Facebook

There is an argument that the latest Facebook scandal is a lot of fuss about nothing. A week-long psychological experiment on 690,000 users in 2012 that did no damage and had a barely noticeable effect hardly registers on the scale of research abuses over the years.

Nadella channelling Zuckerberg (photo: Microsoft)

Executive biographies keep a low profile on most company websites. Not so at Microsoft, which has been showing off its new chief executive, Satya Nadella, on a special microsite of the kind usually used to hawk things that consumers can actually buy. This is unlikely to persuade anyone to buy a PC or a Surface tablet. What, then, is the point?

Visitors see a list of Mr Nadella’s qualifications (Education: BS, MSCS, MBA; Hobbies: poetry). A video shows the new CEO answering questions such as “Why do you think Microsoft is going to be successful?”, which gives you an idea of how useful he might be in a boardroom. The blurb strikes an aspirational tone: “Nadella wanted to complete his master’s degree and take the Microsoft job. He did both.” Read more

Ravi Mattu

Evan Spiegel, co-founder of Snapchat (AP)

Few technology companies are hotter than Snapchat, the photo sharing app founded just under three years ago that turned down a $3bn bid from Facebook. An article about the company in Forbes calls it “the greatest existential threat yet to the Facebook juggernaut”, highlighting that “droves” of teens (the median age of a Snapchat user is 18) are turning to the social network founded almost three years ago that allows users to send videos, pictures, text or drawings that disappear after a set period of time.

But one unexpected detail in the piece stuck out for me. When twentysomething co-founders Evan Spiegel and Bobby Murphy first met Mark Zuckerberg, the Facebook founder tried to dig for information on their plans. He also outlined his own plans for Poke, Facebook’s own app for sharing photos and making them disappear. According to Mr Spiegel: “‘It was basically like, ‘We’re going to crush you’.” Here’s the surprising detail: the Snapchat founders then bought a copy of Sun Tzu’s The Art of War for each of their six employees.

In choosing that particular military-treatise-cum-strategy-guide, Spiegel and Murphy punctured two myths about tech entrepreneurs. Read more

“News is what somebody does not want you to print. All the rest is advertising,” runs the journalists’ mantra, variously ascribed to publishers William Randolph Hearst and Lord Northcliffe. If so, news is being deluged.

John Gapper

Is Twitter showing its principles, or its lack of principals?

One striking thing about the Twitter S-1 filing for its initial public offering was that it will have a single class of shares, with equal voting rights. Unlike Facebook, LinkedIn and other recent Silicon Valley entrants to the public markets, it is trusting in shareholder democracy. Read more

As the social networking industry hits its 10th anniversary, those at the top are doing well. Twitter will soon undergo an initial public offering that may value it at $15bn and Facebook has recovered from its rocky IPO last year so swiftly that the 20 per cent stake owned by Mark Zuckerberg, its founder, is now worth $24bn.

John Gapper

The new free trade zone in Shanghai is a fascinating experiment by the Chinese government – among the most radical since it established the special economic zone in Shenzhen in 1980. But what does “free” mean?

As my colleague Simon Rabinovitch writes, there is uncertainty about how much economic liberalisation will be permitted in the zone, although plenty of big ideas have been bandied about: Read more

Andrew Hill

The digerati are having fun with the Securities and Exchange Commission’s ruling that US companies can use social media to distribute market-sensitive information such as earnings reports. “Facebook Flap Forces SEC Into 21st Century,” says Forbes.

Not so fast. The US regulator’s decision to drop its inquiry into Reed Hastings, Netflix’s chief executive, who boasted about new viewing figures on his personal Facebook page, is only an incremental advance into the new millennium. It makes sense for the SEC to acknowledge the growing use of social media (I’m guessing more people saw Mr Hastings’ Facebook post than have viewed any regulatory announcement in corporate history), but I don’t think the decision will prompt fearful CEOs to tweet their earnings much more than they do already – and, even if it does, it won’t make much difference to investors. Read more

Andrew Hill

Social media buzzed around Mark Zuckerberg’s comment on Tuesday that he wrote the “founder’s letter” for Facebook’s initial public offering registration statement on his mobile phone. (Big deal – investors who have suffered since must wish he’d used the phone’s computing capacity to set the offer price at a more reasonable level.)

