Facebook's hoodie-wearing CEO Mark Zuckerberg and his gang of soon-to-be-billionaire lieutenants are hitting the road this week to woo investors ahead of what's expected to be the biggest initial public offering since the English East India Company got its Royal Charter way back when social networking involved sharing a cup of rum and attending a witch burning.
The Facebook IPO tour has thus far included stops in New York and Boston, with planned visits to Baltimore, Philadelphia, Denver, Chicago, Kansas City, the company's home base of Palo Alto, Calif., and back to New York before the company's stock is offered on the NASDAQ exchange on May 18.
The roadshow got off to a "rough start" in New York on Monday, according to media reports. Facebook is pulling a half-hour video it showed at the Sheraton Hotel in New York City from future roadshow stops after several potential investors complained that they'd have preferred to have gotten down to brass tacks from the start of the meeting.
A more serious mini-crisis erupted out of Zuckerberg's decision to wear a hoodie at that meeting. That raised some eyebrows amongst the button-down set on Wall Street, including Wedbush Securities analyst Michael Pachter, who called the Facebook CEO's attire a "mark of immaturity."
"Mark and his signature hoodie. He's actually showing investors he doesn't care that much, he's going to be him," Pachter tut-tutted on Bloomberg TV. "I think that's a mark of immaturity. I think that he has to realize he's bringing investors in as a new constituency right now, and I think he's got to show them the respect that they deserve because he's asking them for their money."
Perhaps. On the other hand, Zuckerberg isn't some fly-by-night schmoe with a hand outstretched and a mouth full of dubious promises. He's asking investors for their money, but he's also offering them a pretty rock-solid opportunity to make it all back and then some. When that's the equation, respect should probably go both ways.
And besides, the Zuck and his team famously created Facebook in cheap sweatpants and a cloud of Cheeto dust—why invest in the company at all if you think that demonstrably winning formula ought to get made over in starched shirts and uncomfortable ties?
What Facebook Needs to Do Next
Following the hoodie flap, several market watchers and tech executives laughed at all the fuss. Box CEO Aaron Levie, for example, tweeted mischievously: "Yahoo CEO: No hoodie; AOL CEO: No hoodie; Facebook CEO: hoodie. Coincidence?"
Others wanted to focus more on the company's fundamentals and less on its founder's sartorial tastes.
"Facebook's upcoming IPO is invigorating both an entire social movement as well as the financial markets," said Andi Gutmans, CEO and co-founder of PHP software developer Zend. "Facebook touches the hearts and minds of hundreds of millions of people worldwide."
"The caveat is that investors want to know how Facebook's existing dynamic Web content will drive long-term business success," Gutmans continued. "In other words, can they continue to successfully monetize their business model to justify the IPO valuation and beyond?"
Gutmans's take is that Facebook's commanding share of the "social graph" gives it a leg-up on pretty much everybody else in expanding beyond its consumer model to penetrate enterprise markets.
"Personally, I believe Facebook has the opportunity to both meet and exceed investors' expectations," he said.
John Corpus, CEO of social entertainment provider Milvoni, lasered in on Facebook's prospects in what he called three key areas—marketing, commerce, and operations.
"As Facebook matures into a business platform supported by both advertising and commerce, the company needs to make the investments necessary to transition the platform into a marketing, transaction and operations success," he said.
Whether or not Zuckerberg needs to ditch the hoodie, Corpus thinks Facebook does need to change its freewheeling ways in some respects. The company "needs to move beyond its culture of hacking and breaking things and find the appropriate balance between innovation and reliability as a business platform for commerce, customer interaction, and advertising. It's time Facebook transitions from a beta platform into a business platform ready for the next generation of growth," he said.
Corpus also described Facebook's "reputation around personal data and security [as] anything but stellar," and contended that the social network needs to figure out ways to "facilitate two-way conversations between companies and fans" on top of the powerful relationships that develop between consumers who use Facebook regularly.
Can Facebook Really Keep Growing?
Meanwhile, other observers wondered if Facebook can sustain its phenomenal growth rate of the past few years. The company has nearly a billion users worldwide, but its growth has shown signs of slowing recently.
In light of that, it seems convenient that a major tech influencer like Farhad Manjoo has taken up a campaign to label non-users of Facebook "weird." In a podcast aired this week, Manjoo, Slate's technology columnist, warned that people who aren't on the social network are signaling to potential employers and dating prospects that they've got "something to hide." He also opined, pretty counter-intuitively, that the only way to truly control your own online identity is to hand over control of it to Facebook.
Whether such scare tactics motivate a few more people to join Facebook remains to be seen. A Slate poll on the subject indicated that more than 90 percent of readers disagree with Manjoo's opinion and in fact are very sympathetic to people who simply want to opt out of social-networking platforms entirely.
As Facebook makes the rounds ahead of its IPO this week, investors will probably be trying to suss out if the company may well be reaching a saturation point in terms of users. If so, the best thing Zuckerberg and Co. can show its deep-pocketed audience is that it has a solid plan to start making its existing user base more profitable.
For more, see Facebook IPO: What They're Saying, as well as What Does a Facebook IPO Mean for Users?, and Zuckerberg: 'No Rush' to Facebook IPO.
For more from Damon, follow him on Twitter @dpoeter.
