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Bay Area Awaits Impact of 'Facebook Effect'

Facebook filed papers on Wednesday announcing a $5 billion initial public offering. Now everyone from government officials to money managers is waiting to see what employees of the world's biggest social networking business are going to do with their newly minted millions.

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Facebook CEO Mark Zuckerberg delivers a keynote address during the Facebook f8 conference on September 22, 2011.

Host Kelly Wilkinson: From KQED News, I'm Kelly Wilkinson.

You've probably already gotten the status update: Facebook, based in Menlo Park, filed papers today for its initial public stock offering.
   
In paperwork filed with the Securities and Exchange Commission, Facebook indicated it hopes to raise at least $5 billion dollars through its IPO.
   
The ripple effects here in the Bay Area are expected to extend into the real estate market, venture capital firms, even the state's bottom line.

Kara Swisher is the co-executive editor of All Things D. She's been covering Silicon Valley and digital issues since the late 90s.  
   
Kara, you've watched this happen when Netscape went public in 1995 and then Google in 2004. Now we're going through it again. Can you put this IPO in context for us in terms of what it means for Silicon Valley?

Kara Swisher: Well it’s the biggest one in a while. It’s going to make multi-millionaires out of many people, billionaires out of a few. Obviously it’s a big jolt for the local economy. They’ll probably be house buying, car buying and things like that.

Wilkinson: There's a lot of juicy details in Facebook's filing like the company's earnings and growth. As you mentioned making millionaires and some billionaires. Who are these people and how will that be felt in Silicon Valley?

Swisher: I don’t know how they spend their money. Mark Zuckerberg doesn’t spend a lot of his money. He’s gonna be the richest person here. He owns a very large chunk of the company. He's not going to sell a lot, from what I understand. He's not going to be buying a lot I guess. He’s been giving away money of course to various charities.

At the top of the pyramid of Facebook there are already some wealthy people that came from Google. So I don’t know if it’ll change a whole lot in terms of what people buy, or if all the suddent there's a run on private airplanes. I doubt that.

Wilkinson: There is this fascination with the money and the IPO. But does have any meaning for the average person in the Bay Area?

Swisher: Not unless you work for Facebook, or serve people who work for Facebook.

I think it’s just another good thing for the economy to have a very healthy IPO. The IPO market has been slow in the Silicon Valley. It's impacted a lot of things, although startups have been very lively for the past two years.

Facebook doing well is good for everybody else. Not all ships will rise. But this is the flagship of all these companies, and a lot of them have their businesses attached to Facebook. If it does well, they’ll do well.   

Wilkinson: We've obviously been through tech bubbles and busts. What kind of lessons do you think have been learned?

Swisher: I don’t know that there’s any lessons to be learned. This is a very substantive company as are many of the companies in web 2.0. This is not a Pets.com by any stretch of the imagination. The tech industry is vibrant in this country which is one of the few areas we’re very good at, compared to the rest of the world, and that’s great for the American economy.

Wilkinson: How about specifically, how will it affect venture capital?

SwisherVenture capitalists will get richer. A lot [of them] have a piece of this. If the shares do well, as they’re expected to do, as long as the economy keeps up, everyone will benefit and then they’ll have more money to invest presumably.

Wilkinson: Do you think those investments will be made increasingly in social media sites?

Swisher: Not necessarily. A lot of them are attacks on traditional industries. Mark Andreessen, who’s the legendary Netscape inventor; he’s on the board of Facebook and he’s a big investor in it. He just got $1.5 billion to invest all around everywhere and he was talking about disrupting existing industries, anywhere from the hotel industry to the food industry. So I think it’s going to be more widespread than just social media.

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