The weight of the world is now on Zuckerberg’s shoulders. As co-founder of Lastminute.com, I can, in a small way, empathise

I can’t claim to have had anything like the success of Mark Zuckerberg, but as Facebook floated on the Nasdaq stock exchange today, I could empathise in a very small way with what its founder must be feeling. In March 2000, following a period if intense media interest, my own company, Lastminute.com, went public, and was priced the day Nasdaq peaked, at £571m. It increased its price during an accelerated road show by more than any other European initial public offering (IPO). The thinking then was technology IPOs were like Giffin goods – the more expensive, the more demand.

Facebook is at a different stage. Back then, the internet had very few profitable giants. We were loss-making and had the revenues, as one analyst wisely pointed out, of a small pub. Facebook is very profitable, making $1bn last year, and has jaw-dropping reach. Its execution has been almost flawless (excluding the occasional privacy lapse and mobile) and it is now valued at more than $100bn – 100 times greater than our business.

Yet there are superficial similarities. Both had young founder chief executives. I was 31 when Lastminute.com went public (old by today’s standards: my co-founder Martha Lane Fox was 28). I had very little real idea of what to expect from investors and of managing large teams and crazy growth. Zuckerberg has had eight years to build a world-class, experienced team around him. Facebook has the benefit of the pioneers that have gone before it, they have lowered the costs of web technology dramatically and given a new generation digital management experience.

Zuckerberg is in the mould of Jeff Bezos of Amazon, Steve Jobs of Apple, and Google’s Larry Page – an idealistic, passionate, driven, impatient, obstinate, obsessive CEO, who can drive a team to long-term rather than short-term goals. He will have 57% voting control – Martha and I had no control, and were never advised about the possibilities of such things as “dual-class voting stock“.

But, like Facebook, our business was a hot stock that was chased up by retail investors. We saw how this creates real stress. People bought into our business at a high valuation and believed it could only go one way. Investors see this as free money, and if it isn’t (in our case the bubble burst and the stock went down 95%, until we recovered) then sentiment changes fast. In such situations, motivation has to come from the team around you, from growth and the love of customers for your product – you cannot depend on support from critical investors and an increasingly cynical media.

Despite the massive boost to his personal wealth, which is now valued at $25bn, there are things Zuckerberg will hate about going public: the results, saying the same thing over and over again to investors when he would rather be driving the business; the market sentiment that will make his stock a hedge fund plaything. He will hate being asked about the share price, as if he controlled that too. He will hate people who want him to focus on short-term profits as opposed to his long-term mission. He will probably hate having to worry about how to invest his money, as that doesn’t seem to drive him except as a way of keeping the score.

Investors, in turn, should look for Zuckerberg to keep his confidence – not arrogance. For the valuation to double over five years (the sort of return investors need to believe in) they will want him focused. He will need to demonstrate that with his fantastic war chest and user base he can take the business into mobile phones, payments, identity, big data analytics, social commerce … In a similar way the lastminute.com IPO valuation was based on a belief that the business was not about selling low-margin cheap flights but would continue its expansion into a greater share of customers’ leisure spend across different devices and into different nations.

The night we went public and raised £120m, Martha and I were very subdued. It felt as if we had the weight of the world, and our employees, on our shoulders, and that the company was priced for perfection. That was massive pressure. However, now I look at Zuckerberg and see someone who really does have the weight of the world on his shoulders, is only 28, and doesn’t have a proper business partner.

I had hoped Facebook would resist the temptation that we also felt, to raise the price too much. In our case I’m not sure the added pressure was worth it, and in theirs they really don’t need the extra money. I suspect Zuckerberg will feel that pressure, that his world is surreal. But he will be happy that he has been given this chance to continue to change the world – and follow his passion. And that his creation’s future is assured for some time to come.

Comparing public user engagement suggests that Google+ is still a niche pursuit, despite Google claiming it has 170 million people signed up – while Pinterest’s attraction remains high

Away from all the hubbub over that other social network, how is Google+ – described by Larry Page and others as the new “social spine” of the company – doing?

As far as user numbers go, swimmingly: Page said that it has crossed the 100 million user mark. In April, Vic Gundotra said that “More than 170 million people have upgraded to Google+”. That’s a lot. That’s more than Twitter claims as monthly active users (140 million).

But as far as user engagement goes, previous studies have said that it’s not a hit. What we don’t know is how many of those 170 million are active users of Google+ in the past 30 days. The suspicion, because Google has been evasive, is that the answer is: not many at all.

And now a new analysis from RJMetrics is reinforcing that suspicion. It says:

• The average Google+ post has less than one +1, less than one reply, and less than one re-share.

• 30% of users who make a public post never make a second one. Even after making five public posts, there is a 15% chance that a user will not post publicly again.

• Among users who make publicly-viewable posts, there is an average of 12 days between each post

• A cohort analysis reveals that, after a member makes a public post, the average number of public posts they make in each subsequent month declines steadily. This trend is not improving in newer cohorts.

The obvious question to ask of that analysis – which, as a caveat, is only made against public posts (because private posts are, well, private, and there’s no way of knowing how many of them there are) – is how it compares against other social networks, partciularly Facebook, Twitter and the new kid on the block, Pinterest.

Note too that these are averages. There will be significant extremes; this is unlikely to be a normal curve. Most likely at one end there is a colossal number who don’t do anything (and whose engagement may have been minimal – and perhaps nonexistent), while at the other is Robert Scoble, who never stops.

That would suggest the likely distribution of Google+ users is bathtub-shaped – high at both ends, very low in the middle. Because the people who like it really like it, as with any social network.

So how high are the ends and the middle?

Analysing the sides

The Google+ data analysing 40,000 randomly-chosen users, from RJMetrics, says that the chances are good that someone will make a second post – 70%. But, says Robert Moore, the author of the post, “after that, Google Plus does not perform as well as other social services that we have analysed. In charts like these, we typically expect to see the probability of repeat posts shoot up to well north of 90% by the time the user has made several posts. This is basically the ‘once you’re using it you’re hooked’ principle.”

But instead, he says, “with Google Plus, this number never crosses the 90% mark. Even after having made five such posts, the chance of making a sixth is only 85%. That means that 15% of people who have made five posts never came back to make a sixth.”

It’s possible of course that the sixth is made privately – but it seems counterintuitive for someone to post publicly five times in a row and then shift entirely to private sharing.

Moore also notes that Google+ users “are less and less likely to make additional posts even a few months after initially joining.”

In other words, Google+ just isn’t sticky. Or, alternatively, it’s attracting people who start and then go “periscope down”.

But is this a pattern that’s common to social networks? Not at all, he says, and contrasts it with Pinterest – which recently won an investment round valuing it at over $1bn.

Pinterest: pinteresting

RJMetrics did a similar analysis against Pinterest in February, and found completely different behaviour. “Pinterest’s traffic charts aren’t hockey sticks – they’re rocket ships,” Moore noted then.

It found that Pinterest was retaining and engaging users two to three times more efficiently than Twitter had been at a similar stage in its history. Over 80% of “pins” were re-pins from elsewhere on the site, indicating a lot of viral activity. (For Twitter at the same age, only 1.4% of tweets were retweets.)

But it was the user engagement that was surprising. By breaking people down into cohorts based on the months in which they joined, it could follow how active they were – with the expectation that they would drift away and become less active. But instead, the older cohort remained just as active.

“This either means that no one who starts using Pinterest ever stops or – more likely – that users who continue to use Pinterest become so much more engaged over time that their activities fully make up for those of any users who leave,” Moore noted.

