Monday, January 30, 2012

It feels like it’s happening overnight, but Facebook has been marching toward an initial public offering (IPO) for almost eight years. Mark Zuckerberg created “TheFacebook” way back in 2004, nurturing it from dorm-room dream to Silicon Valley megasuccess during that time, and along the way he repeatedly dodged questions of when the company would offer stock.

Actually, some very lucky people have been able to own a chunk of Facebook for a while now. Apart from major investors like Microsoft and Russia’s Digital Sky both of which invested substantially in the company over the years Facebook employees have been able to buy and sell their stake in Facebook on secondary markets since 2009.

If buzz is any indication, that stake will soon be worth a lot. Facebook is said to be filing for its much-anticipated public offering on Wednesday this week, and estimates for how much the company will be worth once it’s done are in the $100 billion range. That would make the social network about four times the value of Google at the time it went public in 2004 with a valuation at $23 billion the day after.

Although Facebook has been the target of acquisition interest since its beginnings (Friendster was reported to have been interested as early as 2004), Zuckerberg had faith that he and his team could be more successful on their own, rejecting any and all offers. While talks between Facebook and Yahoo progressed far in 2008, the $1.6 billion reportedly being offered wasn’t enough for Zuckerberg.

Zuckerberg never had much to say when asked about an IPO, preferring to keep the focus on the products Facebook was putting out and the network it was building. But the company began to take its first serious steps toward an offering in early 2011, reaching out to investment banks to help the company navigate the complicated financial waters.

And now the IPO filing appears imminent. Besides the reports from various financial publications, Facebook recently pushed out its new Timeline feature to all users and stopped its share trading on secondary markets, both without explanation. We should know the answer very soon.

2004: First Offers Turned Down

Facebook launches with humble beginnings that most people have seen dramatized in The Social Network by now. It was a small social site backed by only a little money, and limited just to the undergrads at Harvard. Right out of the gate, Facebook turned down offers from an unknown investor and Friendster, each offering $10 million. This was, of course, when the company was still called TheFacebook.


2005: Serious Interest

By 2005, “TheFacebook” was becoming more and more interesting to potential investors. They waved off bids from the likes of NBC, The Washington Post Group, and two separate attempts from both MySpace and Viacom/MTV.



2006: Microsoft & Yahoo Come Calling

Facebook became more legitimized as it moved into more colleges, and then expanded to the public. Microsoft signed a large advertising deal with Facebook, an event that began a long, positive relationship between the two companies.

Just a month later, Yahoo made a $1 billion offer to buy Facebook, but it was rebuffed after Yahoo’s stock dropped and the company had to lower to $800 million.



2007: Forging an Alliance

After a lucrative advertising relationship, Microsoft invests heavily in Facebook, putting in $240 million for 1.6% stake in the company. This raised Facebook’s estimated worth to $15 billion, after only three years of existence. Despite this, Zuckerberg said the possibility of an IPO is “years out.”


2008: Valued at $4 Billion

In an interview with 60 Minutes in January, Mark Zuckerberg said there was no chance of a Facebook IPO that year. In August, Facebook gave itself a valuation of $4 billion, then began letting fully vested employees sell 20% of their stock based on that valuation.



2009: More Investment

Facebook gets $200 million investment from Russian Digital Sky, who bought 1.96% of the company with that. That investment raised Facebook’s valuation to $10 billion.

Two other estimates of wealth came out later in 2009 that lowered Facebook’s valuation, probably as more terms of the deal with Digital Sky became clear.



March 2010: Zuckerberg Talks IPO Rumors

Zuckerberg is still coy about an IPO, saying there is “no rush,” and proving that Facebook doesn’t need the money.


November 2010: Valuation Climbs

Trading on secondary markets suggests Facebook is the third most valuable web company in the United States. As private investors sold their stakes, valuations of the company soared as high as $56 billion.


January 2011: First IPO Moves

Goldman Sachs and Digital Sky Technologies drop a massive $500 million cash infusion into Facebook, pushing its value upwards of $50 billion. According to USA Today, that valuation exceeds companies like eBay and Nike.

Facebook also launches an $1.5 billion equity offering through Goldman Sachs, letting some private investors buy a piece of Facebook.


June 2011: The $100 Billion IPO?

Reports circulate that Facebook’s IPO could exceed $100 billion, and that it might go public during the first quarter of 2012.

January 2012: IPO Imminent 

 Facebook halted trading of its shares in secondary markets for three days starting Jan. 25, a possible indicator the company’s long-awaited IPO is coming soon.