Facebook IPO: Not for Me

May 16, 2012 by

No to Facebook StockSix reasons I won’t be buying Facebook stock:

  1. Hype: I think the hype around the Facebook IPO virtually guarantees an inflated stock price, at least for a while. Buying into Facebook through or soon after the IPO would be like betting on the favorite in the Kentucky Derby: With millions of amateurs lured in by all the hype, bettors are assured of getting a crummy pay-off, even if the horse wins.
  2. Zuckerberg: For admittedly not very defensible reasons, I’m not wild about Mark Zuckerberg. After the IPO, he’ll retain 57% of Facebook’s voting rights. His run with Facebook may well persist, but I prefer to entrust my retirement money to people I like, and who are more than a decade past puberty’s finish. (No offense intended to brilliant young people, who we need desperately. Some of my best friends are brilliant 20-somethings!)
  3. Privacy: Facebook’s business model reduces to inducing users to divulge personal information, then selling it. The company is a serial privacy violator. What we know about Facebook’s personal data collection and (ab)use is alarming and has led to regular mini-scandals. This is pure speculation on my part, but I suspect we know of only the tiniest tip of Facebook’s privacy abuse iceberg, and that what’s below the surface could be enough to compel Mr. Zuckerberg to raise his hoodie when in public. That’s not a risk I’m keen to take.
  4. Fakebook: The value of Facebook’s information hoard is directly related to its authenticity. Facebook’s first generation of users delighted in the opportunity to commune openly and honestly with friends and family, readily disclosing personal and often intimate details about themselves. That translates to major ka-ching for Facebook. While such use of Facebook still lingers, increasingly ascendant on Facebook are promoters disguised as common users, scammers, hackers, cretins, and quacks. And the aim of most of the current generation of “regular” Facebook users appears to be self-branding, self-promotion, and self-absorption. Facebook has become Fakebook, an encyclopedia not of who its users are but of who they’d like the world to think they are. Perhaps Mr. Zuckerberg can continue to convince advertisers and business partners that this pseudo-information has value, but perhaps not.
  5. Poor User Experience: Facebook has become clunky, spammy, bossy, pushy, and, ironically enough, anti-social. Many, many of its users I believe are hungry for a viable alternative, and may readily jump the Facebook ship when that alternative inevitably comes along. I’d wager you or someone you know openly disdains Facebook, but participates anyway because… ?? Google+, by choosing to imitate rather than re-invent Facebook, has no chance. Pinterest? Getting warmer I think …
  6. Arrogant: A few weeks ago I received an email from Facebook with the subject line “Get your $100 free Ad coupon!” The email stated clearly that, in exchange for watching (and passing a quiz at the end) what turned out to be a 10-minute, exceedingly disingenuous video allegedly about how I might better market my business through Facebook but actually about how Facebook might better market itself through me, I would receive $100 in free Facebook advertising. Here’s the coupon from the email:Facebook advertising coupon

After suffering the indignity of jumping through Mr. Zuckerberg’s hoops and passing his quiz, Facebook told me, sorry, I didn’t qualify for the free advertising after all. Facebook saw no reason to disclose even a hint of why I didn’t qualify. Naturally this disgusted me so much I instantly resolved to ignore all future communications from Facebook promotion and never, ever to advertise on Facebook.

With respect to the IPO and Facebook’s business prospects, to me this episode, while trivial, I think is indicative of a fatal Facebook flaw: Like an emperor who’s been in power too long, Facebook has irretrievably lost touch with reality and, drunk on its own dominance, long ago forgot that treating its “subjects” like dirt is probably bad for business. Abusive emperors invariably meet an ugly end.

Will You Buy Facebook Stock?

Will you be investing in Facebook and the 28-year old Mr. Zuckerberg’s CEO acumen?

And Another Thing

Just because I’m not investing in Facebook doesn’t mean I don’t want you to visit and “Like” Money Counselor’s page on Facebook. Please do! 🙂 It’s the only game in town—for now.

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