Of course a key point about Pinterest compared to Google+ is that Google’s nascent social network is much larger, so you might not expect the same level of excitement on average. Another potential factor is that many new joiners are in effect co-opted in via their Gmail account, which “upgrades” them to Google+ whether they particularly want to or not. That’s always going to degrade the level of user interaction compared to something that people actively choose to join.

But Pinterest users look like a determined bunch. “Between 40% and 60% of [Pinterest] users are still actively pinning even as far out as week 8,” notes Moore. “This may seem like a steep dropoff, but for a consumer internet business it’s exceptionally good.”

And then, Twitter

And for comparison, he goes back to a Twitter analysis he did in 2009 – when the service was just three years old. I did ask Moore whether there have been any more recent analyses of Twitter; he doesn’t (though might run one now).

What he found then was that Twitter decay rate – how many unique tweeters were still at it 8 weeks ahead – was down around the 20-22% mark. And also: “Once a user has tweeted once, there is a 65% chance that they will tweet again. After that second tweet, however, the chance of a third tweet goes up to 81%.” And: “If someone is still tweeting in their second week as a user, it is extremely likely that they will remain on Twitter as a long-term user.” Remember that this was back in 2009, when it was still part of a comparatively tiny demographic, and by his estimate had about 49 million accounts. Now that’s up to 140 million, according to Twitter’s release earlier this week.

But here’s his conclusion on Pinterest in February: “Pinterest demonstrates some of the strongest user engagement, retention, and virality metrics I have ever seen in an online business. The company has found tremendous success among its core demographic”.

OK, and now how about Google+? Less good. In fact all the metrics are less good (apart from the user numbers). On average, a user waits 15 days between making their first public post and making their second. This number declines with each subsequent post, but not drastically. There is an average of 10 days between a user’s fifth and sixth public posts.

But we’ve already brought up the caveat about public posts, and it’s entirely possible that some people make their first post in public, but after that restrict themselves to private posts, or keep posting with a constant frequency but only make their posts public occasionally. (One challenge is that it’s hard, if you’re a Google+ user who’s in someone’s circle to which they post, to know whether that post is public or not. So Google+ users themselves aren’t in a great position to know this.)

Next, Moore looks at the much more public face of Google+: +1s, replies and sharing. He writes:

Of all the categories, we feel that this is the least likely to be biased by the fact that we only studied public posts. These public posts will still be visible to each member’s private networks, and actually could attract +1s, shares, and replies from external users as well. If anything, we would expect our numbers here to be higher than in the general population.

Nope. From 70,000 posts, he gets
• an average of 0.77 +1s per post (or, put another way, out of 10 posts, 3 won’t even get the equivalent of a Facebook “Like”)

• an average of 0.54 replies per post (ie, about 1 reply per two posts – no wonder people don’t post; it’s unrewarding)

• an average of 0.17 re-shares per post (or slightly less than 1 in 5)

I asked Moore what, of all the data about Google+, he found the most remarkable. “It’s not the absence of activity that we find noteworthy here, but the drop-off,” he responded. “You can speculate on the reasons why people stop posting publicly (in certain cases maybe it was a behavioural change from wanting to post publicly to wanting to post privately), but the drop-off is so consistent across the population we studied that we speculate there may be an underlying drop-off in overall activity.”

He added: “I would not expect our stats on likes, +1s, and re-shares to be biased downward. Activities like these on public posts are just as visible to private circles and also can be acted upon by members of the public.”

In a statement to Fast Company, which saw the study early, Google said: “By only tracking engagement on public posts, this study is flawed and not an accurate representation of all the sharing and activity taking place on Google+. As we’ve said before, more sharing occurs privately to circles and individuals than publicly on Google+. The beauty of Google+ is that it allows you to share privately – you don’t have to publicly share your thoughts, photos or videos with the world.”

Conclusion

It’s interesting to look back at what Steve Rubel, a PR expert, wrote back in June 2011 when Google+ started.

On the plus side, pun intended, the company has clearly rethought how people may want to share and they have learned. Google+ is basically what Google Buzz should have been. However, unlike its predecessor, there’s no easy way for consumers to pull in content from other networks – at least for now.

However, at least where we sit today, I believe that Google+ will leave consumers nonplussed – e.g. bewildered. While the interface is terrific and Circles and Hangouts both offer a strong value proposition, Google+ doesn’t solve a consumer problem that Facebook already hasn’t – or soon will – solve.

jobs

• Facebook breaks even in first day of trading
• IPO smashes record for trading volume with 565m shares
• Underwriters step in to shore up $38 offer price
• Launch delayed amid confusion at Nasdaq
• Follow our Facebook shareholder wealth tracker here

8.30am ET/1.30pm BST: Mark Zuckerberg will ring the bell for the opening of the Nasdaq stock market at 9.30am as he kicks off a share sale that will value the company at $104bn.

We’ll be live blogging the day’s events here in New York, and you can see how the fortunes of Zuckerberg and the social network crew rise (or fall).

Not since Google’s initial public offering (IPO) has a share sale been as closely watched. It’s Super Bowl for social media: every commentator in the land has an opinion on whether the firm is really worth that sort of cash, and is lining up to share it.

At $104bn, Facebook is being valued at more than the combined value of Nike and Goldman Sachs. Last year Facebook had revenues of $3.7bn. Goldman’s were 10 times that.

But this is a company with massive potential. Facebook will have more than a billion people logging in to its service this year – that’s more than three times the populations of the US – and it hasn’t got started in China. Nearly 400 million people log on six days a week. In the first three months of this year those people “liked” or commented on Facebook items 3.2bn times a day.

Google added a verb to the lexicon; Facebook redefined “friend” and “like”. Now Zuckerberg has to find a way to make his social network live up to its massive promise.

8.30am ET/1.30pm BST: Mark Zuckerberg will ring the bell for the opening of the Nasdaq stock market at 9.30am as he kicks off a share sale that will value the company at $104bn.

We’ll be live blogging the day’s events here in New York, and you can see how the fortunes of Zuckerberg and the social network crew rise (or fall).

Not since Google’s initial public offering (IPO) has a share sale been as closely watched. It’s Super Bowl for social media: every commentator in the land has an opinion on whether the firm is really worth that sort of cash, and is lining up to share it.

At $104bn, Facebook is being valued at more than the combined value of Nike and Goldman Sachs. Last year Facebook had revenues of $3.7bn. Goldman’s were 10 times that.

But this is a company with massive potential. Facebook will have more than a billion people logging in to its service this year – that’s more than three times the populations of the US – and it hasn’t got started in China. Nearly 400 million people log on six days a week. In the first three months of this year those people “liked” or commented on Facebook items 3.2bn times a day.

Google added a verb to the lexicon; Facebook redefined “friend” and “like”. Now Zuckerberg has to find a way to make his social network live up to its massive promise.

8.52am ET/1.52pm BST: Trading action on Facebook shares is not likely to commence until 10:30am ET at the earliest, as bankers work through the mechanics of the offer, market sources said.

9.13am ET/2.13pm BST: The delayed debut of Facebook stock this morning affords us time for a walk down memory lane… back to 2004, when FB chief Mark Zuckerberg was still just a cocky college student bragging about his hacking exploits in instant messages to friends.

Those messages are now a matter of public record. The Guardian’s Josh Halliday writes:

Zuckerberg appears to confirm in one message that he secretly hacked into the website of the Harvard University newspaper, the Crimson, by guessing the emails and passwords of two people in the college database.

“So I want to read what they said about me before the article came out and after I complained,” he told a friend. “So I’m just like trying the email/passwords of everyone who put that they’re in the Crimson. I wonder if the school tracks stuff like that.”

