Tag Archives: Facebook

Do’s & Don’t’s from SXSW

End of a 2 block line of pilgrims waiting to g...

I just got back from another “South By,” always a fun time.  I spent the weekend there, which given SXSW‘s total boondoggle nature, is I think about the right period of time to be there.  Having caught up with other folks who attended and having traded notes, and now having attended for 3 years, here are a few Do’s and Dont’s for SXSW.  Pro Tips (alright, potentially only semi-pro tips).

  1. Wear comfortable shoes.  SXSW is a place where you should be spending a lot of time walking and standing.  Wear the most comfortable shoes you own.  For me, I bring and wear a pair of Brooks running shoes.  I could walk to Arkansas in them, they’re that comfortable.
  2. Avoid conference sessions (unless I’m speaking ;). Every year I make this mistake…  I get my badge, and I think, wow I should do something useful like go to a conference session.  This year, I did this and I ended up at a session where a guy had as his powerpoint slides pictures of kittens… talking about what I parsed to be the evolution of work and questioning why our normal workday was roughly 8-5.  Snooze fest.
  3. Do make sure your app works.  Highly touted mobile app Highlight launched a new version of its app prior to SXSW.  They garnered press on their cool ice cream truck.  I thought I’d reinstall Highlight to see how it had evolved since the last SXSW.  Unfortunately, for me at least, I couldn’t get Highlight to work after installation.  When I click the “Sign in with Facebook” button to actually use the app, nothing happens.  So other than a splashscreen, Highlight doesn’t really offer me anything. I’d be interested to learn whether anyone else ran into this problem. (A few disclosures .. First, BlueRun Ventures, where I work, is an investor in Banjo, which is often positioned as a competitor.  Two, I reinstalled Highlight twice to try and overcome this issue, unsuccessfully–user error may be at work here, but I’m dubious.)  Robust testing pre-launch, especially for mobile apps where Apple will take weeks to approve updates, is an absolute must do.  Quick plug: check out mobile testing platform Appurify (disclosure: I’m an investor), when you want to put your mobile app through a rigorous QA and testing regiment.
  4. Drink a lot of water.  Next year I’m bringing a Camelback and just wearing it.  SXSW does have a lot of partying.  At the same time, Austin restaurants are pretty weak at getting you water.  Get water every chance and place you get.
  5. Always be charging.  ’nuff said.

 

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The Fast-Changing Landscape

Image representing iPad as depicted in CrunchBase

In tech, we talk a lot about how fast things change, how dynamic things are.  As an investor in mobile, I think and talk about this all the time.  I sound like a booster, sometimes even to myself.  I try to balance that, I really do.

This week, though, wow, if you ever thought that the landscape was settling and the picture was coming into focus, did that ever get thrown out of the window.

Intel saw a 27% year-over-year drop in earnings as the PC market continues to shrink.  Chipmaker Qualcomm, which is riding the mobile wave, overtook Intel in market cap: unbelievable.  Also highlighting the headwinds in the PC market, Michael Dell is reportedly looking to take the company he started in his dorm room private.  Hard to imagine giants like Intel and Dell facing such a changed landscape.

At the same time, it’s not like new markets are standing still.  Sharp is reporting that its ramping down production of the full-sized iPad as the demand for the iPad Mini is so much stronger.  Gee, that was quick!  Has the iPad Mini even been out for 6 months yet?

And finally, it’s exciting to see that someone other than Apple is starting to see consumer hype and love in the mobile market, with the WSJ is reporting that the upcoming Galaxy IVS from Samsung is seeing “iPhone like hype.”  I’m not hating on Apple here, I just think its great for everyone when there’s strong competition, which Samsung appears to e bringing.

However stifled innovation may seem today, it sure seems like the market is pretty dynamic.

 

 

 

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Where are we?

