- @4entrepreneur

Facebook filed for five billion dollar IPO on February 2, 2012. As with every public company, Facebook disclosed confidential, strategic information to SEC and the public. In this document, Facebook indicated potential threats and risks for investors. This document, filing was especially important since as a private company, people knew little about Facebook’s strategy behind maintaing sustainable competitive advantage. IPO documents further indicate that there are factors beyond the control of Facebook – like distribution on mobile platforms, meeting customer expectations and facing inevitable change in member habits and expectations in the future.

With 800 million MAUs (monthly active users), 483 DAUs (daily active users) and  2011 revenue of 3.711 Billion, the company presents strong revenue model. Facebook makes 12% of its current revenue from Zenga, a social gaming website that relies on Facebook’s platform.  The challenge, according to the documents remains on how to retain existing members as well as to continually striving for a scalable growth. Facebook presents these numbers and makes a case for investors, advertisers assessing their ROI. Though revenue model based on gaming is strong, advertisers are yet to see how advertising model within member community will unfold.

Facebook could face a massive challenge of meeting customer expectations and the social platform being of casual in nature, there is a question of finding a right fit of fulfilling customer service for the masses. With 800 million MAUs, privacy, potential liability and customer service are of main concerns.
As per the documents, mobile is another area of concern for Facebook. The growth rate of mobile users is rising at a higher pace than the growth rate of its members. Currently, Facebook relies heavily on piggybacking on third party mobile platform.  Facebook relies on seven million application developers and websites that integrates with Facebook APIs . Facebook indicates acquisition as one of its primary growth strategies.

Tags: 4entrepreneur, API, Dacebook API, facebook, Facebook App, Facebook App developers, Facebook applications, Facebook DAU, facebook going public, facebook IPO, Facebook MAU, going public, IPO, IPO Facebook, venture loft, venture loft network, ventureloft.tv, Zenga, Zenga Facebook partnership, Zenga ROI, Zynga API, Zynga IPO