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Is it too early to judge Facebook's performace?

Last updated on: May 21, 2012 15:52 IST

Is it too early to judge Facebook's performace?

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Ritu Jha in New York

On Friday May 18, when Facebook with 901 million users worldwide debuted on NASDAQ, many said it would fall short of expectation.

However, venture capital firm in the Silicon Valley said there was no need to worry about the Menlo Park-based company in California.

Founded in 2004, by Mark Zuckerberg, 28, the technology company, announced the pricing of its initial public offering of 421,233,615 shares of its common stock at a price to the public of $38 per share.

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Photographs: Reuters

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More than 100 million shares were traded in less than five minutes at Wall Street, and the stock price indeed went up to $42, but it did not last for long and slipped back to $38.23.

"Facebook is a long-term company, and people working at Facebook are building it for a long term goal. Going public is not what they are aiming at; they are aiming for a company that will be around for the next hundred years or so," said Josh Elman, principal, GreyLock Partners, a leading venture capital firm based in Silicon Valley to rediff.com.

He added, "I think one needs to believe in the team and its vision. I think Facebook is going to continue to form a really-really well company in the long term."

Greylock invested $12.5 million in the social media giant in 2006.


Photographs: Keith Bedford/Reuters

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Josh, who worked at Facebook for couple of years in 2008, before joining Greylock said the company is not going to look at day to day stock price.

Josh said his partner at Greylock, David Sze saw Facebook back in 2000 and realised that this was a platform where people engaged and communicated like never before.

"David realised that the valuation might be $500 million, but that was a very early valuation for a company which will have a long lasting property and platform for the world," Josh said, "Many people thought that was silly or crazy, but then it looked like we were just at the beginning of a big company".

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Photographs: Keith Bedford/Reuters

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Talking on the revenue generation, he said, "Facebook generates revenue through advertising, Facebook Credit where people pay for virtual currency for various games on the platform and Facebook Connect," adding, "When I worked there we helped to border the 'Facebook connect'. Lots of company use Facebook to innovate their social graph."

What makes Facebook special is that it connects people to friends and also connects them with business and brands and other things they are interested in.

He said Facebook is not just about banner ads. In fact, it targets and informs its user what their friends like. "Mark is brilliant. He is really focused and driven on building an incredible company," stated Josh.

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Photographs: Reuters
Tags: Facebook , Josh

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"Making 100 billion on day one is a big success. Now it is one of the biggest companies in the world," said Manu Rekhi, principal at venture capital firm, Inventus Capital Partners.

Rekhi who worked at Google before joining Inventus Capital Partners said the anticipation of Facebook IPO was big enough to make history. So, if the stock did not jump, does not mean it is a failure.

However Trip Chowdhry, managing director of Equity Research at Global Equities Research in California has a totally different view about Facebook.

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Photographs: Reuters

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"Facebook has to focus on the management. If you think about Zuckerberg, it raises some quick questions- Is he really a manager or is he really a programmer?," asks Trip.

He said Facebook is a social media company and it could motorise the social media action, which means sharing, commenting, uploading, but if you count on revenue, the generation does not come from any social aspects of Facebook. "There are many unanswered questions about Facebook's business model and the competencies of the Facebook's management.

Zuckerberg is more matured as a programmer, but he is not matured on the vision side. "We saw his interaction at the road show in New York before IPO, and it was quite dismal," said Trip.


Photographs: Lucas Jackson/Reuters

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