Over the past few weeks, I’ve noticed two themes in press and analysis around the tech world.

economist cover

Theme #1 : Where has the innovation gone?  This was represented best I think with this week’s cover of the Economist, asking whether we’ll ever invent anything as useful as a toilet ever again.  This echoed folks like Michael Arrington who quipped that he was bored and Peter Thiel who griped that instead of flying cars, we got instead 140 characters.

Usually, when I hear lots of mainstream concern that innovation is dead, that’s when I start getting excited.  The froth is coming out of the market, and the true innovation is out there, lurking, perhaps unrecognized (yet).  But it’s out there, just waiting to delight.

So on one hand, I’m excited.  Bullish about the future.

Theme #2: Thoughts on the Series A crunch.  Lots has been written about the pending Series A crunch.  I basically agree with Michael Maples Jr’s as quoted in a PandoDaily article, where he says (paraphrasing) that every year there are about 10 fantastic startup companies.  Irrespective of funding environment, those 10 are the ones everyone wants to get into and those have little trouble finding funding.  The goal is to start or be involved with one of those companies.

With that as context, I’ve read with increasing alarm the press that prominent incubators are putting out about how much follow-on funding their companies have attracted.  Here was one such announcement just made today.  I can understand why its useful and its not to take away from the work that incubators are doing to help companies get themselves started and off of the ground.   I’ve never been much of a fan of funding announcements though.  I’m more of a fan of announcements of big customer wins, market share achievements, and partners that are committing to your solution.  That’s real traction and where you have those wins, funding will follow.  I do worry that the signal from incubators on follow on financing is going to, if anything, prolong the Series A crunch.

These are just thoughts.  The concrete action feedback, if you’re a startup, is to stay focused on winning in the market place through traction–customers, market share, partners, revenue, growth, etc.

Delight a rapidly growing customer base and the Series A crunch and the concerns on a lack of innovation in today’s tech market will magically work themselves out.

 

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Disruption Daily: Early Thoughts on Facebook Graph Search

Peter Drucker dies at 95

Big tech news today with Facebook announcing its new Facebook Graph Search.  Wall Street apparently didn’t like the news, sending FB down -2.74% on a day the rest of the market was pretty sharply up.  I might need to lean in and pick some up.

I think it is a big tech story for 2013.  I agree with David Weekly’s initial observation that this is a serious ongoing threat to Google.  It’s a pretty obvious step for Facebook and I think its going to pay off for a few basic reasons.

First, it starts to highlight in a very mainstream way how Facebook has, in effect, become the internet for many people.  People are spending so much time on Facebook that it makes sense that FB would invest in convening a “Dream Team” of Google Search engineers to do some semantic forking and NLP stuff to make Facebook the place you go for search.  It makes all the more sense when you consider that Facebook content isn’t really searchable via Google–I can’t go to Google and search for that status update, photo, or meme you posted.  Just doesn’t work.  So an obvious strategic move.

Will it succeed?  I’m bullish.  It’s one of these strategies where Facebook’s chocolate meeting the peanut butter of search seems to fit really nicely.  Certainly it seems a lot smoother of a fit than Google trying to veer into social with G+.  (With Marissa Mayer taking her talents to Yahoo, I think Google’s push into social is perhaps even more at risk, as her fingerprints in terms of user experience and design were so pervasive.)

Second, I think that there are a variety of scenarios where FB search could be quite disruptive in the shorter term–with local in particular.  We are all connected to friends through Facebook, and I’d bet that a lot of accounts have a huge portion of friend connections who are nearby.  The next time you need to know whether that new Chinese place is any good, are you really going to go to Yelp or Google, or would you like to see that 6 of your friends had “Liked” the place on Facebook.  Local is a big kahuna market, and FB has a nice route to going after it.

Third, it’s a winning move in that FB is growing engagement and retention, and search (along with mobile) gives it a new avenue to continue driving this lift.  Surely there’s an opportunity to go for the jugular over time with Google, and this is good for the industry.

