Why Facebook Went Public (and how it made one graffiti artist stinkin' rich)
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"disqusTitle": "Why Facebook Went Public (and how it made one graffiti artist stinkin' rich)",
"title": "Why Facebook Went Public (and how it made one graffiti artist stinkin' rich)",
"headTitle": "The Lowdown | KQED News",
"content": "\u003cfigure id=\"attachment_1379\" class=\"wp-caption alignleft\" style=\"max-width: 257px\">\u003ca href=\"http://ww2.kqed.org/lowdown/wp-content/uploads/sites/26/2012/03/facebookipo20120201-e1331065687780-300x2101.jpg\">\u003cimg class=\"size-full wp-image-1379 \" title=\"facebookipo20120201-e1331065687780-300x210\" src=\"http://ww2.kqed.org/lowdown/wp-content/uploads/sites/26/2012/03/facebookipo20120201-e1331065687780-300x2101.jpg\" alt=\"\" width=\"257\" height=\"170\">\u003c/a>\u003cfigcaption class=\"wp-caption-text\">Facebook CEO announces his company's plan to go public (credit: Justin Sullivan/Getty Images)\u003c/figcaption>\u003c/figure>\n\u003cp>When Facebook filed for an Initial Public Offering (IPO) in February, Mark Zuckerberg \u003ca href=\"http://abcnews.go.com/blogs/technology/2012/02/facebook-ipo-mark-zuckerbergs-letter/\">wrote a public letter\u003c/a> outlining Facebook’s mission: to bring the world closer together. With the additional investment money that an IPO would bring, he explained, Facebook would have the resources to better reach that goal.\u003cbr>\nOr, to put it another way, when Facebook goes public, it stands to make a whole lot of money. IPO’s can be a good way for companies\u003cbr>\nto have access to a lot of funding fast,\u003c!--more--> expand their businesses quickly and, in theory at least, make even more money (remember that whole \"you gotta spend money to make money\" thing?).\u003c/p>\n\u003cp>Think about some of the recent Facebook features like Timeline, Newsfeed, or video-chatting. More investment in Facebook means more innovations that can be more quickly designed, implemented, and, most importantly, turned into profitable applications.\u003c/p>\n\u003ch4>\u003cstrong>So what's Facebook actually worth?\u003c/strong>\u003c/h4>\n\u003cp>Keep in mind that the “I” in IPO refers to just the \u003cem>initial\u003c/em> chance that a company going public has to raise cash. Facebook is hoping to get as much as $10 billion from their upcoming IPO (the company will likely go public by early summer). Not too shabby, right? But that’s only a fraction of what the company actually thinks it's worth. And therein lies the big question ... How much?\u003c/p>\n\u003caside class=\"pullquote alignleft\">In 2005, a graffiti artist painted Facebook's office walls and got paid in stock options that soon will be worth about $200 million.\u003c/aside>\n\u003cp>No one really knows for sure. The company made \u003ca href=\"http://www.forbes.com/sites/tomiogeron/2012/02/01/facebooks-5-billion-ipo-filing-3-7-billion-in-2011-revenue/\" target=\"_blank\">$3.7 billion in 2011\u003c/a>, but that's nowhere near how much industry experts think the company is \u003cem>actually worth\u003c/em> or what it will be worth in the near future.\u003c/p>\n\u003cp>In going public, Facebook has to open its accounting books and let outsiders finally get a better sense of how much the company makes and how it makes it. From there, investors will speculate its actual worth. Experts are already anticipating that Facebook’s \u003cem>actual\u003c/em> value will be somewhere \u003ca href=\"http://www.bloomberg.com/news/2012-02-23/facebook-insiders-limit-ipo-by-pushing-100-billion-value-tech.html\" target=\"_blank\">between $75 billion and $100 billion\u003c/a>.\u003c/p>\n\u003cp>[ad fullwidth]\u003c/p>\n\u003cp>To put that number in perspective (assuming it's reasonably accurate): if Facebook were a country, it'd have the 59th highest gross domestic product (GDP) in the world, putting it between Vietnam and Morocco!\u003c/p>\n\u003ch4>\u003cstrong>Why will this make some Facebook staffers very rich?\u003cbr>\n\u003c/strong>\u003c/h4>\n\u003cp>Similar to what happens in many start-up companies, Facebook offered some of its first wave of employees a small percentage of ownership (shares) in the company in lieu of big salaries (which it couldn't afford to pay at that point). The idea rests on the hope that some day the business becomes really successful and goes public, and those employees then get to cash in.