I was more interested in his admission that the social networking group had “burned two years” betting on the wrong mobile technology. For most companies, that doesn’t sound like a long time to spend exploring a potentially highly profitable dead-end, but remember, Mr Zuckerberg hit the button that launched “Thefacebook.com” on February 4 2004. It has barely been in existence eight years. In that context, to burn two years is like Ford (founded 1903) wasting a quarter of a century developing a five-wheel car or General Electric (1892) blowing 30 years exploring the possibilities of a steam-powered lightbulb. Read more

John Gapper

The dismal performance of Facebook’s initial public offering, after several years in which it was expected to crown the emergence on public markets of social networks, is bound to dampen the mood in Silicon Valley.

Paul Graham, who runs Y Combinator, a start-up incubator, says the effect will be what you might expect – early-stage valuations will suffer. His email to portfolio companies, obtained by Business Insider, contains this warning:

“If you haven’t raised money yet, lower your expectations for fundraising. How much should you lower them? We don’t know yet how hard it will be to raise money or what will happen to valuations for those who do. Which means it’s more important than ever to be flexible about the valuation you expect and the amount you want to raise (which, odd as it may seem, are connected). First talk to investors about whether they want to invest at all, then negotiate price.”

 Read more

Andrew Hill

Investors with long-ish memories will recall that Ariba, the business-to-business ecommerce network that SAP has just agreed to buy, was a dotcom IPO star of 1999: its stock surged 291 per cent on its debut, giving it a market capitalisation of $3.7bn – only just short of the $4.3bn that the German enterprise software company has agreed to pay for it 13 years later. Those were the days, Facebook investors may ruefully reflect.

Ariba had much further to go in the short period before the dotcom bubble deflated in 2000 – at one point it was worth a heady $30bn. But its longevity, before finally being snapped up by one of the companies it successfully challenged, demonstrates the durability of its underlying offering. Ariba’s early potential was obviously hugely overrated at the peak of the internet boom, but it grew into that original valuation. Read more

John Gapper

The 33 banks that signed up for the Facebook initial public offering may have thought they were heavily discounting their normal six or seven per cent underwriting fee in return for some good publicity on a sure-fire winner. It doesn’t look like that now.

Facebook’s sputtering IPO is drawing scrutiny both to the role of Nasdaq, which has admitted to “embarrassing” mistakes  on Friday, but to the price stabilisation tactics that the banks, led by Morgan Stanley, had to employ. Read more

John Gapper

The travails of old media businesses are well-known but I’m starting to feel sympathy for advertisers and media buyers.

That sentiment was brought on by looking (in old media fashion) at the front of the print section of the New York Times today. The lead article is about Madison Avenue’s scepticism on whether Facebook is a good advertising medium and underneath that is a piece on Dish Network’s new ad-skipping digital video recorder.

Facebook’s advertisers have been struggling with whether display ads on the social network will produce results, with General Motors pulling its $10m Facebook ad budget ahead of the intial public offering.

Meanwhile, Dish has upset US television networks in the “upfront” season where they show off their next season wares to advertisers but producing a box that automatically skips all the commercials between network shows. Read more

Andrew Hill

Facebook investors: you have been warned. The last time I was in Silicon Valley was 12 years ago, in the very week that the Nasdaq crashed, marking the end of the dotcom boom. That I should fly back into San Francisco on the eve of the social network’s initial public offering cannot be a good omen.

I’m not here to write about Facebook – for expert insights, read the analysis of my San Francisco-based colleagues or the FT Lex team – but the IPO overshadows most discussions. What strikes me is how entrepreneurs, technology executives and analysts I’ve met are reluctant to talk publicly about Facebook and its founder Mark Zuckerberg. Ask them what they think about him and they tend to preface their remarks with a polite request that this part of the interview should be off the record. Read more

John Gapper

Facebook’s video for retail investors in its forthcoming initial public offering is a nice innovation, but fundamentally, Facebook is taking a step back from Google’s IPO in 2004.

The IPO bookrunners and co-managers are a litany of Wall Street names, led by Morgan Stanley, JP Morgan and Goldman Sachs. But Facebook has dropped Google’s attempt to upend the IPO process by running an electronic auctionRead more