A final point on Facebook’s capacity to disrupt Google in a major way… I remember reading an interview of Peter Drucker in 1997 or 1998, around the time that the Department of Justice was lining up to take on Microsoft for anti-trust violations.  The interviewer asked the father of modern management what his opinion was on the anti-trust case. His answer, basically, was that in the case of the technology industry, the market moves too quickly.  When a company becomes as big as Microsoft  the seeds for obsolescence are in a sense already planted.  He forecast that based on Microsoft’s size, some small, disruptive company that no one had yet heard of would step up to take on Microsoft in relatively short order.  Though there’s no reason to think Drucker had ever heard of them in 1998 when the interview happened, it’s pretty clear that he was prophesizing Google.

Now certainly we’ve all heard of Facebook, so this time around is a little different.  But at the same time, it’s not lost on me that in the same week that the Department of Justice announced it would not pursue action on Google after 2 years of investigation–the true sign of being a tech behemoth–Facebook announced its Facebook Graph Search.

 

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Monetize early and often

A common, long-running theme in Silicon Valley is that companies will get started with no sense of a business model.  The common ethos is this: “we’ll get lots of eyeballs, and then we’ll monetize the eyeballs later.”

And certainly if you look at a business like a Twitter or an Instagram, neither were ones where a business model from day 1 made much sense.  To succeed at scale, they needed to establish themselves as very broadly adopted, broadly used services.  Indeed, not so long ago, many were hand-wringing over whether Facebook would ever be able to generate sustainable revenues.  Given that $FB is now pulling in well over $1B / quarter, no one’s really harping on that anymore.  So I think it’s safe to say that for the foreseeable future, we’ll continue to see tech companies that grow first and monetize later.

At the same time, I’m noticing a trend of companies that are starting to monetize earlier in their life cycles.  Companies like Evernote, AirBNB, and Uber are examples, where they were generating revenue really early and growing from there.  My sense is that we will see more of these, for a few reasons.

First, the breadth of endpoints is massive.  Over the last 5 years, we’ve seen the explosion of smartphones, tablets, Kindles and other e-readers, along with the continuing growth of the PC market.  The increase in nodes (or screens if you prefer) and endpoints where a service can be offered and a transaction consummated is staggering.

Along with this rise in endpoints, distribution is now becoming increasingly accessible, if you can pay for it.  If your company can prove that it can generate gross margin on a per unit basis, then it’s going to be possible for you to invest a good portion of that margin in acquiring new users via a broad range of promotional and advertising offerings.

A third reasons is that a broader range of business models–freemium and in-app purchases, for example–have matured over the last several years.  This gives tech startups a path to offering users a low-friction, try-before-you-buy value proposition on the one hand, while offering a path to monetizing from early in the lifecycle.  This is a great thing for startups.

I think all of this bodes well for startups.  Getting revenue in the door at any level is a great validation of product-market fit.  It’s also a great way to keep the doors open and retain equity.  If I were starting a company today, I’d be looking for a path to get revenue in the door from as early on as possible.

 

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I Second That Emotion

Image representing Mixpanel as depicted in Cru...

There’s a management aphorism attributed to Peter Drucker that goes something like this “If you can’t measure it, you can’t manage it.”   This was on my mind, as I read Liz Gannes’ great article on AllThingsD today covering Mixpanel founder Suhail Doshi‘s call for an end to Bullsh*t Metrics.  His basic point is that technology companies have not innovated enough on how they think about measuring their businesses.  He’s calling BS.

Pageviews, installs and total installed base are out.  Engagement and retention are in.  This makes a lot of sense.

When I meet with very early stage startups, as I did last week at AppNation for VC Office Hours, I find myself repeating a few of the same points again and again.  Very early stage companies (i.e., pre-product or pre-product-market fit) tend to want a sense for how many installs or pageviews they need to attract an investor.