In another message, Zuckerberg boasts about deactivating college students’ accounts on the internal Harvard social network, ConnectU. “I got bored so I started deactivating accounts on ConnectU haha,” the future cyber-grandee writes.

9.23am ET/2.23pm BST: CNBC, which is tracking the Facebook IPO, is reporting on the overnight “hackathon” at the company’s Menlo Park, California, campus. In the run-up to today’s big splash, employees spent the night at their place of work writing computer code, over-caffeinating and giving their eyes a little extra practice staring at computer screens. The event reflects the company’s youthful, creative, spontaneous, creative culture.

Employees ordered Chinese food and there was talk of them making a run to In-n-Out Burger, CNBC reports. How does the news change your bet on what Facebook stock will do today? Let us know in the comments.

9.28am ET/2.28pm BST: Hackathon Update. It turns out there was one Facebook face who declined to participate in last night’s ritual of camamaderie and computer fun. Zuckerberg apparently called it a night early in the evening, Josh Halliday reports. He went home to his girlfriend Cilla and their Hungarian sheepdog, Beast.

When you’re the boss you get to do that.

9.30am ET/2.30pm BST: Mark Zuckerberg has just rung the bell opening the Nasdaq market. He did so from a stage at the company’s Menlo Park HQ. Then he hugged COO Sheryl Sandberg. The stage is full of other FB execs, with a sea of employees all around. A boom camera is capturing the action in the cheering, waving crowd. Looks like Bonnaroo. “A Woodstock event,” someone on CNBC just called it.

9.39am: The scene at Facebook HQ in Menlo Park in the run-up to the IPO. The company is valued at $104 billion as shares go on sale to the public.

9.36am ET/2.36pm BST: The Guardian’s Dominic Rushe has been talking to David Kirkpatrick, author of The Facebook Effect – the only book written so far with Facebook’s cooperation – and a man who has spent many many hours with Mark Zuckerberg.

“His impact on the world will be as least as big as Bill Gates and probably already has been,” Kirkpatrick tells Rushe. “Like Gates I’m positive he is going to end up being one of the world’s great philanthropists. I believe he has a very strong social conscience.”

He says this will be a big day for Zuckerberg but that while the Facebook boss may party later, he’ll try to keep things as normal as possible once he has rung the bell.

Then the real work begins…

“I spoke to Peter Thiel [Silicon Valley investment legend and one of Facebook's early backers] and he said Facebook had this peculiar quality, it will either completely dominate or it will completely go away. I don’t think it’s going away anytime soon though.”

Fitzpatrick predicts that Zuckerberg could soon be the world’s richest man.

9.40am: One take on the big offering.

Wocka! Wocka! twitter.com/dmataconis/sta…

— Doug Mataconis (@dmataconis) May 18, 2012

10.10am ET/3.10pm BST: Facebook is summoning great spectacle in its rollout this morning – but will the stock price hold up? When the excitement dies, will the company warrant its $104 billion valuation, and the $38 share price?

One main place investors locate value in Facebook is its potential power as an advertiser. With 900 million users and counting – and a potentially vast market in China still waiting to be tapped – Facebook has an unparalleled capacity to put ads in front of eyes.

But earlier this week, US auto manufacturer GM decided that those ads weren’t worth it, ending its Facebook campaign. The company had been spending $10 million a year to advertise on the site, but none of the reports measuring those ads’ profitability came back positive. The Economist spoke with Chris Perry, marketing chief for GM’s brand Chevrolet, who confirmed that “a routine marketing review concluded that the site delivered ‘insufficient’ results.

Companies still believe that Facebook is an indispensable tool for spreading buzz about new products, however:

That viewpoint was echoed by the senior media buyer at a major Detroit ad agency, who asked not to be identified by name because he is not authorised to discuss strategy with the press. Based on clicks-throughs alone, he says, Facebook “doesn’t pay off.” His agency’s approach is to use the service as part of broader social media campaigns.

10.21am ET/3.21pm BST: Facebook co-founder Eduardo Saverin came in for a drubbing last week when it was revealed that he had disclaimed US citizenship in favor of residence in Singapore, which does not have a capital gains tax. Saverin responded to the criticism by saying that his move was not a tax dodge; he simply prefers Singapore.

Last night Saverin set the controversy aside to offer his former colleagues a hearty congratulations on his personal Facebook page. He misspelled his co-founder’s name – but it’s the thought that counts?

On the eve of the Facebook public float, 8-plus years in the making, I as co-founder wanted to look back and cherish Facebook’s early beginning. Congrats to everyone involved in the project from day one till today, and I especially wanted to congratulate Mark Zukerberg [sic] on keeping tremendous stead-fast focus, however hard that was, on making the world a more open and connected place.

10.37am ET/3.37pm BST: A major status update for the Facebook cofounder: as Mark Zuckerberg rang the bell to open the Nasdaq exchange, his account automatically spread the news.

Zuckerberg tagged fellow executives Chris Cox, vice president of product; the chief finance officer David Ebersman; the vice president of finance Cipora Herman; and his trusted No 2, Sheryl Sandberg.

10.46am ET/3.46pm BST: Facebook as a growing concern. Whatever happens with the stock price today, the immense market draw of the company is plain to see in a chart tracking users, from about 300 million in March 2009 to 900 million today (blue is all Internet users worldwide; brown/gray is FB users):

10.42am ET/ 3.42pm BST: T-minus three minutes and counting: Nasdaq has just announced that trading in Facebook shares will begin at 10.45am ET.

11.02am ET/4.02pm BST: Reuters is reporting that the opening of trading has been pushed back a bit:

RT @ProducerMatthew: Reuters: Facebook IPO extended by additional 5 minutes, to trade at 11:05 AM ET – NASDAQ

— Anthony De Rosa (@AntDeRosa) May 18, 2012

11.23am ET/4.23pm BST: Nasdaq has announced that there has been a delay in the start of Facebook trading. We’re reaching out to sources at Nasdaq to find out more about the holdup.

The latest delay is the third or fourth of the morning. Nasdaq itself puts out time call information. Meaning the market itself is failing to predict when the market will go to work.

The Wall Street Journal is now reporting that traders are having problems changing or canceling their orders ahead of the Facebook IPO.

Will Zuckerberg have to change his status again?

11.27am ET/4.27pm BST: IPO delayed indefinitely by glitch in market: This isn’t the headline Facebook was looking for this morning.

Wow, Nasdaq found the only way possible to upstage the Facebook IPO.

— Heidi N. Moore (@moorehn) May 18, 2012

11.30am ET/4.30 pm BST: Mark Zuckerberg and colleagues ringing the opening bell for Nasdaq at 9.30am ET.

Looks anticlimactic now.

11.30am ET/4.30pm BST: And they’re off. Facebook is now on sale – and the first shares cross at $42.05, a good deal higher than the $38/share rollout price.

For the time being, at least, the company has 100 billion reasons to cheer.

11.34am ET/4.34pm BST: How big is trader interest in Facebook? 82 million shares were traded in the first 30 seconds, according to Nasdaq.

The stock price is bumping along at the $40-$41 level. You can follow the stock price here.

11.36am ET/4.36pm BST: How will Facebook shares perform in the first day of trading? Tell us what you think.

For extra credit, let us know in the comments what you think the high price and the low price of the day will be.

11.50am ET/4.50pm BST: As the Facebook share price settles back to $38, The Guardian’s Nils Pratley contributes his analysis of the pricing dynamics. If the stock goes too high, insiders who sold in advance of the IPO may resent the investment bank. A share price of around $41 would satisfy most everyone, Pratley writes:

A 10% pop should satisfy the IPO advisers. When you start getting to 20%-plus, the insiders who are selling feel short-changed and accuse the investment bank advisers of misjudging demand. 10% is ok – it meets the “leave something on the table for the next person” rule.

