Facebook’s IPO Has Forced a Departure From The “Hacker Way”

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Facebook has gone public in the past year, and the effects of public ownership are beginning to show in the company. Once a small tech start-up, Facebook has made its way for nine years under the direction of creator and CEO Mark Zuckerberg. Recently growth for the company has accelerated, but Facebook is working to keep investor expectations low so they don’t disappoint.

Before going public Facebook had a lot more freedom to do things their way. Despite being a billion dollar company, their roots as a small website started by some college kids lead to the establishment of a certain company culture, which influence has stayed with the company even today. As a computer enthusiast first and a businessman second, Zuckerberg’s ideas of creating great software, and not turning massive profits, are what drove the company.

Going into the publicly traded stock market has a certain effect on companies, and it’s not always for the better. Public companies have to be accountable to investors, and aren’t able to maintain nearly as much privacy as they might like. In Facebook’s case, this means that their revenues are now public information. One area of interest is in mobile, which was a weak spot for Facebook before their initial public offering (IPO). Pressure from investors to capitalize on what was a great source of potential lead Facebook to really make a strong push in that area. They have grown rapidly since then.

Though this pressure to turn profits can be good, it can also have a negative effect on the product. As a public company, Facebook’s first obligation is to make a profit, and their second one is to make a good product. Certainly they can’t abandon quality completely, but they are now more likely to choose to place additional ads in places that might be more obtrusive to users for the sake of revenue growth.

The “Hacker Way” involves dedication to the software, not to other influences, such as investors. Hackers and computer enthusiasts tend to be obsessed with user experience and well made products, and not so much with who makes what product or other external factors. Facebook has its roots completely in the hacker culture, but it is slowly branching away from that beginning and moving towards a more mainstream, bureaucratized culture.

Facebook’s transition is an important example for all tech companies. Facebook is a model for others in its transition from a start up to being one of the most influential companies. Smaller and newer companies, like ones that offer operator assisted conference call services or New Jersey web development will look to Facebook as an example.

Facebook hasn’t changed a ton in the several months since their IPO, but their growth has been impressive. As we look to the future, their continued growth will be important, and will keep outside investors from meddling with the company too much. Failure to meet expectations, however, could lead to additional efforts to adapt the company to the mainstream business culture.

Image Credit: Andrew Feinberg