A few hunches regarding the Facebook IPO

INTRODUCTION:

A lot of talk about Facebook IPO. The stock price keeps falling and I think it will continue.

People don’t know what Facebook is going to do, they know the advertising model has yet to be proven and there is much skepticism from traditional investors about how they are going to monetize.

But you have to think, why would this terribly successful private company need to go public? Why does Zuckerberg need an additional surge of capital? What is he going to do with the money?

I have a few hunches and If I were the CEO here are a few things I might be looking into:

HARDWARE:There are an estimated 2.6 billion people on earth using the internet. Of that approximately 900 million people on FB. Mark needs this number to rise. Many developing nations are using cheaper means of logging on like smart phone, tablets, and netbooks as opposed to space consuming desktops and expensive laptops.

If I were Mark I would be positioning myself to make a bid on the dying Blackberry company Research In Motion. If only for the value of the Enterprise platform. It is the most secure network and syncing functionality of all the major mobile players.

This will allow them capture all that additional development band width, hardware expertise, and of course the patents.

This would put FB in front of consumers in with a tangible product in stead of behind them. Mark won’t have to worry so much about proving his shaky ad model because they will have a steady source of revenue from hardware. He’ll get to tap into more people that are already online and capture those immerging markets where people are newer adapters to internet technologies.

MEDICAL:There is a huge growing market of medical software solutions. I would look to weave FB into that space. There are a few successful startups that have been able to network medical records, treatments, and support groups into social networking-esque platforms but none with as robust features or user base like Facebook.

Currently you can upload your professional network, city or origin, but what if you could upload that your specific medical information? I’d make FB a place to register for donor lists, network with members of a similar clinical trial or patients who are under the care of a particular physician.

Remember Mrs. Zuckerberg is a pediatrician and FB has the ability to link people in many innovative ways. By changing what data they capture and who they share it with they have the capability to create a social-medicine space.

This kind of program would help capture additional users in existing markets that are really interested in keeping in touch with HS comrades but if they are mapping a path to health or a better quality of life would certainly be enticed to join.

INTERCORP COMMUNICATION:

I would open Facebook up to priavate networks similar to what it was when it was University exclusive. I would license FB networks to large corporations to facilitate non email communication via chat, file share, and augmented network infrustructure.

Those that large companies always have trouble comunication and one of Facebooks current strenths is the ease of sharing media. This application could just as easily be lended to excel files or Google Doc-type products. Project management, chat, communication can all be lended to companies to support their operation and at the moment there aren’t very many pioneers in this space beyond the traditional guys, IBM, EMC,Cisco etc.

This could be big bucks for FB but they would need to the capital to grow their development teams, costumer service, and sales. The strenth of the brand, ease of transition and familiarity with the interface could make FB a simple option here.

CLOSING

I think the price will continue to drop perhaps as low as $25 or $26 dollars per share, but if I am Mark Zuckerberg I am less worried about the stock price at the moment and more focused on what I am going to do with all the money I just raised. Those short sighted investors will jump ship and take a beating but its the 5year and 10 year play on FB stock that is going to be the cash cow.

People are constantly comparing Google and Facebook as if they are in direct competition but they have different roots and are not necessarily stepping on each others toes outside of the social networking space. Facebook,like Google has applications far beyond social networking and with the huge user base they already have they have the capability to provide a host of services to monetize in ways far beyond advertising.  Mark Zuckerberg is poised to create first world’s official registry where you manage all your essentials  from one place, effectively making Facebook nearly synonymous with the internet itself.

Anyway, it’s just a hunch.

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