11.56am ET/4.56pm BST: A look back at the hot tech IPO of 20 years ago:

Celebrating Facebook IPO today while reflecting on AOL IPO 20 years ago. Valuation was $70 million. Most thought Internet was a fad. #wrong

— Steve Case (@SteveCase) May 18, 2012

12.03pm ET/5.03pm BST: One stock that really doesn’t like what it’s seeing in the Facebook IPO: Zynga, the Internet gaming company.

Zynga, which depends on Facebook for a platform for its games, had an underwhelming IPO of its own in December, when it fell 5 percent in its first day of trading.

So far today Zynga is down 13 percent.

UPDATE 12.07pm ET: Trading in Zynga shares has now been halted.

12.18pm ET/5.18pm BST: Facebook stock has been out of the gate for 50 minutes. After opening at just above $42 the stock dropped to the break-even level of $38. But instead of continuing to fall, the stock staged a resolute recovery:

So what happened? Here’s Dominic Rushe:

Facebook’s shares came dangerously close to falling below $38, the offer price, and have now rallied. This chart shows what happened. The speculation is that the underwriters have piled in and supported the price that we are chasing now. If it’s true, they can’t support the price forever and you can expect FB’s shares to fall next week.

But – and it’s a big but – there have clearly been problems with the IPO at Nasdaq, orders for shares were backed up and may have caused these weird price movements.

There are however signs that investors are underwhelmed. Zynga shares were suspended after they crashed this morning – not a good sign as the game firm is largely dependent on Facebook for its business.

12.34pm ET/5.34pm BST: Have underwriters stepped in to hold Facebook shares above $38?

Business Insider gets a look at the order book, sent in by Twitter user @Bourbon_Meyer.

“It strongly appears that there’s a huge perma-bid at $38 on Facebook,” Joe Weisenthal writes. “Check out the big mass of yellow on the left column… all those bids at $38.”

12.39pm ET/5.39pm BST: If you don’t own Facebook shares yet, are you currently missing an historic opportunity to get in on the ground level of a company that’s about to break all previous records for stock growth?

Warren Buffett apparently doesn’t think so. Here’s what the Oracle of Omaha has to say about IPOs in general:

It’s almost a mathematical impossibility to imagine that, out of the thousands of things for sale on a given day, the most attractively priced is the one being sold by a knowledgeable seller (company insiders) to a less-knowledgeable buyer (investors).

12.55pm ET/5.55pm BST: Facebook staffers have flocked to the social network to bask in the post-IPO glow, the Guardian’s Josh Halliday reports.

Lindsey Cochran, who works in marketing at Facebook, writes: “I vividly remember signing up for facebook in the upstairs quad of 508 Thurston … in April of 2004. I can’t believe I am now going to be a part of such a historic moment. Feeling incredibly lucky!”

Gabe Hernandez, another staffer, says: “While I won’t be in any of the Facebook offices to celebrate today, I am wearing my hoodie in solidarity. Thanks everyone for making my job far from the last place I ever want to be. Now stay focused and keep hacking!”

Meanwhile, Zuck has returned to his Facebook to note: “This is a pretty awesome hack.”

1.09pm ET/6.09pm BST: Till death do us part – or your company doth go public. Will the Facebook IPO cause a spike in shareholder divorces as new millionaires are created and relationships become more liquid, as it were? The Financial Times has a morbidly droll (and paywall-protected) report:

“When Google went public, there was a wave of divorces. When Cisco went public there was a wave of divorces,” says Steve Cone, a divorce attorney based in Palo Alto, near the social network’s Menlo Park headquarters. “I expect a similar wave shortly after Facebook goes public.”

1.16pm ET/6.16pm BST: Dominic Rushe checks in on the Internet gaming company Zynga, and what the poor performance of its stock today could mean for Facebook:

Facebook’s shares have recovered after dropping worryingly close to their $38 offer price. But over at Zynga there are still problems.

As we mentioned earlier, it looks likely that Facebook’s battalion of bankers moved to make sure FB didn’t drop below $38. Zynga had no such luck and was down more than 13% at one point. It’s now down nearly 6%.

Zynga is basically a way to trade Facebook, since nearly all of its business comes from the social network. So is this what FB’s share fall would look like if the bankers hadn’t piled in? Just sayin’.

1.22pm ET/6.22pm BST: Guardian tech editor Charles Arthur looks at what’s next for Facebook:

What to expect now? Don’t be surprised if the next big thing is a Facebook phone – running its own software and developed from top to bottom to involve you in the site all the time.

Zuckerberg’s team has been advised to do this directly, because it needs to reach the “next billion” internet users, and they are mainly going to be using mobile phones, not desktop or laptop computers. Selling its own phone would mean it could make itself the background hum of many peoples’ lives everywhere – and show adverts and collect data on its own terms.

Read Charles’ full analysis here.

1.55pm ET/6.55pm BST: Bloomberg reports that Facebook underwriters did in fact start buying shares at $38 to keep the stock from falling below its offer price:

Facebook Inc. (FB) underwriters purchased the company’s stock to keep it from falling below $38 a share after debuting on the Nasdaq Stock Market, people with knowledge of the matter said.

The bankers supported the stock after Nasdaq OMX Group Inc. (NDAQ) faced difficulties delivering trade execution messages after the initial public offering, said one of the people, who asked not to be identified because the transactions are private.

1.42pm ET/6.42pm BST: If you haven’t checked out our live tracker of top Facebook shareholders’ wealth based on today’s fluctuations in the FB share price, you can have a look here. For the record, Mark Zuckerberg is currently “worth” more than $20 billio

2.59pm ET/7.59pm BST: One person we haven’t heard a lot from today is Sheryl Sandberg – but expect that to change. Here’s Dominic Rushe:

Sandberg is one of the most impressive execs in the US with a resume that includes the US Treasury, Google and McKinsey. You can read my profile of her here.

Sandberg was late to the Facebook party; she joined in 2007 when Zuckerberg poached her from Google. Back then Facebook had 70m users and no profits. How things change. She holds 1.9m shares and has made a small fortune today.

Sandberg stands to make a far larger fortune in the near future. She has 39m restricted stock units, most of which are tied to performance targets. If she hits them – and history suggests she will – Sandberg will become a billionaire, which is a rarity for employees. That kind of reward usually goes to the founders, not the help.

2.52pm ET/7.52pm BST: Dominic Rushe places the Facebook stock performance in the context of the lackluster Nasdaq showing this week:

“OK I admit it. I’ve had a bit of a downer on Facebook at $100bn plus. It’s an amazing company but I just don’t think it’s proven worthy of that kind of valuation yet. And maybe bankers are propping the share price up.

“Even so, today’s performance needs to be set against what has been happening to the rest of the Nasdaq companies this week. One look at this graph of the Nasdaq over the last five days shows, this wasn’t an easy week to launch.”

3.02pm ET/8.02pm BST: With an hour to go until the Nasdaq close, Facebook’s shares are at $39 a share and Mark Zuckerberg has outpaced several of the world’s richest men.

With wealth of over $21bn, Zuckerberg is now worth more than Jeff Bezos at Amazon or either of the Google founders, according to the Forbes list of billionaires. He was briefly richer than New York mayor Mike Bloomberg, but has now just slipped behind B’s $22bn pile. Poor thing.

