Monthly Archives: May 2012

How Facebook Can Rally From Its IPO Fiasco

Facebook has a big image problem but a clear escape.

Some reports say that individual investors – aka Main Street– lost more than $ 600 million dollars because of the IPO fiasco and the company continues to generally get hammered for their role in the mess.   Wall Street, on the other hand, profited by $ 100 million dollars.

While they may have bungled management of their IPO, they can divert their own mistakes to the 900 pound Gorilla of villains, Wall Street, if they play their cards right.

Like the Abramoff scandal in the early 2000’s sullied Washington’s reputation, the housing market meltdown of the latter 2000’s brought to light Wall Street’s role in manipulating our financial markets and led to “reform.”  (that’s another debate).   Today, Congress and Wall Street are neck and neck for most disliked and mistrusted by the public.

Twenty-four hour news cycles and the growth of niche media means a story can appear among any variety of channels, from a financial news network to a small magazine or newspaper to Internet chat rooms and blogs. 

This is working against Facebook in a big way. But they can right the ship quickly if they’ll take aggressive and fast action:

First – Issue an emphatic and sincere apology to Main Street for how the IPO was transacted.  Facebook’s initial reaction has been defensive – “We believe the lawsuit is without merit and will defend ourselves vigorously,” and they’ve otherwise been quiet.

That may be the right legal posture, but it’s certainly won’t help their relationship with the public. 

Show some remorse and contrition – pronto – before the stock drops another 20%.

Facebook’s COO made a public appearance on Wednesday and declined to comment on the IPO matter.  That needs to change.  She, Zuckerberg and management needs to add the phrase.. “we regret anything surrounding our IPO that negatively impacted individual investors,” and then..

Second, the company should call for significant financial reform around how IPO’s are handled, and then commit resources to make it happen.  A villain is often the catalyst for change; Facebook has a ready-made villain on Wall Street.

To this end, some are calling on a review of the recently passed JOBS Act.

U.S.Senators Jack Reed and Sherrod Brown separately blasted that change to securities laws in statements. “During the debate over the misnamed JOBS Act there was a lot of talk about driving more companies toward the so-called IPO on-ramp, but little discussion and no hearings about the efficiency and transparency of the IPO system,” said Reed, who chairs the Senate Banking Committee’s panel on securities.

Whether that’s the platform for change or not, Facebook needs to find a pro-Main Street bandwagon and get on it quickly.

Third,  Facebook should undertake a significant philanthropic initiative now.   Transparent?  Of course.. But it won’t matter in a week.   Surveys show that consumers want to do business with good corporate citizens, and those undertaking ‘good deeds.’   

While they’re at it, they should identify their ‘core reputation platform’ which defines their distinctiveness and what the company stands for.  The reputation platform speaks to all stakeholders (for Facebook, that’s most of us) and tells them a story.  Although over time a company may tell multiple stories to its stakeholders, the best-regarded companies tell stories that are rooted in core principles from which they don’t waver.

Because business often overlooks some of these key tenets, their public relations often become a defensive game.  Unfortunately, experience shows that when issues are defined for business, even aggressive advocacy may not be enough to counter the tide of public opinion (often fanned by the media) in the other direction.

The lesson here:  With the public experiencing unprecedented access to news, information, and rumor, it is increasingly important for organizations to be actively and consistently engaged in an ongoing strategic communications campaign, and then respond quickly when things go south.

Ultimately, a business growth strategy has to include a plan to communicate with key constituencies to enhance — or in this case save — a corporate reputation.

As they have defined social networking, Facebook has an opportunity to create a new paradigm in a new environment, one in which companies engage key constituencies, add “sunshine” to the process, and make the public part of the solution to their problem.

Today, public opinion is being shaped by traditional means and new non-traditional means that collectively present opportunity, challenges, and potentially a competitive threat to all organizations.  This perfect storm is providing an unfortunate opportunity for Facebook to address all three; hopefully they’ll make the most of it.

Craig Casselberry
C 512.762.7366

Global Venture Labs at the University of Texas – Austin held its “Super Bowl” of investment competition over the weekend (  The event featured young start-up companies from multiple industry sectors, 13 different countries and five continents.

Having the pleasure of serving as a judge for the competition again this year, I was reminded how lucky we are to be in Texas, a land of great entrepreneurs and job-creators.

After all, here we sit in the 13th largest economy in the world, competing in a ‘flat’ global economy, and Texas is thriving.

Last week, Chief Executive Magazine released results of its eighth annual survey of Best and Worst States in which to do business and Texas easily clinched the No. 1 rank, the eighth successive time we’ve been so recognized. (

Also last week, 24/7 Wall Street Wire reported (“As employment surges in six states,Texas rules”) that Texas led the country in job creation in 2011 and accounted for a full 33% of those new jobs. In the Milken Institute’s 2011 “Best Performing Cities” index,Texas had four of the top five in the country and nine of the top 25. Texas gained almost 28,000 jobs in February and the unemployment rate fell again to 7.1% (compared to 8.3 nationally).  As a state, we’ve shown positive job growth for the last 22 months.

Just three weeks ago, Apple, the world’s most valuable company, announced it was expanding its presence in Austin with a $ 304 million dollar investment, adding 3,600 jobs over the next ten years.

The Texas Coalition for Capital (, the state’s leading advocate for access to capital and an organization we’ve managed since 2004, has had a front row seat during this run and we know its not by chance that Forbes, CNBC and other notable mediums have called Texas the best place in America for business and jobs over the last five years.

In Chief Executive’s rankings, CEO’s cite our business-friendly tax and regulatory environment and workforce quality (second only to Utah’s).  We’ve also led the way in public-private partnership to add efficiency in how we administer state government and use tax dollars.  Innovative programs like the Texas Emerging Technology Fund spur innovation and create sustainable companies that create jobs over the long term, a model program other states have emulated.

The Texas Enterprise Fund, which makes Apple-like deals possible, has brought more than 56,000 new jobs to the state and generated $14.7 billion in capital investment since its inception.

The Texas Certified Capital Company program has invested about $ 250.00MM in promising young companies across the state and realized a 3:1 ratio of private investment to public dollars.  In other words, public dollars are incenting investment from private investors at an impressive rate and Texas will reap the benefits of those companies’ growth.

To maintain our global economic competitiveness, Texas should stay focused on core principles of public-private partnership, a business climate that favors low taxes, reasonable regulation, skills development within our workforce, and access to capital.

The Coalition and our partners will continue to work for pro-business public policy and access to capital for Texas small businesses to keep Texas economically competitive on a global basis.

The overriding message to entrepreneurs and companies large and small:  bring your jobs to Texas and we’ll leave you alone to innovate and grow.   Based on the state of our economy today and feedback from CEO’s, it seems the message is resonating.


Craig Casselberry
C 512.762.7366