Zuckerberg Facebook IPO to Make Him Richer Than Ballmer
Facebook Inc. (FB)’s $11.8 billion initial public offering will cement the status of 27-year-old Mark Zuckerberg as one of the world’s richest men and put his social network among the highest-valued companies in the U.S.
Facebook is offering about 337.4 million shares for $28 to $35 each, according to a regulatory filing yesterday. At the upper end of that range, the co-founder’s stake would be $17.6 billion, making him richer than Microsoft Corp.’s Steve Ballmer and Russian steel billionaire Vladimir Lisin, who are both twice his age, according to the Bloomberg Billionaires Index.
Zuckerberg, who began the service for Harvard University classmates as a 19-year-old in his dorm room, built Facebook into the most popular social-networking site in the world, topping 900 million users last quarter. Now he has to prove he has the leadership skills to deliver enough growth to justify the company’s valuation, said Paul Saffo, managing director at Discern Analytics in San Francisco.
“The whole story about the Silicon Valley is hard-working, entrepreneurial tech geeks getting big payoffs,” said Saffo, whose firm provides analytics to institutional investors. “The challenge he has is: Can Mark grow as quickly as his company has grown? And can Mark grow faster than his company has grown? Because, of course, that’s what a leader must do.”
Passing MySpace
Zuckerberg, who has developed a reputation for introducing new products quickly, helped the company supplant MySpace as the most popular social service while also navigating competitive threats from Google Inc., Twitter Inc. and other social-media sites. The company has expanded its appeal by enabling developers to build applications on top of the platform, offering users music, movies, e-commerce options and other extras.
“They stayed nimble, like a startup of a smaller size,” said Jeremiah Owyang, an analyst at Altimeter Group. “The culture encouraged them to experiment and innovate on a regular basis, even when they had the lead.”
Facebook’s IPO would value the company at as much as $96 billion. It is offering 180 million of the shares, while existing owners such as Accel Partners and Digital Sky Technologies are offering 157.4 million shares, according to the filing. Zuckerberg is offering 30.2 million of his 533.8 million shares. The majority of his net proceeds will be used to pay taxes associated with exercising a stock option.
Majority Control
He may control about 57 percent of the voting power of Facebook’s capital stock outstanding after the offering, according to the filing.
Zuckerberg has shown patience in bringing Facebook to the brink of an IPO. After starting the company in 2004, he rolled it out to other college campuses, reaching 1 million users by the end of the year. Zuckerberg also received a key investment from Peter Thiel, who made much of his wealth as a co-founder of online-payments service PayPal, later sold to EBay Inc.
It wasn’t until 2006 that Zuckerberg opened up the service so anyone could join. Facebook accumulated 12 million users by the end of 2006.
Zuckerberg was able to woo other investors along the way to handle the growing user base. That included software company Microsoft (MSFT), Accel and Russian investor Digital Sky.
Facebook, while preparing for the IPO, has remained active on other fronts. After being sued by Yahoo! Inc. (YHOO) in March for patent infringement, the company has been looking to buy intellectual property from other owners of it. Facebook plans to spend $550 million on some of the patents Microsoft had earlier said it would purchase from AOL Inc.
Microsoft CEO Ballmer's net worth was $15.4 billion as of yesterday, according to the Bloomberg Billionaires Index.
To contact the reporters on this story: Brian Womack in San Francisco at bwomack1@bloomberg.net; Lee Spears in New York at lspears3@bloomberg.net
To contact the editor responsible for this story: Jennifer Sondag at jsondag@bloomberg.net FB US <EQUITY>
Zuckerberg’s Facebook IPO Will Make Him Richer Than Ballmer
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Mark Zuckerberg, chief executive officer and founder of Facebook Inc., at Facebook's F8 developers conference in San Francisco.
Mark Zuckerberg, chief executive officer and founder of Facebook Inc., at Facebook's F8 developers conference in San Francisco. Photographer: David Paul Morris/Bloomberg
May 3 (Bloomberg) -- Facebook Inc. is valuing itself at as much as $96 billion in its initial public offering, the largest on record for an Internet company. Bloomberg's Jon Erlichman reports on Bloomberg Television's "Bloomberg West." (Source: Bloomberg)
May 4 (Bloomberg) -- Richard Nunn, media analyst at Charles Stanley, discusses Facebook Inc.'s $11.8 billion initial public offering and potential revenue from mobile-phone advertising. He talks with Guy Johnson on Bloomberg Television's "The Pulse." (Source: Bloomberg)
May 3 (Bloomberg) -- Facebook Inc. Chief Executive Officer Mark Zuckerberg and investors plan to sell as much as $5.5 billion in stock in the social-network company’s initial public offering. Cory Johnson reports on Bloomberg Television's "Street Smart." (Source: Bloomberg)
May 4 (Bloomberg) -- David Poh, regional head of asset allocation at Societe Generale SA, talks about global stocks and his investment strategy. Poh speaks from Singapore with Rishaad Salamat on Bloomberg Television's "On the Move Asia." (Source: Bloomberg)
May 4 (Bloomberg) -- Bloomberg's Erik Schatkzer reports on who is cashing in on the Facebook IPO and how much they stand to make. CEO Mark Zuckerberg is reported to sell 5.7% of his stake to get cash to pay taxes. He speaks on Bloomberg Television's "Inside Track." (Source: Bloomberg)
May 4 (Bloomberg) -- Eric Jackson, president and founder of Ironfire Capital LLC, talks about the outlook for Facebook Inc.’s initial public offering. Jackson, speaking with Erik Schatzker and Sara Eisen on Bloomberg Television’s “InsideTrack,” also talks about a review of Yahoo! Inc. Chief Executive Officer Scott Thompson’s educational record. (Source: Bloomberg)
May 4 (Bloomberg) -- Roger Altman, chairman of Evercore Partners Inc. and former U.S. deputy treasury secretary, talks about today's April jobs report and the outlook for the economy and Federal Reserve monetary policy. Altman, speaking with Betty Liu on Bloomberg Television's "In the Loop," also comments on Facebook Inc.'s initial public offering. Bloomberg's Michael McKee also speaks. (Source: Bloomberg)
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The Facebook Inc. logo is reflected in the eyeglasses of a user in this arranged photo in San Francisco, California.
The Facebook Inc. logo is reflected in the eyeglasses of a user in this arranged photo in San Francisco, California. Photographer: David Paul Morris/Bloomberg
Facebook IPO
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Tourists take photos of the Facebook Inc. 'like' logo displayed on a sign at the entrance to company headquarters in Menlo Park, California.
Tourists take photos of the Facebook Inc. 'like' logo displayed on a sign at the entrance to company headquarters in Menlo Park, California. Photographer: David Paul Morris/Bloomberg
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