The Bankwatch

Tracking the consumer evolution of financial services

“Facebook has no philosopy” | a comparison to the Google IPO

Much has been written in the last few days about the FaceBook IPO, er private funding.  Umair makes a solid point here and notes that FaceBook is doing exactly what is wrong for sustainable value.  No doubt many will make commissions, including Goldman but is this approach appropriate for sustainable share value.

He goes on to note that by aligning themselves with the worst of Wall St approaches, something Google chose to not do, FaceBook has less chance for creating sustainable real and consistent value for investors.

A Tale of Two IPOs | Bubblegeneration

Companies that have philosophies are resilient–they’re able to weather the fiercest of storms, because they focus on enduring value, not transient gains. What Facebook’s Goldman deal might tell the astute observe of strategy is this. Facebook has no philosophy, no set of guiding principles that focus it on enduring value. Instead, it is focused–as it has been focused–on building an extractive ecosystem rife with subprime economics and tail risk, not creating value that matters, lasts, and grows.

Sidenote:  it is also interesting that the broker side of Goldman Sachs chose to not participate indicating that the valuation is too high.  The bankers know better 🙂

Goldman Sachs Capital Partners — a $20.3 billion group that manages and invests mostly for pensions and sovereign wealth funds — was offered the opportunity to invest $450 million in Facebook, according to people familiar with the matter. Goldman Sachs allegedly allows its Capital Partners unit to get the "first look" on many investment opportunities.

But unit head Richard A. Friedman decided to pass on the Facebook shares, saying the company was a mismatch with his investment criteria, according to the New York Times.

Written by Colin Henderson

January 6, 2011 at 16:39

Posted in Uncategorized

%d bloggers like this: