The financial and tech news sites have been buzzing about the Facebook initial public offering (IPO) over the last few days. For a private company that’s sitting on almost $4 billion in cash, what do they plan on doing with the extra $5 billion they hope to generate from the IPO? In the filing, Facebook gave a standard explanation of what it will do with cash it raises: “working capital and other general corporate expenses”. The company plans to focus on 4 key areas of improvement:
Mobile Revenue Strategy – Facebook was designed for computer browser interfaces, not mobile. With that in mind, they have not come up with a way to generate cash from its mobile applications. With people accessing the web more and more from mobile devices than computers, this is an essential challenge that FB must overcome.
Package More Data – With numbers of users growing (845 million + as of Tuesday), Facebook collects more data than ever. As this is their product, they need to find more ways to bring in content from other sites (Youtube likes etc.) and find better ways to package this data to sell to advertisers.
Streamline Advertising Strategy – Facebook is at the end of their experimentation period in terms of an advertising strategy. What they do well now is serving tons of display ads (28% of all US display ad impressions actually…) but eventually advertisers will want to know how to get leads from data on Facebook. One way they have talked about doing this is using “sponsored stories” to feed ads right into a users’ feed.
Hire Top Talent – Facebook mentioned in their IPO filing that they plan on continuing their strategy of buying smaller startups, shutting down their products/services and deploying their technicians on their own initiatives. It would be advisable for Facebook to throw in some attractive salary perks such as company equity