3.20pm ET/8.20pm BST: Has the Facebook IPO been a success? With 45 minutes to go until the closing bell, the stock is slowly sinking from around the $40/share range back to its opening price of $38. In the New Yorker, John Cassidy sees a party that fizzled:

At 11:30, the stock opened at $42, jumped up to $43, fell back $42—and kept falling, back to $40. “For market sentiment, this is not going to be positive,” said Simon Hobbs, the network’s resident Brit. Melissa Lee was equally crestfallen: “Forty minutes ago, I don’t think anybody thought $40,” she said. David Faber had been working the phones, and he reported that his sources had told him the stock might well fall below the issue price of $38, which would be a big embarrassment to the banks underwriting the deal, led by Morgan Stanley. “The big story is that Facebook, the social network, is now a public company,” he said. “The smaller story is that after five minutes, it’s only up six per cent.”

Henry Blodget, in contrast, congratulates the investment banks for rolling out a stock that was “perfectly priced”:

This price level was ideal for almost everyone involved–with the exception of short-term traders who bought the stock only to instantly flip it. (And no one should cry for them).

With such a modest pop, Facebook and its selling shareholders did not leave tens or hundreds of millions (or even billions) of dollars on the table–an expensive mistake that most companies make.

When LinkedIn went public, for example, the bankers underpriced the deal, and the company needlessly handed $100+ million to institutional investors.

Heidi N. Moore has been arguing that the failure of the stock to lift and hold above its initial offer price of $38 is making for a “rocky” debut.

What you’re not seeing right now is 33 banks all seeking to blame each other for why this stock is barely clinging to a decent open. $$ FB

— Heidi N. Moore (@moorehn) May 18, 2012

3.26pm ET/8.26pm BST: Here’s a eye-catching list from Heidi N. Moore, comparing Facebook to other big companies in terms of market value and revenue. She calls the list “One of These Things Is Not Like the Others: Facebook Edition.”

At $40/share, Facebook ranks 6 out of 10 in terms of market value ($112bn).

Guess where Facebook ranks in terms of revenue?

Google: Market value $200 billion; 2011 revenue $37.9 billion
JP Morgan Chase: Market value $127 billion; 2011 revenue $99.8 billion
Verizon: Market value $117 billion; 2011 revenue $110.9 billion
Merck: Market value $115 billion; 2011 sales $48 billion
GlaxoSmithKline: $112 billion; 2011 sales $44 billion
Facebook: Market value $112 billion; 2011 revenue $3.7 billion
Anheuser-Busch: Market value $111 billion; 2011 revenue $39 billion
PepsiCo: Market value $109 billion; 2011 revenue $66.5 billion
McDonald’s: Market value $91 billion; 2011 revenue $27 billion
Cisco Systems: Market value $89 billion; 2011 sales $10.4 billion

3.41pm ET/8.41pm BST: Facebook stock on the day of its IPO after four hours of trading: $38.

3.50pm ET/8.50pm BST: Facebook shares seem to be trying their hardest to sink below the $38 offer price. The underwriting banks are in the market to shore up that price. And they’re dealing with a lot of volume: record volume, in fact.

The previous record for most shares traded on the day of an IPO was set by General Motors Co. (GM), at 458 million. With 10 minutes to go in the trading day, Facebook has already smashed the record with 532 million.

3.54pm ET/8.54pm BST: And this, folks, is as good as financial TV gets.

EPIC: FACEBOOK UNDERWRITERS WAGING HUGE BATTLE HAPPENING RIGHT NOW TO HOLD THE $38 LEVEL read.bi/M24r5A

— Joseph Weisenthal (@TheStalwart) May 18, 2012

4.00pm ET/9pm BST: And the close: Facebook shares end their first day of trading at $38.23 – up 23 cents a share on record volume.

4.06pm ET/9.06pm BST: Here’s what the last hour of trading looked like for Facebook. Down to $38 and then flat, flat, flat. It’s almost as if there was an artificial floor holding it there.

4.10pm ET/9.10pm BST: It’s hard to see how the headlines now aren’t hard on Facebook. The market didn’t want the stock at that price.

Some schadenfreude on Twitter:

Currently lol’ing at the people who thought $FB would close at > $60 today.

— Ethan Klapper (@ethanklapper) May 18, 2012

After final trading volume of 565 million shares, an IPO record, the price didn’t move.

Hey, keep it on the down low, but I hear there is still a chance to get in on the Facebook IPO at the offering price!

— James Sununu (@jsununu) May 18, 2012

4.47pm ET/9.47pm BST: Heh.

My two cents: Whole lot of frantic for 38 penny advance in share price.

— david carr (@carr2n) May 18, 2012

4.50pm ET/9.50pm BST: The Securities and Exchange Commission announces that it will investigate what caused the delay this morning in the Facebook rollout, CNBC is reporting.
The regulator will look into why it apparently was that not all traders had the same information at the expected time.

4.55pm ET/9.55pm BST: We’re going to wrap up our live blog coverage of the Facebook IPO. It wasn’t the fireworks display some investors expected to see.

This morning market watchers were discussing whether Facebook would post double-digit gains in its first day. Precedents such as LinkedIn, which jumped 107 percent in its May 2011 IPO, made it seem possible that Facebook could hit $50 or higher.

It has been a tough week for the markets in general – the worst week for stocks in all of 2012 so far, in fact. The Dow dropped 450 points this week, or 3.5 percent. The Nasdaq and S&P 500 were both down.

But the spectacle of the underwriting banks that set Facebook’s offer price of $38 having to buy shares for the final hour of trading to shore up that price made the offering feel flat.

Here’s a summary of what happened:

• Facebook ended the day virtually even. The stock opened at $38. The stock closed at $38.23 (up .61 percent).

• The company shattered the record for IPO volume, with 565 million shares changing hands. GM held the previous IPO volume record with 458 million shares.

• Because of a Nasdaq glitch, in which traders were unable to get confirmation of their trades early in the day, the IPO was rolled out about a half-hour later than expected. The first Facebook shares traded at 11.30am ET. The SEC has announced it is investigating.

• At today’s valuation, Mark Zuckerberg’s Facebook fortune tops $20 bn.

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Mark Zuckerberg is not alone in financially benefitting from the world’s largest technology flotation

The world’s largest technology IPO is providing not just fees for bankers but fodder for comics. “It’s great — now you can lose all your money in the same place you lost all your time,” quipped late night comic Jimmy Fallon on the NBC network this week. With Facebook’s share price expected by many to crash back down to earth within weeks or even days, the only people guaranteed not to rue their investment are those who bought in while the company was privately held.

We list Facebook’s early backers are a potent mix of Silicon Valley insiders, Russian oligarchs, Wall Street financiers – and a pop star called Bono.

The insiders – directors and board members past and present

Mark Zuckerberg. Cash raised from selling into the IPO: $1.15bn. Paper value on Friday yesterday morning at $38 a share: $19.1bn. Zuckerberg is now a paper billionaire many times over and on Friday morning was level-pegging with financier George Soros on the Forbes rich list.

Edward Zuckerberg. Paper value $76m, number of shares sold undisclosed. He never exercised his option to buy 2m shares, but in December 2009 the company allotted them anyway.

Sheryl Sandberg. Not selling in the IPO. Paper value on Friday morning: $72.2m. Facebook’s chief operating officer and self-described “grownup” in the room joined from Google in March 2008 when Facebook had 70 million users. She has steered it steadily to 900 million users and America’s second largest initial public offering.

Marc Andreessen, paper value $251m, number of shares sold: undisclosed

A technology legend, Andreessen helped inflate the first tech bubble by co-founding Netscape Communications. The company behind the first big internet browser raised millions from its 1995 IPO before Microsoft developed a rival product that killed it off.

Peter Thiel. Cash from IPO: $640m. Paper value on Friday morning: $1.059bn. Silicon Valley legend and PayPal co-founder. He is on Facebook’s board and was an early investor.

