What Everyone Seems to Miss In Facebook’s Private or Public Debate…

…is the core reason it makes sense for Facebook to be public: Accountability to its customers. The rest of this debate is simply financial folks arguing amongst themselves. Facebook is the greatest repository of data about people's intentions, relationships, and utterances that ever has been created. Period. And a…

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…is the core reason it makes sense for Facebook to be public: Accountability to its customers. The rest of this debate is simply financial folks arguing amongst themselves.

Facebook is the greatest repository of data about people’s intentions, relationships, and utterances that ever has been created. Period. And a company that owns that much private data should be accountable to the public. The public should be able to review its practices, its financials, and question its intentions in a manner backed by our collective and legally codified will. That’s the point of a public company – accountability, transparency, and thorough reporting.

If Facebook wants to stay private and not be part of the social mores which we’ve built that govern major corporations (flawed though they may be), well I think that would be a major strategic blunder, one that would ultimately doom the company. It’s fine for all sorts of companies to stay private, for all sorts of reasons. But a company like Facebook, with its unprecedented grasp of our social data, should be accountable to the public. If it isn’t, we’ll migrate our “social graphs” to a company that is.

If Zuckerberg doesn’t want to be a public CEO and deal with the realities of that, as this Reuters piece argues, well, he should find a CEO who is willing to do the job.

(If you’re not up on the debate, here’s a primer.)

Author: John Battelle

A founder of NewCo (current CEO), sovrn (Chair), Federated Media, Web 2 Summit, The Industry Standard, Wired. Author, investor, board member (Acxiom, Sovrn, NewCo), bike rider, yoga practitioner.

90 thoughts on “What Everyone Seems to Miss In Facebook’s Private or Public Debate…”

  1. I suspect that the future of Facebook won’t be as simple as going public or staying private. The platform itself has transcended a mere product to become a massively important communications platform that wields tremendous influence.

    Think about it: if Google were to disappear today, what would happen? We could still find other search engines, email providers, or what have you. But what would happen if Facebook were to disappear today? It has become so ingrained into the culture so quickly that to consider it a company like Google, Wal-Mart, or Phillip Morris is to vastly underestimate it’s influence.

    I don’t have an answer for what kind of company Facebook is, but it certainly isn’t a company that fits into the past paradigms.

  2. I suspect that the future of Facebook won’t be as simple as going public or staying private. The platform itself has transcended a mere product to become a massively important communications platform that wields tremendous influence.

    Think about it: if Google were to disappear today, what would happen? We could still find other search engines, email providers, or what have you. But what would happen if Facebook were to disappear today? It has become so ingrained into the culture so quickly that to consider it a company like Google, Wal-Mart, or Phillip Morris is to vastly underestimate it’s influence.

    I don’t have an answer for what kind of company Facebook is, but it certainly isn’t a company that fits into the past paradigms.

  3. John, you’re off your rocker.

    Being a publicly-traded company, with the disclosures that that entails, has nothing to do with reporting to the general public. It has everything to do with liquidity for investors and cheaper and easier access to capital for the company. The fact that the general public also has access to the company’s disclosure reporting is only a by-product of those purposes.

    Now, if the US GOVERNMENT was to create laws requiring more disclosure of how Facebook (or Google, etc.) uses the information it gathers, that is a different story. And one I am in favor of.

    But that has nothing to do with going public or staying private.

  4. John, you’re off your rocker.

    Being a publicly-traded company, with the disclosures that that entails, has nothing to do with reporting to the general public. It has everything to do with liquidity for investors and cheaper and easier access to capital for the company. The fact that the general public also has access to the company’s disclosure reporting is only a by-product of those purposes.

    Now, if the US GOVERNMENT was to create laws requiring more disclosure of how Facebook (or Google, etc.) uses the information it gathers, that is a different story. And one I am in favor of.

    But that has nothing to do with going public or staying private.

  5. John, really, the only reasons people are saying you don’t know what you’re talking about is because you seem to think that Facebook being public would have any sort of user-privacy-driven impact on its data policies, and you naively imagine that Facebook’s users are its customers.

    Other than having any sort of understanding about how public listing of a company works, and how the business/customer relationship works, I’m sure you’re very well-informed about this issue and you know lots, and if “everyone else seems to miss” some stupid nonsense that you made up, well, that’s our loss.

  6. John, really, the only reasons people are saying you don’t know what you’re talking about is because you seem to think that Facebook being public would have any sort of user-privacy-driven impact on its data policies, and you naively imagine that Facebook’s users are its customers.

    Other than having any sort of understanding about how public listing of a company works, and how the business/customer relationship works, I’m sure you’re very well-informed about this issue and you know lots, and if “everyone else seems to miss” some stupid nonsense that you made up, well, that’s our loss.

  7. I’m not sure how you come up with core reason Facebook becoming a public company will be: “Accountability to its customers.”

    If Facebook becomes a public company, the accountability will be to SHAREHOLDERS. Shareholders and customers are not the same thing.

    If anything, going public will make them less accountable to their customers. They are going to look at monetizing ANYTHING and EVERYTHING they can to increase the bottom line.

    Do you think that means they are going to be more or less evil company? I’m not saying they’re either at the moment, but the potential for abuse is huge.

  8. I’m not sure how you come up with core reason Facebook becoming a public company will be: “Accountability to its customers.”

    If Facebook becomes a public company, the accountability will be to SHAREHOLDERS. Shareholders and customers are not the same thing.

    If anything, going public will make them less accountable to their customers. They are going to look at monetizing ANYTHING and EVERYTHING they can to increase the bottom line.

