Lots of news about Facebook's Initial Public Offerring (IPO) with the company filing papers this afternoon to raise at least $5 billion and begin to sell stock in the spring. Facebook has about 3,000 employees in Silicon Valley and with the IPO many will become millionaires. Good news all around - good for the employees, good for surrounding businesses that they frequent and really good for the entire state of California. More of this in a minute.
Most know that Facebook was started (and first incorporated as Thefacebook) by Mark Zuckerberg and some classmates when he was a student at Harvard in February 2004. Shortly after the company was started though, Zuckerberg moved it to Palo Alto, California. At the time I was on the Massachusetts Networking and Communications Council Board and I clearly remember members lamenting the loss. Nobody knew how huge the company would eventually become but member guts were telling them it was going to be big.
California's Silicon Valley is a magnet for tech companies and they've done well over the years. As an example - in 2006 - Google went public, resulting in huge tax filings. To give you an idea how much money we're talking about - in 2006, sixteen (yes only 16 people!) high-level Google employees cashed in 9 million shares valued at $3.7 billion which meant they owed the state (again just 16 people) around $380 million in taxes. Resulting Google tax money was huge for the state allowing the Governator (Arnold Schwarzenegger) to spend big bucks on roads, schools, etc and help him get re-elected.
That Google IPO was massive in 2006 and Facebook's will be a lot bigger. On that first day in 2006 Google's market capitalization closed around $27 billion. Facebook's could be up to 4 times as large putting it over $100 billion.
Simply put - we (Massachusetts) lost it. We had Facebook in our state and we lost it. We lost the employees, we lost their business and we lost the tax revenue. Am I oversimplifying - perhaps. Can't deny though - huge gain for California, huge loss for Massachusetts.