Dustin Moskovitz, not selling in IPO, paper value on Friday morning: $5.1bn

Facebook’s co-founder left in 2008 to form a new software company called Asana.

Sean Parker. Not selling in IPO. Paper value on Friday morning: $2.65bn.

Almost as famous for co-founding Napster, the music sharing site that changed the face of the internet, as he is for his involvement in Facebook. Parker was the firm’s first president and an early mentor and fundraiser for Zuckerberg. He sold in previous rounds but is n

Eduardo Saverin. Estimated net worth $2.7bn. Saverin owned a third of the company he co-founded with Zuckerberg before being squeezed out and seeing his holding diluted to 5%. Having relocated to Singapore and given up his US citizenship to avoid paying tax, he will save an estimated $39m from his Facebook windfall.

Jim Breyer and Accel Partners, cash from IPO $1.9bn, paper value on Friday morning: $5.8bn

The principal at venture capital firm Accel partners, Breyer sits on the Facebook board. Accel invested in 2005, reportedly spending just $12.2m.

Early backers

DST Global Limited. Cash from IPO: $1.7bn. Paper value yesterday morning: $3.3bn. Yuri Milner’s DST Global has been the main conduit for Russian investment. His own backers include steel tycoon Alisher Usmanov.

Goldman Sachs. Cash from IPO: $1.1bn. Paper value yesterday morning: $1.4bn. Goldman Sachs sheltered Facebook from scrutiny by creating a special purpose vehicle to offer shares to its wealthy clients under one name. This prevented Facebook from falling foul of rules requiring companies with more than 500 shareholders to share the same information as publicly owned groups.

Elevation Partners. Cash from IPO: $176m. Paper value yesterday morning: $1.4bn. Bono is a lead investor in Elevation and has been keen to stress any IPO winnings will be widely distributed.

Mail.ru Group, cash from IPO: $745m, paper value on Friday morning: $1.4bn

A listed internet company used as a second investment vehicle by Yuri Milner and his Russian oligarch contacts.

Mark Pincus. Cash from IPO: $38.4m. Paper value yesterday morning: $163.6m. The co-founder of online games group Zynga, whose Farmville and Mafia Wars games are played mostly on Facebook, will now owe more than one fortune to Zuckerberg.

Tiger Global Management, cash from IPO $889m, paper value on Friday morning: $1.2bn

Scenting a killing, the New York hedge fund run by 36 year old Chase Coleman increased the number of shares it was planning to sell from 3m to 23m on Wednesday.

Li Ka-Shing. Paper value $780m, number of shares sold undisclosed. Hong Kong ports, telecoms and property tycoon spent $120m on shares in 2007 and 2008, he helped push Facebook’s valuation up to $15bn.

Missed the boat

Washington Post chief executive Donald Graham will be keeping his bunting in storage. Graham has been a mentor to Zuckerberg since they met in 2005 and joined Facebook’s board in 2009, but passed on the chance to buy into the company during its early funding rounds. He has an option on 1m sharesbut they were not released to him in time for the IPO. Fellow board member Reed Hastings, chief executive of Netflix, has 20,000 unreleased shares but like Graham never dared to take a punt with his own cash. Zuckerberg’s Harvard roommate Joe Green was one of the first to walk away from the company. He helped set up the network’s predecessor FaceMash but decided to continue his studies instead of following his friend to California.

Google, Yahoo! and US media giant Viacom were among the companies that failed to persuade Zuckerberg to sell. Even the $15bn offered by Microsoft in 2007 was rebuffed. The software giant does, however, have a small stake, worth a tidy $997m at the opening price.

The social network’s stock market debut has made Zuckerberg the 23rd wealthiest person on earth but he’s no evil genius

Thursday night was just like any other for Mark Zuckerberg. On the eve of his company’s dizzying stock market debut, the 28-year-old gave his weekly address to Facebook engineers and opened its “hackathon” jamboree of computer code, caffeine and Chinese food.

Zuckerberg did not stay long into the night, leaving his company’s campus-style headquarters in Menlo Park, San Francisco, to be with his girlfriend Cilla and their fluffy Hungarian sheepdog, Beast.

His modest way of life has been described as monastic by some commentators, who contrast it with the lavish extravagances enjoyed by other self-made billionaires. On Friday he became the 23rd wealthiest person on earth, according to Forbes magazine.

But Zuckerberg does not own a super-yacht or a mansion. He is rarely seen out of his trademark navy hoodie, and last year the Harvard dropout drove around San Francisco in a discreet $30,000 (£18,995) Acura TSX.

Those who have worked with Zuckerberg over the past four years describe an earnest and unassuming young developer whose social network has grown to connect one-eighth of humanity.

“He’s not off on himself about how this whole thing has happened,” one of these people said. “He’s just earnest about developers and the product; he’s definitely not some kind of evil genius. It’s easy to make a caricature of him, but he’s not a caricature – he’s a good guy, and it could have been so easy for him to be a dick.”

Much has been made of Zuckerberg’s apparently awkward social manner. Technology news sites are awash with videos of early interviews showing an unblinking, dry-mouthed 20-something struggling to explain his quasi-religious belief in engineering and openness.

But those who worked with Zuckerberg say he has gone “way out of his comfort zone” to improve on his press relations, guided by his widely admired No 2, Sheryl Sandberg. “Mark is clearly gifted, but he doesn’t make others feel small or flaunt his success. There is no ‘I’m the boy genius wonder, where’s my Gatorade?’” said one person.

Even his own Facebook profile is unpretentious. His history timeline mentions the mammoth social network only once – when he founded it in 2004 – and otherwise charts his own personal milestones: in 2010 he started learning Mandarin Chinese (Cilla is half Chinese and a fully qualified doctor); in 2011 he became vegetarian; in April this year he joined an organ donation scheme.

The 5ft 8in New York Yankees fan lists “minimalism” and “openness” among his interests, he enjoys reading Plato, and tennis and fencing are among his favourite sports. Like your typical young American male, Jay Z and Nirvana feature heavily on his iPod. Less is known about Zuckerberg’s wildly ambitious formative years.

The son of a dentist father and psychiatrist mother, Zuckerberg enjoyed a comfortable upbringing with his three sisters, Randi, Donna and Arielle. He was a voracious computer programmer, building a network for the family home dubbed “Zucknet” aged 12. Later he reportedly created a computer game version of Monopoly based on his middle school in Dobbs Ferry, New York.

A rare insight into his teenage mind came to light in 2010, when the Business Insider website published a series of instant messaging conversations between Zuckerberg and his Harvard college friends in 2004. The correspondence is notable both because it exposed a steely ambition but also because Zuckerberg’s machine-gun-fire missives were remarkably close to his unusually flat way of speaking.

Zuckerberg appeared to confirm in one message that he secretly hacked into the website of the Harvard University newspaper, the Crimson, by guessing the emails and passwords of two people in the college database.

“So I want to read what they said about me before the article came out and after I complained,” he told one friend. “So I’m just like trying the email/passwords of everyone who put that they’re in the Crimson. I wonder if the school tracks stuff like that.”

In another message, Zuckerberg joked that 4,000 people had submitted emails, pictures and addresses to his budding Harvard social network. “People just submitted it … I don’t know why … They ‘trust me’ … dumb fucks.”

Zuckerberg later told the New Yorker that he regretted the exchanges and that he had since grown up and learned from his mistakes. “If you’re going to go on to build a service that is influential and that a lot of people rely on, then you need to be mature, right?” he said.

The signs are that Zuckerberg, guided by his close-knit group of experienced internet executives, has grown up markedly since those Harvard hijinks. Hidden in the corner of his Facebook profile are three favourite quotations, including this from Pablo Picasso: “All children are artists. The problem is how to remain an artist once you grow up.” That will no doubt resonate more strongly than ever as Zuckerberg enters a bold new chapter with his $100bn-valued social network.