\u003c/p>\n\u003cp>And that's exactly what seems to be on the verge of happening. Big time..\u003c/p>\n\u003cp>As long as Facebook remains a private company, those stock options aren't worth diddly because the company has no stock market value. But with its likely very lucrative IPO in sight, that $100 billion price tag suddenly becomes relevant. And all of a sudden, those employees who for years have been sitting on seemingly worthless stock have really big smiles on their faces.\u003c/p>\n\u003ch4>The Breakdown\u003c/h4>\n\u003cp>Imagine if you were one of those early Facebook workers and were given, say, 1% ownership in the company? If the company actually ends up being worth $100 billion, you'd suddenly be sitting on $1 billion in shares. Not too shabby!\u003c/p>\n\u003cp>Now to be clear, not \u003cem>all\u003c/em> Facebook employees will get super-rich. A majority of the company's roughly 3,000 staff don't have hefty stock options built into their contracts. But, a lot of them do! It's been widely estimated that \u003ca href=\"http://www.businessinsider.com/these-people-will-be-fabulously-wealthy-after-facebooks-ipo-2012-2\" target=\"_blank\">Facebook's IPO will create about 1,000 millionaires and a dozen billionaires \u003c/a>among its employees and early investors ... pretty much overnight!\u003c/p>\n\u003cp>So, for instance, take Mike Schroepfer, Facebook's vice president of engineering. He owns a little over 2 million shares in the company, which sounds like a lot, but it's only about .1 percent of the total. Now assuming the company is actually worth between $75 and $100 billion (let's split the difference and call it $87.5 billion), that'd make Schroepfer's holdings worth about $98 million! (source: \u003ca href=\"http://www.businessinsider.com/these-people-will-be-fabulously-wealthy-after-facebooks-ipo-2012-2#facebook-vp-of-engineering-mike-schroepfer-has-a-stake-worth-nearly-100-million-3\" target=\"_blank\">Business Insider\u003c/a>). And then you have Zuckerberg himself - the majority shareholder, who owns almost 30 percent of the company. What does that amount to in stock? Try $25 billion.\u003c/p>\n\u003ch4>The world's richest graffiti artist?\u003c/h4>\n\u003cp>Remember that not all of these people are actually Facebook employees. Some of them are early investors in the company (those guys who took the initial risk and gave Zuckerberg and his pals a bunch of start-up funding). And then there are a handful of folks with some random, quirky connection to Facebook and now stand to cash in big. Take, for instance, graffiti artist David Choe who was hired in 2005 to paint some wall murals in Facebook’s first headquarters. Back then, though, the company hadn't made much money, so offered to pay Choe in stock instead of cash. He did the job, got some stock, and now \u003ca href=\"http://www.nytimes.com/2012/02/02/technology/for-founders-to-decorators-facebook-riches.html\" target=\"_blank\">stands to make about $200 million\u003c/a>. So much for the starving artist.\u003c/p>\n\u003ch4>Does California stand to benefit?\u003c/h4>\n\u003cp>Facebook’s headquarters are located in Palo Alto, and most of the overnight millionaire/billionaire employees live\u003c/p>\n\u003cp>in state. As a company based in California, Facebook will pay taxes to the state, and as residents, it’s employees will pay a state income tax, which is proportionate to what they make.\u003c/p>\n\u003cp>For cash-strapped California, this is potentially really good news. The \u003ca href=\"http://www.lao.ca.gov/analysis/2012/update/economic-revenue-update-022712.aspx\">state's Legislative Analyst’s Office\u003c/a> predicts that California could receive as much as $2.45 billion in taxes from Facebook over the next 3 years after the company goes public.\u003c/p>\n\u003cp>\u003c/p>\n\u003cp style=\"font-size: 11px;font-family: Arial, Helvetica, sans-serif;color: #808080;margin-top: 5px;background: transparent;text-align: center;width: 512px\">Watch \u003ca href=\"http://video.pbs.org/video/2192201847\" target=\"_blank\">Facebook IPO: Putting a Value on Social Media Giant\u003c/a> on PBS. See more from \u003ca href=\"http://www.pbs.org/newshour/\" target=\"_blank\">PBS NewsHour.\u003c/a>\u003c/p>\n\n",