My answer heads a different direction.  To me, the first thing I want to see is evidence of what I think of as early product market fit.  Rather than showing me installs, show me that any small number of users that truly, with concrete evidence, really want your product.   This is actually more difficult to do than you might think.  It requires that the startup can show engagement and retention over a period of time.  And it requires that the startup is thinking about what how it measures user engagement in a manner that’s specific to that specific company.

This perspective seems aligned with Doshi’s feedback.  One thing that I liked a great deal in his post was his recommendation that startups focus on One Key Metric (OKM).  The idea is that tracking 1 actionable metric that “they can literally bet their business on.” Companies picking OKM have to deeply understand their business and what is driving growth and success in order to do so.  This reminds me of discussions that I’ve read of Facebook and Twitter‘s early growth, where FB started to realize that if a user added 7+ friends, that the likelihood that that user would become a retained user went up dramatically.  Similarly Twitter found some number (I don’t recall what the number was) of followers where, when attained, a user would be much more likely to be retained.

This mode of thinking and focus on OKL is smart–it focuses the leaders of a company on understanding, deeply, what users are doing on their service and what drives value to the user.  Hard to argue with this.

BRV portfolio company, Thumb, where I serve on the board, has been drilling in on it’s on OKM.  (I can’t disclose what the metric is.)  It’s been exciting to watch how the focus is leading to increasing retention and engagement, which as publicly reported is already quite high.

In any case, if you’re a startup in the tech space, I recommend reading Doshi’s post and contemplating what your OKM is.

 

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Mobile Brand Connect Dinner

Last night in San Francisco, BlueRun Ventures co-hosted the Brand Connect Dinner.  We work with Mark Evans at Social Local to put these events together, and we were thrilled to have speakers from Facebook, Proctor and Gamble, and Topsy speaking.  Also, it was a great audience of brands and entrepreneurs, seeking to build relationships and trade information.

There are a few takeaways I had from the event.

We are in early innings of what’s possible for brand advertising through Facebook, Twitter, and other social media platforms.  These social platforms are offering a new way for brands to communicate and connect with users.  Currently, most brands are merely repurposing content and media from existing campaigns (TV ads, magazine content, etc.) and just pushing it onto the Facebook wall, where they attempt to drive views and likes, etc.  What we saw though were several very interesting examples of new types of campaigns and engagements that leveraged some of the unique elements of Facebook to enable users to engage in more personal, more deep connections with the brands.  This was exciting.

There will need to be a continuing evolution here.  But this is to be expected if you study the history of media.  When TV first came out, for example, the first ads were basically radio ads just read on TV.  It took a while for everyone to figure out how to leverage TV.  But leverage it they did.  Same thing will happen in Facebook.

Big brands need massive scale from a startup to really engage.  On the one hand, many of the big brands–P&G for example–are getting much more serious about engaging with innovative young startup companies.  We saw this at the Big Brand Hackathon earlier this summer, where Home Depot, Toblerone, Ritz Cracker, and Kraft Mac & Cheese, all joined us and a bunch of hackers to build mobile-oriented demo projects that met their specific brand objectives.  Big companies and brands recognize that these new media types and these new innovations are areas they need to build musclature around, and it is great to see them engaging and working to stretch themselves to strengthen themselves here.

At the same time, its important for a reality check.  Concretely, big brands are driving massive scale and massive P&Ls.  This means that for a startup to really matter to a brand, there is a very high hurdle that the startup has to cross to become meaningful.  As Sonny Jandial, P&G’s Head of Innovation pointed out, the Brand Manager for Dawn Dish Soap is selling $1B worth of soap per year at around $4 a unit.  That Brand Manager has to move *a lot* of soap.  By definition, for the brand to engage beyond a little pilot or experiment with a startup, then, the startup has to be able to deliver meaningful numbers.  It’s a tall order, and as Sonny pointed out, his role is to be more of an experimenter on P&Gs behalf and help startups get nurtured to a level where they can grow to a point where they’d have an appopriate amount of scale to engage.