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With Facebook now sitting on $16bn after its flotation, will we see the massive social network do a Google and develop its own phone?

With its flotation, many think that Facebook is now a juggernaut, sitting pretty on $16bn (£10bn) of cash and a valuation that started the day at more than $100bn.

Friday’s launch was fun (cue Zuckerberg’s droll status update: “Mark Zuckerberg listed a company on Nasdaq”) but there’s a tendency to see stock market flotations as the culmination of a company’s existence. That’s a common mistake, like first parents being excited about the baby’s birth, and forgetting it’s the next bit that really matters.

It has taken eight years to get here, yet it’s easy to forget that this is actually just the beginning.

What to expect now? Don’t be surprised if the next big thing is a Facebook phone – running its own software and developed from top to bottom to involve you in the site all the time.

Zuckerberg’s team has been advised to do this directly, because it needs to reach the “next billion” internet users, and they are mainly going to be using mobile phones, not desktop or laptop computers. Selling its own phone would mean it could make itself the background hum of many peoples’ lives everywhere – and show adverts and collect data on its own terms.

When Google floated in 2004, everyone knew it was good at search, but they didn’t think it would last. Microsoft was going to come after it, and anyway the founders’ lack of respect for the investment banks (something Zuckerberg hasn’t mimicked, hoodies aside) meant the float was not so anticipated.

Yet, in the eight years since, Google has bought YouTube and made it the internet’s biggest video destination. It has launched Android, the mobile operating system which now powers more than half the smartphones being sold worldwide.

It has won millions of corporate customers for its Google Apps suite. The IPO, at $85 per share, was just the start: on Friday, Google’s shares were $630.

Similarly for Facebook, everything so far, and the money and public presence it now has, are just a beginning. It has more users now (901 million) than were using the internet at the end of 2004 (817 million); but the total number of internet users has meanwhile tripled, so rather than having 816 million potential new users, it has 1.38 billion. The potential market has nearly doubled.

But can it carry on growing, or will it sputter out, like Myspace and Bebo?

Ed Barton, director of digital media at the research firm Strategy Analytics, thinks that getting that next billion will be a significant challenge.

“Facebook depends on advertising, and I would highlight that the fastest-growing internet media markets are China and the Far East, India and Brazil,” he told the Guardian.

“Facebook’s potential is nowhere near as strong in those as it has been in the US. And in those markets there are often a number of locally oriented social networks already in place.”

China in particular, where Facebook has so far been banned, has many thriving social sites, as does Russia with VKontake claiming about 290 million users (compared to Facebook’s 901 million).

Barton doesn’t think there’s any risk of Facebook fading out where it’s strongest, in the west: “In the places where it’s already strong, it has a defensible position,” he said, arguing that we “invest” in the networks we use, and don’t want upheaval.

So rather as Google cornered the market for internet search early this century, not by being the first but by being far and away the best, Facebook wasn’t the first social network, but its management has been far better – and unlike Bebo (bought by AOL) or Myspace (bought by News Corporation) or Friends Reunited (bought by ITV), Facebook had no parent that could feel threatened by its rapid growth.

So for some, it looks like a one-way bet. Andrew Schneider, a hedge fund adviser and CEO of San Francisco-based Schneider Family Office, was busy on Friday selling shares of Apple and LinkedIn on Thursday to free up at least $20m of cash for Facebook shares. “You’ve got 900 million users, and you’ve got real solid revenue, and the company is earning money,” Schneider said.

But the present limits to growth could be dictated by its heritage. Facebook was founded on a desktop computer in a university dorm room, and while it long since broke free of the latter, it’s the former that prevents it reaching those 1.38 billion, and the next billion to come.

That’s because a growing number of internet users aren’t going online through the PC, but through the smartphone. By next year, there will be more internet-capable mobile phones (1.83bn) than PCs (1.78bn), according to research company Gartner. Which is why analysts have been itchy about Facebook’s stark admission that it doesn’t make any money from mobile advertising: it’s missing half the market.

What’s the solution? The Facebook mobile app isn’t enough; people only spend a little time there, and showing ads on a mobile screen doesn’t pay well. Horace Dediu, who runs the independent consultancy Asymco, spent a day at Facebook’s headquarters a few months ago and told them to talk to Chinese smartphone manufacturers, create their own version of Google’s Android (as Amazon and China’s Baidu search engine already have) and start selling a “Facebook phone”.

“My recommendation was that they should do a handset,” he told the Guardian. “Because it means they can control the user experience, and capture all the information that they might need to monetise the experience. For Facebook, they could offer it as making your life richer as a social participant.”

While there’s no indication of whether Zuckerberg’s teams will act on Dediu’s advice, the rumours that Facebook is working on a phone have surfaced from time to time – most recently in April, when the Taiwanese news site Digitimes suggested it is working with Taiwan’s HTC to build a device integrating all the Facebook functions, for release this autumn.

Digitimes has a mixed record for rumours like these, but it would be a smart strategy.

If that seems strange, consider that Google realised it needed to control mobile search or it would lose its dominance; hence Android. But Facebook can create a version of Android that doesn’t rely on Google. (It could use Microsoft’s Bing search engine – which some executives there offered to sell to Zuckerberg early in 2011; he demurred).

Everything is in place for this mewling infant of the internet to turn into a real force, if it chooses. And Zuckerberg certainly will choose to.

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Facebook’s share structure wouldn’t happen in the UK. The principle of ‘equal votes for equal economic risk’ is an unwritten rule of corporate governance here

“Direct empowerment of people” and “more accountability for officials” are two of the virtues Facebook says its service promotes. It is referring in its IPO prospectus to the interaction between citizens and governments, which is just as well since most shareholders in Facebook will travel in a third-class carriage. The first-class lounge is reserved for Mark Zuckerberg alone.

The founder, chairman and chief executive is keeping control via a dual voting structure that gives each ‘B’ share held by insiders such as himself 10 times the voting power of the ordinary ‘A’ shares. In addition, Zuckerberg also has arrangements with fellow ‘B’ holders so that he ends up with total voting power of 59%. Outsiders don’t even get to choose how they would manage without Zuckerberg; the boss has the right to nominate a successor in the event that he dies in harness.

It wouldn’t happen in the UK. The principle of “equal votes for equal economic risk” is an unwritten rule of corporate governance that no grown-up quoted company has dared to defy for a couple of decades. The last hold-outs surrendered for a variety of reasons – from quarrels among third-generations family members to a basic inability to raise equity capital from outside investors on attractive terms.

Zuckerberg has no such worries. Facebook doesn’t need cash for investment and the voting arrangement clearly hasn’t affected demand for stock. Maybe there are arguments in favour. Aren’t the most successful technology firms, like Google, controlled by the founder or founders? Haven’t Facebook’s original backers become rich by giving Zuckerberg the freedom to pursue his vision? Don’t you mess with that formula at your peril? And it’s not as if there could be a punch-up over dividend distributions – there won’t be a dividend any time soon.

All the same, there could be trouble ahead. Zuckerberg’s letter to potential investors is mostly about why the company’s “social mission” is important. In the end, though, it’s the commercial mission of milking the base of 900 million users for advertising and other revenues that will determine whether the $104bn (£65bn) valuation is justified.

As matters stand today, it’s possible (just) to believe the twin missions complement each other. But what if events don’t run so swimmingly? Will Zuckerberg choose to operate a vulgar advertising medium or be a heroic pursuer of a more open and connected society? OK, the choice may never be so stark. But there could be tension over strategy and, judged by his public statements, it’s impossible to tell which shade of grey Zuckerberg would prefer. Don’t forget, he is rich enough not to worry about the odd billion being removed from his personal wealth.