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"content": "\u003cdiv class=\"post-body\">\u003cp>\u003cfigure id=\"attachment_1379\" class=\"wp-caption alignleft\" style=\"max-width: 257px\">\u003ca href=\"http://ww2.kqed.org/lowdown/wp-content/uploads/sites/26/2012/03/facebookipo20120201-e1331065687780-300x2101.jpg\">\u003cimg class=\"size-full wp-image-1379 \" title=\"facebookipo20120201-e1331065687780-300x210\" src=\"http://ww2.kqed.org/lowdown/wp-content/uploads/sites/26/2012/03/facebookipo20120201-e1331065687780-300x2101.jpg\" alt=\"\" width=\"257\" height=\"170\">\u003c/a>\u003cfigcaption class=\"wp-caption-text\">Facebook CEO announces his company's plan to go public (credit: Justin Sullivan/Getty Images)\u003c/figcaption>\u003c/figure>\n\u003cp>When Facebook filed for an Initial Public Offering (IPO) in February, Mark Zuckerberg \u003ca href=\"http://abcnews.go.com/blogs/technology/2012/02/facebook-ipo-mark-zuckerbergs-letter/\">wrote a public letter\u003c/a> outlining Facebook’s mission: to bring the world closer together. With the additional investment money that an IPO would bring, he explained, Facebook would have the resources to better reach that goal.\u003cbr>\nOr, to put it another way, when Facebook goes public, it stands to make a whole lot of money. IPO’s can be a good way for companies\u003cbr>\nto have access to a lot of funding fast,\u003c!--more--> expand their businesses quickly and, in theory at least, make even more money (remember that whole \"you gotta spend money to make money\" thing?).\u003c/p>\n\u003cp>Think about some of the recent Facebook features like Timeline, Newsfeed, or video-chatting. More investment in Facebook means more innovations that can be more quickly designed, implemented, and, most importantly, turned into profitable applications.\u003c/p>\n\u003ch4>\u003cstrong>So what's Facebook actually worth?\u003c/strong>\u003c/h4>\n\u003cp>Keep in mind that the “I” in IPO refers to just the \u003cem>initial\u003c/em> chance that a company going public has to raise cash. Facebook is hoping to get as much as $10 billion from their upcoming IPO (the company will likely go public by early summer). Not too shabby, right? But that’s only a fraction of what the company actually thinks it's worth. And therein lies the big question ... How much?\u003c/p>\n\u003caside class=\"pullquote alignleft\">In 2005, a graffiti artist painted Facebook's office walls and got paid in stock options that soon will be worth about $200 million.\u003c/aside>\n\u003cp>No one really knows for sure. The company made \u003ca href=\"http://www.forbes.com/sites/tomiogeron/2012/02/01/facebooks-5-billion-ipo-filing-3-7-billion-in-2011-revenue/\" target=\"_blank\">$3.7 billion in 2011\u003c/a>, but that's nowhere near how much industry experts think the company is \u003cem>actually worth\u003c/em> or what it will be worth in the near future.\u003c/p>\n\u003cp>In going public, Facebook has to open its accounting books and let outsiders finally get a better sense of how much the company makes and how it makes it. From there, investors will speculate its actual worth. Experts are already anticipating that Facebook’s \u003cem>actual\u003c/em> value will be somewhere \u003ca href=\"http://www.bloomberg.com/news/2012-02-23/facebook-insiders-limit-ipo-by-pushing-100-billion-value-tech.html\" target=\"_blank\">between $75 billion and $100 billion\u003c/a>.\u003c/p>\n\u003cp>\u003c/p>\u003c/div>",
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"content": "\u003cdiv class=\"post-body\">\u003cp>\u003c/p>\n\u003cp>To put that number in perspective (assuming it's reasonably accurate): if Facebook were a country, it'd have the 59th highest gross domestic product (GDP) in the world, putting it between Vietnam and Morocco!\u003c/p>\n\u003ch4>\u003cstrong>Why will this make some Facebook staffers very rich?\u003cbr>\n\u003c/strong>\u003c/h4>\n\u003cp>Similar to what happens in many start-up companies, Facebook offered some of its first wave of employees a small percentage of ownership (shares) in the company in lieu of big salaries (which it couldn't afford to pay at that point). The idea rests on the hope that some day the business becomes really successful and goes public, and those employees then get to cash in.\u003c/p>\n\u003cp>And that's exactly what seems to be on the verge of happening. Big time..