Why the Facebook IPO Matters

Today the worlds of technology and finance collide yet again in the first day of public trading of Facebook stock. Facebook is not the first online social networking site (Remember Myspace? Or for that matter TheSquare?). Nor is it the first overhyped IPO. What Facebook does teach us, though, is that even in a weakened economy, the ideology of venturing is thriving.

I’ll post a longer version of this argument after the IPO dust has settled at the end of the day. Already business and financial reporters are buzzing with what the flood of newly minted millionaire-employees will do. According to one analysis, Facebook employees share 30% of the company’s stock. The magic phrase has been 1,000 millionaires created by the end of the day. While notable shareholders like Bono, Sean Parker, and Marc Andreessen have been featured in profiles, less has been said in the media about the early employees of the company who stand to gain from the IPO.

I call those kinds of employees Venture Labor. They’ve made a bargain that their work will pay off financially, not just in terms of compensation for labor, but compensation for the risks that they take. Their entrepreneurial spirit gets celebrated today with the Facebook IPO – people who got in early to work on a college drop-out’s crazy idea “suddenly” become crazy rich. The flip side of this spirit though is a new social ideology that is powerful and pervasive: to get ahead in the current economy, people have to be willing and able to take financial and economic risks.

As a social scientist, my fear is that this new entrepreneurial ideology will have a punitive side. The logic goes something like this. If getting ahead is tied to taking the right kinds of risks, what about those who didn’t make it? Those who don’t get ahead, didn’t take the right risks, make the right choices or “invest” enough. People helped Mark Zuckerberg build Facebook into a powerful company (which is threatening to become its own medium according to some critics like the super bright Steven Johnson and is drastically remaking digital media, according to the Silicon Alley pioneer Tom Watson). They’re certainly not first or the last venture laborers. But they are the lucky ones. I’m sure the folks who worked at Myspace, Pseudo.com, and TheSquare would agree.