Our video team has finished processing the rest of our video interview with famed tech investor Roger McNamee. We’ll be running the rest of it throughout the day.
This clip seems particularly relevant in light of yesterday’s news that Facebook may be delaying its IPO, and the speculation that the distraction of the Instagram acquisition was to blame.
This quote by PrivCo analyst Sam Hamadeh — which we ran in our Ticker yesterday — once again sums up the disconnect between the Valley and Wall Street.
“This now risks the IPO bumping up against the Memorial Day 2-week IPO deadzone as well, which would further push it to June if the SEC doesn’t quickly approve the new filing, as it probably won’t. Regardless of whether Facebook’s recent acquisition made business sense, the timing of them was foolish, risks delaying the IPO timeline and caught even Morgan Stanley off guard.”
I was actually embarrassed for Hamadeh when I read that. He couldn’t be more out of touch with the reality on the ground here. Why on earth would you want to own a stock of a company that prioritized an arbitrary expected IPO date over an acquisition that was absolutely pivotal to its future? It’s spoken like someone who has never built a company — and certainly not acquired one in an intense competitive bidding war.
Deals like these don’t sit around and wait for an IPO schedule. Instagram was in play. As we wrote before, the $1 billion price tag was as much about keeping the company out of the hands of Google and Twitter, as it was about anything else.
Facebook’s Mark Zuckerberg knew his competitors wanted Instagram, and he knew he had to make the deal happen — immediately. This has been one of Zuckerberg’s most important skills to date that his competitors have lacked — a remarkable ability to close the deal. That couldn’t wait a day, much less another month.
I hate to say it, because as a user I need Twitter more than Facebook. But on a company level, we may well look back on Twitter’s foiled attempts to get Instagram as the moment when Twitter became an also-ran.
These decisive moments make or break a company. If Zuckerberg were letting them pass because of some arbitrary IPO window, this would be a stock you wouldn’t want to own.
Also, in case it needs to be stated: THIS IS FACEBOOK, the IPO Wall Street has been salivating over for years. Does anyone really think pushing it back a few weeks materially affects how it will do? Of course not. Sure the push-back is inconvenient, but the only people it really affects are traders and bankers. And Zuckerberg certainly isn’t running the company for them.
In this short clip below, McNamee explains — in case you still don’t get it — why Instagram was a site that Facebook absolutely had to own, timing of an IPO be damned.
Angry banker courtesy of Shutterstock.