Budgets seem to be coming.  Without holding the brands to any fixed numbers, it did sound as though there was real understanding and thinking around th e need to spend here.  Engaging with Silicon Valley is not a hobby effort–it’s real and it’s serious.  The bar is of course high, but it did seem as though the budget is there.

All in all, over the last 6 months, I have seen a tremendous amount of interaction between large brands and with our portfolio and with the startup ecosystem more broadly.  This is an exciting trend.  At BlueRun, we will definitely continue to drive further into helping engage and connect brands into the ecosystem, and I’ll look forward to the next opportunities to get together.  See you at the next Brand Connect dinner!

 

 

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Facebook’s Biggest Mistake

Yesterday, Mark Zuckerberg took the stage at TC Disrupt to make his first extended public comments since Facebook‘s troubled IPO earlier this year.  During his comments, “Zuckerberg revealed that Facebook’s mobile strategy relied too much on HTML5, rather than native applications.”

This perspective and openness showed a founder/CEO who was dialed in to the challenges the company has faced on mobile.  It also enabled him to contrast nicely the big improvement $FB has made in shifting to a heavier reliance on ‘going native’ as it pertains mobile platforms.  Shareholders were positive, pushing the stock up 3%–I’d expect both because they realize that Facebook has a mobile strategy and is executing on it, and because they are seeing evidence that Facebook’s leader is a serious, serious guy.  This is goodness–it’s great for Facebook, of course, because as I’ve expressed elsewhere, Facebook needs a great mobile strategy.  More broadly though, it’s good for the whole ecosystem–we should want Facebook to thrive and grow, as it’s continuing momentum has a gravitational pull that helps fuel and balance the broader tech ecosystem.

From a Facebook standpoint, this was really a no-brainer.  Mobile is the future, and  with mobile, the future is arriving a whole lot faster than anyone really thought.  As a result, Facebook really needed its mobile product to be a first class citizen.  That meant it had to, had to, go native.  Not even a choice.

The unfortunate thing, though, is that it probably exposes the lack of robustness in HTML5 and mobile web.  People will now predict that HTML5 was before its time, companies shouldn’t bet on it, etc., etc.

To an extent this is true.  For great mobile-first and mobile-centric experiences, HTML5 involves compromises.  As a developer, you get broad multi-platform distribution, with the cost of a degraded user experience.  This degraded user experience is a big big deal on mobile though.  The iOS and Android platforms in particular have trained users to expect responsive, highly functional apps.  They’ve gotten us used to instant gratification, smooth transitions between screens, etc., and when HTML5 can’t deliver that, the app suffers.  And given how intimate a smartphone app experience is, and given how many apps are competing for a user’s attention, delivering a weak user experience is an unacceptable risk for a developer to take.  Indeed, Facebook’s mobile HTML5 app showed clearly the challenge–users were held hostage to it, and they hated it.  With its new native app, Facebook is seeing better user retention, engagement and usage.  A better app, a better user.

Does this forecast the death of HTML5?  Absolutely not.  HTML5 is coming and its a big wave.  It is also a lot of work.  The  HTML5 evangelists predicting the  death of native apps, were I think over-optimistic.  Not because of their wrong on the technology.  Instead, its more about user training–users will continue to have high demands on mobile experiences, and this will force the transition to take time.

I think this will continue to provide opportunity for a wave of companies working to build the infrastructure, tools, and services that enable the HTML5 wave to become a first-class development platform.  In the gaming space for example, companies such as Game Closure, Artillery, and Spinpunch, are all focused on helping enable the next generation of games and game distribution via the mobile web.

So exciting times for the industry here.  Great to see Facebook getting on track for mobile.  While I’d love to see HTML5 delivering the goods now as a dev platform, I’m not at all surprised that it’s not yet there.  While a big mistake for FB, a recoverable one.  And not a death knell to the power and impact that HTML5 is going to have in the longer term.