    Do you think that means they are going to be more or less evil company? I’m not saying they’re either at the moment, but the potential for abuse is huge.

  9. I’m sorry but like many others who’ve posted this argument simply makes no sense. Leaving aside the confusion over just who Facebook’s customers are (advertisers versus users), just how does trading shares make a company accountable to its customers or the public? At least this day and age, yes, I’m aware of Smithian and such arguments as to how a larger pool of investors creates a more communal responsibility, but we’re not seeing that by any stretch nor – much much more central to this article – does the public see any difference or have any concern over public versus private companies. Google being public has by itself created no perception differences for the public in measuring the ability of Google to meet perceived social and privacy obligations versus the ability of Facebook to do so. And most users/consumers certainly won’t care or perceive any meaningful difference in FB going public. And rightfully so, for no data suggests companies are more accountable (BP?? Enron?????).

  10. I’m sorry but like many others who’ve posted this argument simply makes no sense. Leaving aside the confusion over just who Facebook’s customers are (advertisers versus users), just how does trading shares make a company accountable to its customers or the public? At least this day and age, yes, I’m aware of Smithian and such arguments as to how a larger pool of investors creates a more communal responsibility, but we’re not seeing that by any stretch nor – much much more central to this article – does the public see any difference or have any concern over public versus private companies. Google being public has by itself created no perception differences for the public in measuring the ability of Google to meet perceived social and privacy obligations versus the ability of Facebook to do so. And most users/consumers certainly won’t care or perceive any meaningful difference in FB going public. And rightfully so, for no data suggests companies are more accountable (BP?? Enron?????).

  11. How can anyone think Facebook will be a better company by going public? I mean what’s the whole goal of wall street?
    That if you buy a share on monday, you need to make a significant profit by friday… How can any company be run in such way that would not affect customer service or do what’s right instead of what will make the most money?
    I hope Mark understands that money is not everything and the only way to continue growing Facebook is if he continues to only implement his ideas and the ones around him.

  12. How can anyone think Facebook will be a better company by going public? I mean what’s the whole goal of wall street?
    That if you buy a share on monday, you need to make a significant profit by friday… How can any company be run in such way that would not affect customer service or do what’s right instead of what will make the most money?
    I hope Mark understands that money is not everything and the only way to continue growing Facebook is if he continues to only implement his ideas and the ones around him.

  13. This is dead on. Of course, FB is within its legal rights to stay (semi-)privately held. But, it does risk user backlash at some point. It won’t always be a darling. Very soon, it will be seen as some evil empire. It’s inevitable. But, at least being publicly traded will aid in their PR efforts

  14. This is dead on. Of course, FB is within its legal rights to stay (semi-)privately held. But, it does risk user backlash at some point. It won’t always be a darling. Very soon, it will be seen as some evil empire. It’s inevitable. But, at least being publicly traded will aid in their PR efforts

  15. I also agree facebook has to much of our information to be so private i mean who knows what they can use against someone or company for that matter if they really wanted to

  16. I also agree facebook has to much of our information to be so private i mean who knows what they can use against someone or company for that matter if they really wanted to

  17. The beauty of these blogging engines and CMS platforms is the lack of limitations and ease of manipulation that allows developers to implement rich content and ‘skin’ the site in such a way that with very little effort one would never notice what it is making the site tick all without limiting content and effectiveness

  18. The beauty of these blogging engines and CMS platforms is the lack of limitations and ease of manipulation that allows developers to implement rich content and ‘skin’ the site in such a way that with very little effort one would never notice what it is making the site tick all without limiting content and effectiveness

  19. The intention of your article is clear, but your logic is deeply flawed.
    Response to a few things

    1) “accountability to its customers”
    We are not facebook’s customers.
    We are its product, which they sell to their real customers, the advertisers and data buyers.

    2) “the point of a public company – accountability, transparency, and thorough reporting”
    The obligations of this sort of a public company is mainly about fiscal accountability to its shareholders. It has nothing to do with any ethical obligations in handling our private data.

  20. The intention of your article is clear, but your logic is deeply flawed.
    Response to a few things

    1) “accountability to its customers”
    We are not facebook’s customers.
    We are its product, which they sell to their real customers, the advertisers and data buyers.

    2) “the point of a public company – accountability, transparency, and thorough reporting”
    The obligations of this sort of a public company is mainly about fiscal accountability to its shareholders. It has nothing to do with any ethical obligations in handling our private data.

  21. Let me help you sleep better at night. Your entire (2 minute) thesis is based on a supremely flawed premise. When 580,000,000+ users render information to Facebook (and their only real customers aka advertisers) it ceases to be private. When you check-in, it ain’t private. When you “like” and “poke” and “friend” and whine that Suzy wouldn’t kiss you after the dance, it ain’t private.

  22. Let me help you sleep better at night. Your entire (2 minute) thesis is based on a supremely flawed premise. When 580,000,000+ users render information to Facebook (and their only real customers aka advertisers) it ceases to be private. When you check-in, it ain’t private. When you “like” and “poke” and “friend” and whine that Suzy wouldn’t kiss you after the dance, it ain’t private.

  23. The creation of a partnership for the some purpose of investing in a specific pre-identified company at pre-identified terms is a fundamentally different animal than a VC partnership deciding to invest into a company after the LPs committed capital

  24. The creation of a partnership for the some purpose of investing in a specific pre-identified company at pre-identified terms is a fundamentally different animal than a VC partnership deciding to invest into a company after the LPs committed capital

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