Facebook’s record IPO on the NASDAQ on Friday and subsequent drop in price reminds me of a time in 2000 when I was part of the team that listed a company on AIM, the London Stock Exchange’s equivalent to the NASDAQ.
ADVFN.com PLC was – and still is – a service that gives broker depth data on shares to private investors.
I had been approached by the founders of ADVFN.com to join their management team with my first task being to help get the company to flotation as soon as possible.
Timing in business is everything – particularly in internet business. ADVFN.com floated successfully on 20th March 2000 and the price rose from its initial price of 10p a share to 62p in 3 days. We were all millionaires! After the third day the share price did not rise again. It crashed. Soon it was trading well below 10p and my share certificates were good for nothing but decorating the garden shed.
Facebook’s IPO timing was good. It rode the wave of corporate enthusiasm for companies run by pimply geeks. People rushed to participate in the IPO and it listed at the top end of price expectations. Markets move on confidence, and a lot of people were very confident about Facebook. After all, 900million people regularly share everything from the latest twist in their relationships to pictures of their skateboarding pet rat. But perhaps not everyone was quite so confident as the beaming venture capitalists and their bankable wonder kids.
The 30-minute delay from Mark Zuckerberg ringing the bell to trading opening was perhaps a sign. By the end of trading the price had not risen in line with expectations. Other social platforms like the recently listed Zynga and Groupon, hoping to benefit from the Facebook factor, were disappointed. The price has since dropped below the IPO level. The cracks are perhaps beginning to appear.
So is this a message of gloom from a once bitten entrepreneur? Not at all. ADVFN.com raised the capital necessary to fund its business and democratise shares data so it is not just in the hands of a few privileged bankers. And Facebook has raised enough money to ensure we never run out of amusing anecdotes about how Gav got drunk on cheap cider and Jen no longer fancies Bob. But don’t be distracted by the latest listing hullabaloo of Facebook and its ilk. More important forces are at work.
As in 2000, after all the noise and hype havedied down, what will be revealed are some fundamentally important trends. In 2000 the technology platforms of Web 2.0 were left in place after the “Dot Com Crash”. Solid foundations that proved to be real, vital and life-changing. They laid the bases for YouTube, iPhones and indeed Facebook. This time around the foundations are no less deep, sturdy and profound. In fact they point to much greater things to come.
The exponential rise of computer processing power has curved upwards another few degrees. New services will make our flirtation with Facebook look like a rather embarrassing first kiss: awkward, misdirected and frankly a bit sloppy. Facebook has connected more people together than at any time in history.
A world of 900 million people at the click of a button. But as early as 2008 the number of things connected to the internet exceeded the number of people on earth. Cars are driving themselves, robots are fighting in wars and sensors are being scattered over cities to report back on the health of their infrastructure. Most interestingly Man is merging with Machine. Limbs are being controlled by thought not nerve ends, a human kidney has been manufactured by a 3D printer and contact lenses are channeling digital data direct to eyeballs.
The world we know is being burned to the ground while we fiddle with a mouse to download another cat. Facebook – the new listing on the block – is already old hat. We won’t need Facebook to tell us someone’s relationship status; we’ll just look them in the eye.
Mark Zuckerberg is a smart fellow. If you looked into his eyes you would see his agreement.
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