\u003c/p>\n\u003cp>As long as Facebook remains a private company, those stock options aren't worth diddly because the company has no stock market value. But with its likely very lucrative IPO in sight, that $100 billion price tag suddenly becomes relevant. And all of a sudden, those employees who for years have been sitting on seemingly worthless stock have really big smiles on their faces.\u003c/p>\n\u003ch4>The Breakdown\u003c/h4>\n\u003cp>Imagine if you were one of those early Facebook workers and were given, say, 1% ownership in the company? If the company actually ends up being worth $100 billion, you'd suddenly be sitting on $1 billion in shares. Not too shabby!\u003c/p>\n\u003cp>Now to be clear, not \u003cem>all\u003c/em> Facebook employees will get super-rich. A majority of the company's roughly 3,000 staff don't have hefty stock options built into their contracts. But, a lot of them do! It's been widely estimated that \u003ca href=\"http://www.businessinsider.com/these-people-will-be-fabulously-wealthy-after-facebooks-ipo-2012-2\" target=\"_blank\">Facebook's IPO will create about 1,000 millionaires and a dozen billionaires \u003c/a>among its employees and early investors ... pretty much overnight!\u003c/p>\n\u003cp>So, for instance, take Mike Schroepfer, Facebook's vice president of engineering. He owns a little over 2 million shares in the company, which sounds like a lot, but it's only about .1 percent of the total. Now assuming the company is actually worth between $75 and $100 billion (let's split the difference and call it $87.5 billion), that'd make Schroepfer's holdings worth about $98 million! (source: \u003ca href=\"http://www.businessinsider.com/these-people-will-be-fabulously-wealthy-after-facebooks-ipo-2012-2#facebook-vp-of-engineering-mike-schroepfer-has-a-stake-worth-nearly-100-million-3\" target=\"_blank\">Business Insider\u003c/a>). And then you have Zuckerberg himself - the majority shareholder, who owns almost 30 percent of the company. What does that amount to in stock? Try $25 billion.\u003c/p>\n\u003ch4>The world's richest graffiti artist?\u003c/h4>\n\u003cp>Remember that not all of these people are actually Facebook employees. Some of them are early investors in the company (those guys who took the initial risk and gave Zuckerberg and his pals a bunch of start-up funding). And then there are a handful of folks with some random, quirky connection to Facebook and now stand to cash in big. Take, for instance, graffiti artist David Choe who was hired in 2005 to paint some wall murals in Facebook’s first headquarters. Back then, though, the company hadn't made much money, so offered to pay Choe in stock instead of cash. He did the job, got some stock, and now \u003ca href=\"http://www.nytimes.com/2012/02/02/technology/for-founders-to-decorators-facebook-riches.html\" target=\"_blank\">stands to make about $200 million\u003c/a>. So much for the starving artist.\u003c/p>\n\u003ch4>Does California stand to benefit?\u003c/h4>\n\u003cp>Facebook’s headquarters are located in Palo Alto, and most of the overnight millionaire/billionaire employees live\u003c/p>\n\u003cp>in state. As a company based in California, Facebook will pay taxes to the state, and as residents, it’s employees will pay a state income tax, which is proportionate to what they make.\u003c/p>\n\u003cp>For cash-strapped California, this is potentially really good news. The \u003ca href=\"http://www.lao.ca.gov/analysis/2012/update/economic-revenue-update-022712.aspx\">state's Legislative Analyst’s Office\u003c/a> predicts that California could receive as much as $2.45 billion in taxes from Facebook over the next 3 years after the company goes public.\u003c/p>\n\u003cp>\u003c/p>\n\u003cp style=\"font-size: 11px;font-family: Arial, Helvetica, sans-serif;color: #808080;margin-top: 5px;background: transparent;text-align: center;width: 512px\">Watch \u003ca href=\"http://video.pbs.org/video/2192201847\" target=\"_blank\">Facebook IPO: Putting a Value on Social Media Giant\u003c/a> on PBS. See more from \u003ca href=\"http://www.pbs.org/newshour/\" target=\"_blank\">PBS NewsHour.\u003c/a>\u003c/p>\n\n\u003c/div>\u003c/p>",
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"info": "What kind of no sabo word is Hyphenación? For us, it’s about living within a hyphenation. Like being a third-gen Mexican-American from the Texas border now living that Bay Area Chicano life. Like Xorje! Each week we bring together a couple of hyphenated Latinos to talk all about personal life choices: family, careers, relationships, belonging … everything is on the table. ",