 

 

 

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Reflections from Glimpse Social Discovery Conference

This week, I got the opportunity to participate on an investor panel at the Glimpse Social Discovery Conference in San Francisco.  I was onstage with Aydin Senkut of Felicis Ventures, Josh Elman of Greylock, Christina Brodbeck (Co-Founder of theicebreak, and prominent angel investor), with Dylan Tweney of VentureBeat moderating.

It was an interesting discussion for a few reasons.  First, there had been a pretty prominent set of press the morning of the event around a recent Paul Graham note to his YC companies and alums saying that the fund-raising environment was going to get more challenging as a result of the weakness of the Facebook IPO.  Also, there was a lot of interest in the category of “Social Discovery,” in part owing to Facebook and LinkedIn’s recent IPOs, and with the excitement and interest that we’re seeing with services like Pinterest, Instagram, and others.

I thought the insights from the other panelists was great.  Elman, in particular, whom I’d not met before, really I think framed well the whole category as basically saying that he thought social and social discovery was basically just replacing what he called “media”.  I think this is apparent–but what I liked here as that he’s just thinking about it simply.  Nothing fancy, just good old fashion disruption.  Elman also pointed out, based on his experiences working at Facebook, Twitter and others, that for him as an investor, distribution is really key.  Figuring out how the flows of the product and the sharing really draws people in and enables you to gain new users is vital as he evaluates early stage teams and business opportunities.  Great advice here, and indeed this is something that in my experience many teams skip over or think about too lightly.

Another point that was a fun discussion was raised when Dylan asked us how businesses get built via social discovery.  In my view, again, borrowing from Elman’s thesis that this is all replacing media, is that with eyeballs comes the opportunity for revenue from businesses.  With all the information and intent information that these new services are capturing–where you are, what you like, what you want, etc.–the proposition in terms of promotions to offer are way more interesting and useful than what I’d call old world media.  I continue ot believe that.  I also talked a bit about how I believe that we’ll continue to see growing social media channels–how I interact on Path is different from how I interact on Twitter is different from Facebook, etc.  Given that, I think we’ll have different media channels, as we have many different cable TV channels today on TV.  This was basically just a reprise of articles I’ve written before.

So all in all, a lot of fun and I got some good info from.  Hope to get chance to participate next year!

 

 

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Lessons from the Facebook IPO

The most anticipated tech IPO since Google’s offering a decade ago, Facebook‘s going public was today called “A Perfect Storm” by the Wall Street Journal’s AllThingsD, pushing further the narrative that Facebook’s IPO was a failure.  There is plenty to support the storyline– NASDAQ faced serious technical glitches to being able to fulfill all the activity, underwriters were reducing Facebook revenue forecasts during the roadshow, and two key banks on the IPO, Goldman and JP Morgan were helping hedge fund clients short Facebook stock (the horror!). Listening to the radio out here in Silicon Valley, the narrative has been that the IPO has been a disaster, in particular for the retail investor who fought to buy shares at the IPO and were expecting Facebook to surge in the first day of trading.

I see things differently.

Facebook acted in a particularly rational and concrete manner, and I think if anything should be applauded for its approach.  Notably, it priced its shares high at offering.  Recall that the preset range was between $28-35 per share according to a Wall Street Journal article from May 3, 2012, several days before Facebook began trading.  When it came time to pricing the IPO, Facebook chose $38–22% above the mid-point of the range, and well above the $35 high-end.  Facebook signaled very clearly with this pricing, that it was uninterested in providing early IPO investors with the opportunity to get a “quick pop” at the opening of trading.  Investors should never buy a product at any price, and those who didn’t re-calibrate their expectations as the prices got solidified should be looking in the mirror, as opposed to blaming Facebook.  In fact, there is no law guaranteeing that hot IPOs sizzle in upward price appreciation, and there shouldn’t be.

