Facebook: The IPO hangover that could change it forever
Coming up any day now, there’s going to be one helluva party at Facebook. Champagne, confetti, speechifying, really loud music — you name the hoopla. And why not? Companies don’t go public for a gazillion dollars very often.
So party on, Facebook.
Just beware the day after. Actually, beware the year after and the year after that.
Because once Facebook has its massive new liquidity infusion, the company stands to get nailed by something that can hurt a lot more, and last a lot longer, than a hangover: a changed culture. That is, a culture of diminished urgency, of game-over-we-won, of not-invented-here conceit.
Now, it practically goes without saying that such cultures can (and too often do) crop up at all sorts of companies for all sorts of reasons. But most often, arrogant or otherwise indolent cultures tend to track with colossal market success, and they definitely tend to be exacerbated when a whole slew of employees are suddenly billionaires and millionaires. It’s just plain hard to generate wide-scale paranoia, passion and humility — the defining values of an energized enterprise — when everyone’s feeling fat and happy.
And after the party, Facebook is going to be feeling pretty darn fat and happy, especially the people who’ve been around the longest and control the most action — its senior managers.
Oh, come on, you’re thinking now, Facebook’s managers aren’t stupid. They’re not going to let the IPO wreak havoc with their winning culture.
And we agree — with the first part. Surely many Facebook managers are top-notch. Look what they’ve done so far.
But they’re also up against expectations, human nature and something of a split-personality disorder.
Expectations first. By that we mean that the world (read: Wall Street analysts, shareholders and business journalists) will soon relentlessly and hungrily start expecting Facebook managers to focus their full energies on strategic matters such as how the company’s going to spend its newly created equity. Should it own the social media space by buying Twitter or Tumblr or both or neither? Should it pour money into inventing the technology that finally takes the aggravation out of mobile? Should it expand its global reach organically or by rapid acquisition?
Without doubt, these are all very important questions. And Facebook managers will understandably heed the pressure to fixate on them.
Then there’s human nature. In the buildup to an IPO, employees are often at their best — bursting with ideas, camaraderie and competitive fervor. There’s a certain optimistic frenzy in the halls and cubicles; a tirelessness. With the IPO over, there will no doubt be a companywide exhale, especially by the people who profited the most richly from the transaction. And let’s not kid ourselves: Late arrivals to the office, long lunches and a lot of happy sighing over new houses and boats do not an energized workforce make.
Finally, there’s the threat of a split-personality disorder setting in. Look, after its IPO, Facebook is going to have two classes of citizens. That’s just reality. Some of its 3,000 or so employees — several hundred in number by some counts — will have significant riches in the hand. Newer hires, though — well, they’ll mostly have options in the bush.
Someone call a motivational speaker.
Or better yet, someone make sure that Facebook’s haves care desperately about the fate of its have-nots, who will only do well if the whole company continues to grow and thrive. “Someone”…meaning Facebook’s top-notch managers.
How can they do that? Well, it actually starts with a kind of campaign stumping on their part, complete with vivid imagery and gritty stories and exciting imaginings about how Facebook is going to look in the years ahead and what it means for the life and career of all company employees. Guess what, Facebook’s leaders need to get out there and say over and over again, the future around here is going to be better than the past — way better. All it takes is every last one of us getting wildly reenergized and recommitted to our mission of making the world more open and connected.
But with all this exultant “barking,” there also needs be bite — in the form of frequent, rigorous performance reviews. The facts are, if Facebook wants urgency, speed and intensity around its mission, those behaviors must be explicit values that, when demonstrated, result in bonus money and upward mobility — or not.
To further unite its culture around its mission, post-IPO Facebook might also seriously consider evaluating its people for competitive paranoia (good), sharing of ideas (also good) and a heightened sense of purpose (same), as well as self-importance, humorlessness and BMW ownership (bad, bad and just kidding, sort of).
Not to get mired in the details of Facebook’s HR process. The bigger point we’re trying to make is that good values don’t happen by accident. Like any company with its coffers full and its managers feeling a bit impervious, Facebook — without a top-down commitment to values — runs the risk of letting its guard down and inadvertently creating an organizational mess.
Mission and values — and the culture they create — really matter.
And if Facebook gets that right after its IPO, it will really have something to party about.
Jack Welch was the CEO of General Electric for 21 years and is the founder of the Jack Welch Management Institute at Strayer University. Suzy Welch is an author, speaker and the former Editor of the Harvard Business Review.