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"info": "Our flagship program, helmed by Kai Ryssdal, examines what the day in money delivered, through stories, conversations, newsworthy numbers and more. Updated Monday through Friday at about 3:30 p.m. PT.",
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"info": "For decades, the process for how police police themselves has been inconsistent – if not opaque. In some states, like California, these proceedings were completely hidden. After a new police transparency law unsealed scores of internal affairs files, our reporters set out to examine these cases and the shadow world of police discipline. On Our Watch brings listeners into the rooms where officers are questioned and witnesses are interrogated to find out who this system is really protecting. Is it the officers, or the public they've sworn to serve?",
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"tagline": "Politics from a personal perspective",
"info": "Political Breakdown is a new series that explores the political intersection of California and the nation. Each week hosts Scott Shafer and Marisa Lagos are joined with a new special guest to unpack politics -- with personality — and offer an insider’s glimpse at how politics happens.",
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"possible": {
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"info": "Possible is hosted by entrepreneur Reid Hoffman and writer Aria Finger. Together in Possible, Hoffman and Finger lead enlightening discussions about building a brighter collective future. The show features interviews with visionary guests like Trevor Noah, Sam Altman and Janette Sadik-Khan. Possible paints an optimistic portrait of the world we can create through science, policy, business, art and our shared humanity. It asks: What if everything goes right for once? How can we get there? Each episode also includes a short fiction story generated by advanced AI GPT-4, serving as a thought-provoking springboard to speculate how humanity could leverage technology for good.",
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},
"radiolab": {
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},
"reveal": {
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"info": "Created by The Center for Investigative Reporting and PRX, Reveal is public radios first one-hour weekly radio show and podcast dedicated to investigative reporting. Credible, fact based and without a partisan agenda, Reveal combines the power and artistry of driveway moment storytelling with data-rich reporting on critically important issues. The result is stories that inform and inspire, arming our listeners with information to right injustices, hold the powerful accountable and improve lives.Reveal is hosted by Al Letson and showcases the award-winning work of CIR and newsrooms large and small across the nation. In a radio and podcast market crowded with choices, Reveal focuses on important and often surprising stories that illuminate the world for our listeners.",
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},
"rightnowish": {
"id": "rightnowish",
"title": "Rightnowish",
"tagline": "Art is where you find it",
"info": "Rightnowish digs into life in the Bay Area right now… ish. Journalist Pendarvis Harshaw takes us to galleries painted on the sides of liquor stores in West Oakland. We'll dance in warehouses in the Bayview, make smoothies with kids in South Berkeley, and listen to classical music in a 1984 Cutlass Supreme in Richmond. Every week, Pen talks to movers and shakers about how the Bay Area shapes what they create, and how they shape the place we call home.",
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},
"science-friday": {
"id": "science-friday",
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"info": "Science Friday is a weekly science talk show, broadcast live over public radio stations nationwide. Each week, the show focuses on science topics that are in the news and tries to bring an educated, balanced discussion to bear on the scientific issues at hand. Panels of expert guests join host Ira Flatow, a veteran science journalist, to discuss science and to take questions from listeners during the call-in portion of the program.",
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