The Economic Times Sunday published my article I wrote for them today. The full text is produced after the image:
I can imagine Mark Zuckerberg saying, “Mere paas baap hai, biwi hai, business hai, dost hai, gaadi hai, bangla hai, izzat hai, shaurat hai, mere paas maa bhi hai; par mere paas IPO success nahin hai….” (I have a father, wife, business, friends, car, bungalow, respect, fame, and I also have a mother; but I don’t have a successful IPO…”). The luckiest, smartest, and probably richest lad in the world got brutally stomped all over by the stock market. Poor Zucky (a lucky Zuckerberg is lovingly called Zucky).
Now, if Zucky had a white sari-clad Daadimaa (grandma) in his Bollywood avatar, he would go to her for blessings before he went out to press that ‘manhoos’ (cursed) Nasdaq button. Daadimaa, seated in her puja room, would be swaying her head and singing bhajans to a beautiful six feet tall Krishna idol. She would come with a thali and a loving smile; put a nice red tikka on Zucky’s forehead, and say, “Zucky beta, be careful. For the first time you are stepping outside the comfort zone of our village. Do not forget the valuable lessons you learnt here.” Ramukaka, standing nearby, would shed tears and carry Zucky’s bag to the Impala car in the porch.
Shucks, I really wish Zucky beta had listened to Daadimaa, rather than leaving the Facebook IPO decisions to his ‘munim’ (CFO) and ‘gumashtaas’ (yes men). Zucky violated three core principles of his own upbringing that brought him his IPO ruin. Consider:
The Art of the ‘No’
Zucky said ‘no’ to advertising moneys very early on, in the Facebook growth story. Later, when lots of rich ‘sethjis’ (acquirers) came to buy him and his company with massive ‘dahej’ (dowry), he said ‘no.’ Zucky had redefined the ‘art of the no’. He had trained himself to not succumb to quick riches. But when the evil Mamajis (merchant bankers) descended on him, he got deluded. They made him agree to raise too much money. When the stock listed, there was too much of it, pre-sold at too steep a price.
Technology fails when you need it the most
I have been constantly using Facebook for the past six years and have never seen it go down. Its technology is ‘fail-proof’. How ironic then, that Nasdaq – who pretends to be the most tech saavy stock bourse, tripped over its own technology at the crucial time of listing the Facebook IPO! Facebook is built on technology. But technology failed its IPO. Couldn’t Zucky and his macho tech team have audited Nasdaq and how it works?
The day of the IPO resembles a Bollywood scene of the evening of the shaadi (wedding). The dulhan (bride - facebook stock) is in her dressing room getting ready. The father, mother, punditji (priest) and relatives are all waiting excitedly for the dulha raja (groom) to arrive (trading to start). But the groom just doesn’t come. The bride breaks down, the parents despair, the punditji and relatives leave. The beautiful ‘mandap’ in the lawns looks deserted. The delay in Facebook trading tripped its sentiment from ‘must buy’ to ‘must sell’. And that sentiment still hasn’t changed.
The law of Karma
Let’s face it. Zucky and his past deeds are not spotless. He stole someone’s idea, sidelined his partners, became ruthless with co-founders and did all the right and wrong things to create Facebook. He definitely earned some negative karma, and that karma paid him back on the most important day of his life. It punished him.
(During the Interval, Zucky got married in the lawns of his bangla in the presence of family).
So, past the Interval, what lies ahead?
Blood, sweat, toil and tears
I see sepia toned Bollywood screen shots of factories, mills, machines weaving cloth, spewing chimneys, Zucky with a clipboard in hand pacing factor floors, workers sweating, ‘maal’ (goods) being produced, orders being executed, ships being loaded, trucks being dispatched. To paraphrase it in Zucky’s own words, I see him ‘staying focused and keep shipping on’.
Nothing has changed at Facebook. In fact, it’s got a war chest of money that it will really leverage well. Zucky is that dreamy, happy (not angry) young man who will do anything to make it to the top. He will make Facebook one of the most valuable companies in the world.
The Death of the greedy ‘Dalal’
I see the extinction of the middlemen and greedy merchant bankers who did everything to fill their pockets and serve no one, but themselves. The most famous IPO in the world has written their death sentence. No longer will their word be sacrosanct; no longer what they do will be beyond question. I see Wall Street crumbling. I see the ‘get-rich-quick’ syndrome vanishing.
Facebook - the new Nasdaq?!
Facebook is a tech powerhouse. Millions of photos, videos, likes and comments get posted every second. Facebook does not fail. Also, it has 900 million people on it! I ask why can’t Facebook be the Nasdaq of the future? Where companies IPO and list themselves seamlessly, without pain? Where friends can ‘like’ stocks, ‘share’ it with other friends and just help crowdsource the entire fundraise, using FB credits?! Oh and Facebook could make a bundle on commissions!
This would be the perfect ‘all’s well that ends well’ closing scene in a typical Bollywood plot. And of course, the screen would read ‘The Beginning’…
What a piece of analysis!!!
It would not be a surprise if Zucky calls you for advice on your last note " Facebook as NASDAQ " .. :) amazing idea sirji...
Zuckerberg, for all his technical prowess, couldn't make even a decent FB app, couldn't combat spam; FB is down as I am writing this.
Or maybe it's just one lesson, "All that glitters is not gold."?
Is it going to be fate of all over priced e ventures like Flipkart, craftsvilla etc. in India?
I read everything you wrote pre-IPO and i read this post-IPO, your faith in FB goes strong but in my opinion after the IPO, FB frankly was over-valued, over-rated & over-publicized ... it could have done better without the overs.
You seem to got it wrong here Mr. Kejriwal.
FB's IPO did not blotch. Sure some retail investors didn't make money on the opening day, but then will you call such people 'investors' ? The sold the shares at $38, much more than the current market price, which is great news for Zuck and FB, since they have raised a lot of money for their operations (the whole point of the exercise).
Sure, the issue may have been overpriced, but by over subscribing, its the investors who messed up, not Zuck.
If you were selling a product/service and your customers were willing to pay you more than the fair market price, is it unfair to sell to them at the higher price?
I would agree on the FB win / Investors lose part which is exactly what happened.