Going public will challenge Facebook to keep its "cool"

Facebook CEO Mark Zuckerberg kept his signature laid-back vibe as he led his company through the road show leading to its IPO on May 18.

Facebook CEO Mark Zuckerberg kept his signature laid-back vibe as he led his company through the road show leading to its IPO on May 18. Though lacking a tie, he answered questions about growing ad revenue as he worked to prove his company's worth to potential investors.

Facebook received some negative feedback along the way, including New York investors who were troubled by the lack of time given to pose questions and a belief among some analysts and investors that projected stock prices overvalue the company and overestimate its ability to keep growing at a rapid rate.

Culture change
With support from COO Sheryl Sandberg and CFO David Ebersman, Facebook pulled off the biggest tech IPO ever. Its immediate post-IPO market value was $104 billion. On day one of trading, shares opened at $38, rose to $45, and closed at $38.23.

Now trading as a public company under the name FB, many wonder if its famously cool, yet efficient culture and communications tactics will change.

Recent IPOs

LinkedIn
Date: May 2011
Price: $45/share
Generated: $352.8 million
Value of the company: $4.25 billion

Groupon
Date: November 2011
Price: $20/share
Generated: $700 million
Value of the company: almost $13 billion

Zynga
Date: December 2011
Price: $10/share
Generated: $1 billion
Value of the company: $8.9 billion

Yelp
Date: March 2012
Price: $15/share
Generated: $106.5 million
Value of the company: nearly $900 million

“While Zuckerberg may have been able to make entrepreneurial decisions at whim, he now has to answer to a board of directors and shareholders,” says Rosanna Fiske, global strategic communications program director at Florida International University. 

“This creates a turnaround in how communications may have been functioning,” she adds, “from silence or hype before the IPO to much more accurate and transparent communications after.”

Brandee Barker, former corporate communications director at Facebook who now works as a communications consultant for companies including Uber and Quora, is confident Facebook's culture will remain constant, mainly because of Zuckerberg's presence at the helm.

“He very much drives the culture of Facebook and is pretty resolute in instilling its values as it has grown,” she explains, adding that for shareholders and new investors the company's culture is one of its largest strengths and one they hope remains solid.

According to Karen Drake, senior communications director at TripAdvisor, which went public last December, communication is key to a successful IPO.

Making that happen, she adds, means “continuing to build solid relationships with business and financial media well before going public” so journalists are educated on the company's objectives and long-term strategy.

As a publicly traded company, regulatory guidelines will impact Facebook's financial communications strategy, such as adapting to the rigors of regular and mandatory earnings disclosure. However, most believe its standard communications tactics, such as interacting with the press through blog and Facebook posts, will not waver.

“It is truly an impressive and deep bench of players that now run that department,” observes Barker. “They're going to be very strategic in how they handle communications going forward; they have been for many years.”

Claire Koeneman, EVP and financial communications practice leader at Hill+Knowlton Strategies, says the management team of post-IPO companies must establish a communications protocol so all employees are prepared to react in public-facing situations, whether it's a media re-quest or a dinner party.

“We stress the importance of each employee having an agreement on a media policy,” she notes. “There must be a deep understanding that you need to preserve the company's integrity and that, since you're public now, things that happen to the business can't be discussed.”

Internal considerations
Internal communications will play an important role as many employees obtain newfound wealth, which may impact how they view their jobs, motivations, and interest in staying or leaving the company, says Bill Harris, CEO of financial consultancy Personal Capital, which late last year raised $25 million for itself in two rounds of financing.

“It's likely to be particularly intense with Facebook because the scale, size, and breadth of the newfound wealth is so breathtaking,” he points out. “In addition, at least in certain instances, there are legal and tax [issues] that some people will be forced to deal with sooner.”

Internal relations efforts need to make it clear that company leadership understands the IPO's financial and tax ramifications on the personal financial situation of not only the new millionaires, but also the rest of the organization.

He adds that Facebook should overcommunicate with employees in a way that expresses its desire to work for good outcomes for all staffers and shareholders.

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