Facebook’s Enviable IPO

Facebook is now trading on the NASDAQ stock market. It is the largest and most successful initial public offering of an Internet company. After a record-breaking first day of trades, Facebook shares closed at a price of $38.23. Although the initial offering price remained at a slightly excessive level and fell short of expectations, Facebook nonetheless claimed its place as a titan of a company valued at $104 billion. Only eight years after its inception, Facebook has been recognized as having achieved a far higher value than other leading global companies like Samsung Electronics or Qualcomm. With a net worth of $19.1 billion, 28-year-old Facebook founder Mark Zuckerberg has joined the ranks of the extremely rich.

Meanwhile, there are ongoing assertions that the hype around Facebook’s public offering is a bubble, or that the company’s future is unclear. It is noted, however, that Facebook’s recent move is injecting a new vitality into the American economy. Facebook is following in the footsteps of Apple and Google in establishing the legendary success of American venture capitalism. Facebook also acts as a lifeline and growth engine for countless web developers and IT companies embedded in the same web ecosystem. More than 450,000 Facebook-related jobs have been created in the U.S. and Europe alone.

America is continuously able to produce leading stars like Facebook thanks to copious investment funds and Silicon Valley’s culture of accepting failure. Zuckerberg is no stranger to business frustrations, having had his file-sharing service muscled out by competition in 2004 or having to face a constant barrage of debates on individual privacy. He is now preparing to launch a new, full-scale business venture with the $18.4 billion obtained through his company’s public offering. Zuckerberg has built a new revenue model of cell phone use, advertisements and marketplaces — pulling profits from a base of 900 million users, their private information and their social networks.

Competition and stimulation are crucial to good economic dynamics; founding promising venture companies and making them public is an effective means of achieving such dynamics. Although angel investors are slowly rising in Korea, it is acutely insufficient. One-person start-ups are only in their infancy while social commerce or SNS-related companies are encountering difficulties. We must cultivate a stronger culture of recovery from business failure and create a stronger venture market with more funds and talent. This is the only way to give birth to outstanding start-up ventures and establish a virtuous cycle in the Korean economy. With a star venture like Facebook’s grand-scale IPO, Korea would be able to brighten market prospects even in the shadow of the Eurozone crisis.