MicroHoo: The Facebook-Metternich Connection
Lest BoomTown forgets–in all the hubbub related to the Microsoft-Yahoo-Google talks among and between the Web’s most powerful players about various alliances and, more likely, misalliances–please do not take your eye off the dark horse in this race, which is to say: Facebook.
Well, without going all Prince Klemens Wenzel von Metternich on you (pictured here in all his dull glory) and also giving myself bad Congress-of-Vienna flashbacks from high school 19th-century European history exams, it’s because the overhyped social-networking site is likely to emerge a key player in this larger digital balance-of-power exercise taking place.
In fact, I am increasingly getting the feeling that the company might sell itself sooner rather than later, especially given that a preferred IPO might be harder to achieve than ever before.
As I wrote last week, Facebook could turn out the be the biggest deal in this roundelay, with Microsoft (MSFT) picking it up rather than Yahoo (YHOO)–and for a lot less, even though its Founder and CEO Mark Zuckerberg has rejected many a multibillion offer in the past.
From BoomTown’s post:
And what if the Microsoft offer was $15 billion? $20 billion?
BoomTown will tell you exactly what:
Possible lawsuits–ask any good corporate governance lawyer about it–from any number of aggrieved minority investors for not grabbing the Willy Wonka-esque golden ticket when it was offered to you.
Growing pressure from the media–which you are, to be certain, very good at completely ignoring–asking incessantly whether you have just made too big a bet this time.
And, most importantly, from your own employees, the growing worry that even you, especially in a weak economy, cannot spin up a shinier IPO than the money Microsoft is offering you. Stayers can turn into sellers very quickly.”
Add to that: new stats showing troubling declines in Facebook usage and engagement; a still turbulent economy that might not be the best setup for either an IPO or for new still uninvented ad paradigms that Facebook has been promising (and has not delivered) will explode; and a growing war with Google (GOOG) over openness that, let’s be kind, Facebook is not exactly winning from a perceptual point of view.
Perhaps most importantly, there are a lot of motivated sellers affiliated with Facebook, such as its original venture funders (who wanted to sell to Yahoo in 2006 for just $1 billion) and increasing numbers of its employees too, who long for a safe harbor of a bigger buyer.
“Don’t look at me,” said one person close to Facebook to me recently, “I always wanted to sell out to stay in the game.”
That would to be to Google-obsessed Microsoft, with their truckloads of cash and a desperate need to make a very big stand in the consumer digital space.
Ironically, if you really thought about it in terms of pure assets that could really be leveraged by the right managers–massive traffic, solid communications products and really interesting content–Yahoo is probably the more sensible takeover target for Microsoft than Facebook is.
But in this swirling miasma, it’s hard to tell what to do.
In fact, even a pioneer of diplomatic realism like Metternich would have a hard time figuring out the right balance of power here.