Saturday, 19 May 2012

Facebucks: King of the geeks makes £12billion in a day... so much for the recession!


Mark Zuckerberg finds himself in another stratosphere after floating the social networking site and making himself £12billion richerDressed in his hoodie, Mark ­Zuckerberg looks like he has just left the college dorm where he started Facebook.
But the 28-year-old yesterday found himself in another stratosphere as he floated the social networking site, making himself £12billion richer in the process.
Zuckerberg became the world’s 23rd richest person with the record-breaking stock market launch, that also created more than 1,000 millionaires ­overnight.
They included the founder’s dentist dad Edward who is sitting on a paper fortune of £40million.
Irish rocker Bono also cashed in on the flotation by turning his £56million stake into a £1billion windfall.
And 49-year-old Brit Joanna Shields, who runs Facebook’s European arm from its London office, is another big beneficiary of the move.
Lower-ranking staff in the British capital will also have holdings worth hundreds of thousands of pounds.
Social media specialist Ivor Kellock said the flotation will have rivals scrambling to come up with better ideas.
He said: “Facebook is the dominant force in the western world and social networking is still in its infancy.
“That’s not to say there won’t be more competition and it won’t get more difficult for them.
"The only caveat is it depends what other new, innovative ideas come up that knock Facebook for six.”
Facebook stock market
Trading: Facebook is now on the stock market
Getty
 
Facebook’s flotation on the US Nasdaq market was delayed for half an hour amid reports about massive demand for stock.
"When trading started, 82 million shares changed hands in first 30 seconds.
It is now valued at £66billion – more than coffee chain Starbucks and computer giant Hewlett Packard combined. ­
Facebook is also now worth more than Amazon and twice that of Ford. Yesterday’s move gives the popular network more than £11billion of financial ­firepower which experts believe it will use to stage a fresh expansion.
But sceptics warn there is too much hysteria and that the shares are over-priced.
Zuckerberg appeared on a videolink from his California HQ for the launch.
He started Facebook in a Harvard dorm room eight years ago with classmates Dustin Moskovitz, Eduardo Saverin, and Chris Hughes.
It now has more than 900 million users, including around 31 million in the UK.
The float is also good news for Tyler and Cameron Winklevoss, the Olympic rowing pair whose dispute with Zuckerberg over who originally came up with the idea sparked hit film The Social Network.
They accepted a £12.6million settlement and Facebook stock that could now be worth more than £95million.
Who makes what
:: U2 star Bono is now the world’s richest musician after a £56million stake he bought in 2010 soared to more than £1billion.
:: Co-founder Eduardo Saverin’s stake is worth a cool £2.7billion. Hit film The Social Network told the story of his falling out with  Zuckerberg. He has defended claim in recent days that his decision to ditch his US citizenship was to save on tax.
:: Sean Parker, played in the film by Justin Timberlake, was an early investor in Facebook. It paid off after his stake was also valued at £2.7billion.
:: Grafitti artist David Choe is £130million richer after the best gamble of his life. The 35-year-old was offered the choice of a few thousand pounds or Facebook shares when he asked to paint murals at the fledgling firm’s HQ seven years ago. He, wisely, opted for the former.
:: Mark Zuckerberg’s father, Edward Zuckerberg, is £40m richer today. Zuckerberg senior, a dentist, fired his son’s enthusiasm for computers after enrolling him on a graduate computer course at a nearby college.
:: Joanna Shields is one of the biggest British beneficies of the float, The 49-year-old runs Facebook’s European arm from its London office. She is married to Formula 1 team boss Andy Stevenson.
:: Mark Zuckerberg’s college roommate Dustin Moskovitz, 27, is thought to have a stake worth £2.2bn. He helped set-up Facebook at Harvard.
:: Former Google employee Sheryl Sandberg, who became Facebook CEO in 2008, has netted a £1.3bn stake.
Analysis: By Martin Sorrell, founder and chief executive of the world's biggest ad agency, WPP
I’ve met Mark Zuckerberg and what you see is what you get.
He is highly intelligent and clearly unique. When you think what he has achieved, it is incredible.
Facebook, and Zuckerberg, represent the American Dream. From Harvard dorm to one of the biggest initial public offerings in stock market history, in a few years.
Imagine the psychological impact of this rags to riches success on budding entrepreneurs everywhere – not just among the Facebook nation, the third largest country on the planet, but throughout the world.
Nothing is impossible.
Now, however, the hard work starts. ­Facebook will have to demonstrate growth that justifies a valuation of over 25 times its revenues.
To do that it will have to make money from its content even more effectively than before.
There is no doubt it is a very powerful branding mechanism, but is it as good an advertising mechanism as online searches?
In addition, it hasn’t cracked mobile – yet. Rumours are that ­Facebook will have a mobile handset by the end of this year.
Google remains the principal competitive threat. The competitive playing field will be a battle royal, with Apple, Amazon, Twitter and Microsoft weighing in too.
For our clients and ourselves, all this represents wonderful opportunities to build brands for the long-term, and that is what also Facebook has to do, particularly after today.
Nothing can take away their iconic success so far. Now, ironically, they really have to capitalise on it.

 
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