So why did Facebook set its price so high, when it could have been so easy to set it lower, get a pop and silence all this noise?  I think two factors came into play.  First, Facebook likely didn’t want to leave money on the table.  Setting its IPO price high would yield Facebook as much cash for its balance sheet (and for pre-public investors) as possible.  Second, Facebook likely reasoned that it didn’t want to attract investors looking for quick, short-term gains, but rather wanted investors focused on the long-term.  Certainly this approach has been consistent with how Mark Zuckerberg has built and driven his company–with a clear focus on  delayed gratification and for the longer-term.  Given that that’s been Facebook’s approach over time, its totally logical that its approach towards offering its stock to the public would similarly be optimized towards longer-term focused investors.  So the unsaid message from Facebook to its public investors with this pricing approach is this: “If you want to be an early investor in Facebook’s public stock, you had better be ready to hang on for a while.”

I applaud this approach for a few reasons.  First, when selling its shares to the public, a firm should get as much capital as it can for its balance sheet.  That is the key purpose and reason for the IPO in the first place.  Second, this approach addresses one of the key problems with today’s investment environment, namely its ultra-short-term focus.  From my perspective, Facebook’s behavior is spot on.

Those who should be excoriated are NASDAQ, retail brokerages who f*cked up trades for their retail clients, and retail investors who expected to make money on the initial pop.

NASDAQ has long positioned itself as the tech-centric exchange for stocks.  Not anymore.  The incompetent exchange is more like it, 30M shares were excuted imporperly, the largest problem the exchange has experienced.  This would be like being the wedding planner for the Royal Wedding in the UK and basically screwing the whole thing up.  This was something NASDAQ had to nail, and it didn’t.  It will be interesting to see how they recover here.  To fail this badly in this high profile an IPO is amazing.  In a world where the next Facebook will have its choice of exchanges, expect NASDAQ to be playing catch-up.

The New York Times has an interesting article about how retail brokerages like Scottrade, Charles Schwab, and Fidelity have basically universally declined to take direct responsibility for losses their retail investors suffered owing to the NASDAQ’s screw up.  Further, as retail investors are not members of Nasdaq, they can’t file complaints, whereas large institutions can.   Instead, the retail investor whow as screwed by NASDAQ’s incompetence has a totally fugly remediation process that I can only imagine involving lots of automated phone trees with cut rate brokerages like Scottrade or Fidelty.  “Dial 3 if you’d like to talk to someone about your trade… current wait times are unusually high, we expect someone to be with you in approximately 95 minutes.”   Yuck.

So retail brokerages who won’t stand behind their retail customers and who offer crumby service deserve to be called out.  Definitely.  But there is also some accountability that retail investors have to take here.  They should not come into an IPO expecting to see a quick pop.  That’s lotto thinking, its not stock investing.  It exposes you for a sucker and your foolishness deserves to be repaid with you losing your money.  When you buy a share, you are buying a share from someone ready to sell.  You need to ask yourself if you’ve really thought carefully enough about the trade you’re making, as its likely that the person or computer on the other end has dedicated a lot more brainpower to what they’re doing.  If you’re ready to put your money into the market or into Facebook, you’d better understand that its a long-term game, you really shouldn’t be doing this with an eye towards what happens today, this week, this month, or frankly this year.  To do so is foolish.

This tough love message is especially important now.  With all that we have been through in the last 10 years–DotCom Crash, WorldCon, Enron, the banking crisis, Bernie Madoff, the housing crisis–we should have learned that you’ve got to be mindful when you invest.

To see how quickly these lessons were forgotten, and how quickly the mirage of a sure thing of Facebook’s IPO took hold of the psyche, is cautionary indeed.  Fools and their money.

Disclosure: I have no investment position in Facebook.  I plan to be a long-term buyer, but frankly plan to wait a little longer, as I think the price is still too high.  I expect it to drift down over coming months, and will hope to pick some up.

 

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