But those buying Facebook shares for profit, one assumes, would be less relaxed. Surely they would applaud more commercialism if it makes the share price go up. Well, nobody’s forcing them to buy stock, it might be said, and Zuckerberg’s complete control of Facebook is not being disguised.

True enough. But, viewed from London, it is quite amazing that dual voting arrangements survive in the US. The UK does not have technology successes of the size of Google or Facebook to shout about, but equal votes for equal economic risk still sounds an excellent principle. In economic terms, Zuckerberg has 28%. He should not have complete control. Facebook may be the future but, in governance terms, it’s a trip back in time.

Users of the social network have filed a $15bn class action complaint over data collection

Facebook’s first day of trading following its $100bn flotation has been gate-crashed by a $15bn class action against the social network.

Users of the service have filed an “amended consolidated class action complaint” in federal court in San Jose, California, relating to allegations that Facebook has been “improperly tracking the internet use of its members even after they logged out of their accounts”.

The class action is being brought by law firms Stewarts Law US and Bartimus, Frickleton, Robertson & Gorny.

David Straite, a partner at Stewarts Law, said: “This is not just a damages action, but a ground-breaking digital privacy rights case that could have wide and significant legal and business implications.”

The plaintiffs are citing the federal Wiretap Act, which provides statutory damages of up to $10,000 per user and they say potentially implies damages of more than $15bn if compensation is rolled out across Facebook’s user base.

The action consolidates 21 related cases filed in more than a dozen states in 2011 and early 2012.

If successful, the claimants could stifle Facebook’s ability to collect data about its users and hinder its ability to grow advertising revenues.

The social network generated 85% of its $3.7bn revenues last year from advertising, according to its regulatory filings with the Securities and Exchange Commission.

A German data protection official also warned Facebook investors on Friday that the social network’s $38 starting share price is based on practices that breach European privacy rules.

Thilo Weichert, the data protection commissioner for the northern German state of Schleswig-Holstein, was quoted in the German daily newspaper Frankfurter Allgemeine Zeitung warning shareholders to be aware that if European privacy authorities have their way, “Facebook’s business model will implode.”

Facebook declined to comment as the company prepared to go public on the Nasdaq stock exchange on Friday.

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Instant messages sent to college friends in 2004 paint Facebook founder in unflattering light

He is the 28-year-old computer wiz whose billion-dollar bank balance has inflated as quickly as his social network. But, in a string of unguarded instant messages sent to college friends in 2004, the Facebook founder Mark Zuckerberg even then showed a steely ambition in his approach to his future $100bn business.

The correspondence, published by the Business Insider website, shows a 19-year-old Zuckerberg firing off scattergun thoughts about business, social networks – and user privacy.

Zuckerberg appears to confirm in one message that he secretly hacked into the website of the Harvard University newspaper, the Crimson, by guessing the emails and passwords of two people in the college database.

“So I want to read what they said about me before the article came out and after I complained,” he told a friend. “So I’m just like trying the email/passwords of everyone who put that they’re in the Crimson. I wonder if the school tracks stuff like that.”

In another message, Zuckerberg boasts about deactivating college students’ accounts on the internal Harvard social network, ConnectU. “I got bored so I started deactivating accounts on ConnectU haha,” the future cyber-grandee writes.

Zuckerberg jokes in another exchange that 4,000 people have submitted emails, pictures and addresses to his budding Harvard social network. “People just submitted it … I don’t know why … They ‘trust me’ … dumb fucks.”

Facebook would not confirm or deny that the messages were authentic when asked on Friday, but Zuckerberg told the New Yorker in September 2010 that he absolutely regretted sending them.

“If you’re going to go on to build a service that is influential and that a lot of people rely on, then you need to be mature, right? I think I’ve grown and learned a lot,” Zuckerberg told the magazine in 2010.

The messages were leaked to Business Insider in 2010 as Facebook’s legal team trawled Zuckerberg’s computer in the search of evidence to defeat the now-infamous legal claim from the Winklevoss twins.

They will have proved painfully embarrassing for the Facebook founder who has attempted to draw a line under his Harvard days and be the responsible, but still hoody-wearing, internet executive his investors yearn for him to be.

The messages have also not derailed the stratospheric success of Facebook. Zuckerberg was named Time’s person of the year in 2010, just months after the controversial exchanges became public.

On Friday the social network will cement its place in US business history with a public offering expected to value Facebook at $104bn and make its founder one of the richest people on Earth.

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Bankers’ fees for Facebook’s landmark flotation total about $100m – but what is the company getting for its money?

So who’s the sucker in Facebook’s initial public offering (IPO) today? Any banker will tell you that there is a fool in every trade, which is why you must always know who the fool is, because if you don’t, the fool is probably you.

A range of candidates suggest themselves, of whom the most obvious is Facebook. Earlier this week the New York Times reported that the company is paying the bank Morgan Stanley around $35m for its work on the deal. Practically every other major global bank is in on it, too, bringing the total bankers’ fees to an estimated $100m.

Why would Facebook pay so much? In its continuing Voices of Finance series the banking blog spoke to a former managing director at a major bank. For years he was the opposite number of those currently managing Facebook’s IPO, making £1m a year. It’s simple, he says. Corporations pay such huge fees because the global investment banks form “a cartel”.

According to free market theory lucrative fees attract newcomers, which drives down prices. But the barriers to entry for new banks are huge, and CEOs at corporations would “rather pay up than go into business with somebody no one’s heard of. Reputation is decisive. What’s important for a CEO is getting the deal done, not keeping costs down; what’s 50m between friends?”

There’s an analogy with selling your house, he says. “In the supermarket you diligently compare the price of two packets of tea, with real estate agents you suddenly put up with huge fees. You know they are all the same and do nothing special. But you just don’t dare doing it without them.” He adds: “If corporations saw how easy most of our work was, they would weep.”

But why did Facebook engage so many banks? Two reasons, says the MD, one openly talked about, one an open secret: “Banks have different client bases – relationships with particular investors. More banks means more coverage. Two: each bank has research analysts writing reports for investors recommending them to buy or sell a share. With all the top analysts from all the big banks on board, you won’t get dissenting voices”.

So is Facebook today’s fool? Not so fast. Buying off dissenting voices is a necessary element in creating the impression that the IPO is unanimously popular and incredibly oversubscribed, and therefore ‘hot’. The MD: “If a share was really ‘hot’, we’d give it to big institutional players in exchange for favours. Allocating ‘hot shares’ is essentially giving someone money – you know the stock price will shoot up once trading starts.”

The favours from big players were never explicit, he explained. Institutional investors would give his bank extra business, say, directing trades its way so the bank made commissions. Or they’d help the bank out by placing an order on another IPO that wasn’t hot.

Facebook is a classic example of a hot share, he said. “Retail (individual) investors will be clamouring for stock, but they’ll be shafted in favour of the institutions. The stock will probably ‘pop’ on the first day of trading, and many of those institutions will book an instant profit by selling them into the market. Retail investors will probably be left holding the baby if and when the price tanks.”

Which makes individual investors the true fools? Well yes, but let’s not forget the biggest group. Those favours called in by the big banks from institutional investors in exchange for “hot shares” cost money. And whose money is managed by institutional investors like pension funds? Yours and mine.

The former MD compares it to insurance fraud: “It seems victimless while in reality everyone’s premium goes slightly up.” That’s the system, he says: a cartel “skimming off everyone’s pensions and savings”. Read the full interview here to discover how he got depressed and quit.

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