“Facebook was not originally created to be a company. It was built to accomplish a social mission — to make the world more open and connected.” — Mark Zuckerberg ? Facebook’s imminent IPO will complete Mark Zuckerberg’s journey from bedroom coder to Wall Street-backed Silicon Valley tycoon. Facebook and Zuckerberg embark on mega-IPO FACEBOOK unveiled plans for a record Internet IPO that could raise as much as US$10 billion, but made it clear CEO Mark Zuckerberg will exercise almost complete control over the company, leaving investors with little say. The Harvard dropout, who launched the social networking phenomenon from his dorm room, will control 56.9 percent of the voting shares in a company expected to be valued at up to US$100 billion when it goes public. Facebook says it has 845 million active monthly users. Wednesday’s long-awaited filing kicks off a process that will culminate in Silicon Valley’s biggest coming-out party since the heyday of the dotcom boom and bust. In its filing Facebook says it is seeking to raise US$5 billion, but that is a figure used to calculate registration fees, among others, and analysts estimate it could tap investors for US$10 billion. That would value the company at US$100 billion, dwarfing storied tech giants such as Hewlett Packard Co. while validating the explosive growth worldwide of social media as communication and entertainment. Zuckerberg’s economic control of about 28 percent of the shares would be worth US$28 billion at a US$100 billion valuation, ranking him as the fourth-richest American. The 27-year-old’s ownership position means Facebook, a company dissected in 2010’s Oscar-winning “The Social Network,” will not need to appoint a majority of independent directors or set up board committees to oversee compensation and other matters. The company’s ownership structure and bylaws go against shareholder-friendly corporate governance practices put in place in the United States after years of investor activism. As Facebook states in its prospectus, Zuckerberg will “control all matters submitted to stockholders for vote, as well as the overall management and direction of our company.” Zuckerberg struck deals with several Facebook investors that granted him voting rights over their shares in all or most situations. Those included Yuri Milner’s DST Global, venture capital firm The Founders Fund, and entities affiliated with Technology Crossover Ventures, the IPO filing shows. Google Inc’s Sergey Brin and Larry Page retained control of the search giant through similar arrangements and the Sulzbergers did much the same at The New York Times. “Zuckerberg, at the time, probably had his choice of investors,” said Steven Kaplan, a professor at University of Chicago’s Booth School of Business who researches venture capital and corporate governance. “He basically had the ability to say ‘my way or the highway.’” “The downside of doing this is that the value of Facebook may be slightly lower than it would be if he were not retaining control.” Its IPO prospectus shows that Facebook generated US$3.71 billion in revenue and made US$1 billion in net profit last year, up 65 percent from the US$606 million it made in 2010. “We often talk about inventions like the printing press and the television,” Zuckerberg said in a letter accompanying the documents. “Today, our society has reached another tipping point.” “The scale of the technology and infrastructure that must be built is unprecedented.” Zuckerberg agreed to cut his compensation from US$1.48 million last year to US$1 effective Jan. 1, 2013, following the example of Apple founder Steve Jobs. Facebook’s growing popularity has pressured entrenched Internet companies from Yahoo to Google Inc. In 2011, the social network overtook Yahoo to become the top provider of online display ads in the United States by revenue, industry research firm eMarketer says. A US$10 billion IPO would be the fourth-largest in U.S. history after Visa Inc., General Motors, and AT&T Wireless. The prospectus said 85 percent of Facebook’s 2011 revenue was derived from advertising. Facebook aims to be more attractive to potential large advertisers. It has improved its ad targeting capabilities as it collects user data through new features such as the Timeline, said George John, founder of Rocket Fuel, a digital marketing company. Advertising revenue increased 69 percent in 2011 from 2010, and its average revenue per ad increased 18 percent. “As Facebook gathers more and more users’ time and data, it makes sense for advertisers to get more serious about allocating more budget to Facebook,” he said. Yet in his letter to investors, Zuckerberg stressed Facebook’s “social mission” over the pursuit of profits. “Facebook was not originally founded to be a company,” he said. “Simply put: we don’t build services to make money; we make money to build better services.” He laid out his vision for a company that remained grounded in an engineering culture, devoting several paragraphs of his letter to what he called “The Hacker Way” at Facebook. Some of Facebook’s most successful products — including Timeline, chat and video — emerged from “hackathons” where coders gathered to build out prototypes and compare notes, Zuckerberg wrote. “Hackers believe that something can always be better, and that nothing is ever complete,” he said. “There’s a hacker mantra that you’ll hear a lot around Facebook offices: ‘Code wins arguments.’” Born in 1984 in White Plains, New York, Mark Zuckerberg’s mother was a psychiatrist and his father a dentist. Together with his three sisters, he was bought up in Dobbs Ferry, a wealthy village nearby. Zuckerberg graduated from a private high school in New Hampshire in 2002 and went straight to Harvard University to study psychology and computer science, which was already both a passion and a source of income. At age 12 he created messaging software he called ZuckNet that alerted his father when a patient was in his waiting room. By 18, Zuckerberg was available for hire online as a jobbing coder, touting his expertise in a more than half a dozen programming languages. On campus at Harvard he quickly gained a reputation as a computer whizz. In 2003 he created the Facemash Web site, a forerunner to Facebook that presented visitors with pictures of two students and invited them to vote on who was more attractive. The same year he met his girlfriend, Priscilla Chan, a fellow Harvard student. (SD-Agencies) ? | 