All Tech Considered
3:16 am
Fri February 3, 2012

Facebook's Early Investors May Have Much To Like

Originally published on Wed May 23, 2012 11:03 am

Facebook filed to go public this week, and many analysts expect that it will be valued between $75 billion and $100 billion on the day of its initial public offering. That would make Facebook more valuable than GM, Ford and even Goldman Sachs.

What's most remarkable is that the company has barely 3,000 employees, and many of them are about to become very, very rich.

There's this guy, David Choe. Back in the day, Facebook hired him to paint graffiti murals all over the company's original office space in Palo Alto, Calif. Even Marc Zuckerberg got into the act.

Choe was paid for his work in stock. And according to The New York Times, that stock could soon be worth $200 million.

One of the guilty pleasures of an IPO filing is getting to peer inside a company as famous as Facebook and get a glimpse of who owns what. Of course there's Zuckerberg.

"Obviously, he should be worth a tidy $25 billion," says Henry Blodget, editor of Business Insider and the bad-boy analyst of the last Internet boom.

This time the bad boys are becoming billionaires — like Sean Parker, Facebook's first president. Before that, he co-founded Napster.

"The man who, in the movie at least, famously said 'a million isn't cool — a billion is cool,' " Blodget says. "And he will have several of them."

In that movie, The Social Network, Dustin Moskowitz had little more than a cameo. He was Zuckerberg's college roommate, but he could soon be worth $7 billion.

"If he had been down the hall, we wouldn't be talking about him," says Michael Stern, who runs the website Who Owns Facebook. He says Moskowitz wasn't the only winner of the roommate lottery. Zuckerberg's prep school roommate will get a couple hundred million.

"A lot of people won the lottery here," Blodget says. And, he says, not all of these future billionaires are men.

After Facebook COO Sheryl Sandberg's options vest, "she's going to be one of the richest self-made women ever," Blodget says.

According to its filings, Facebook has close to 1,100 stockholders. Many more could benefit from restricted stock options. But Robert Frank, who writes the Wealth Report blog at the Wall Street Journal and is the author of the new book The High-Beta Rich, says that doesn't mean all these folks will become instant millionaires.

"More than half of this company is owned by just five large shareholders," he says. "So, like most of America, wealth in Facebook is very top-heavy, concentrated among just a few people at the top."

In Silicon Valley, it's become conventional wisdom that Facebook's IPO will create 1,000 new millionaires. And while that may be true, Frank says it's impossible to know for sure.

"Even those with a lot of shares will see their wealth fluctuate wildly. So the number of millionaires may change," he says.

After all, this is a tech stock, and Frank says all this wealth is just on paper — at least for now.

Copyright 2012 National Public Radio. To see more, visit http://www.npr.org/.

Transcript

RENEE MONTAGNE, HOST:

And when Facebook filed to go public this week, analysts wondered whether it was really worth the $100 billion it's valued at. But there's no question about one thing: many employees are about to become very, very rich. Steve Henn reports.

(SOUNDBITE OF MUSIC)

STEVE HENN, BYLINE: There's this guy named David Choe.

DAVID CHOE: I love spray painting. I can't get enough of it.

HENN: Back in the day, Facebook hired him to paint graffiti murals all over the company's original office space in Palo Alto. Even Mark Zuckerberg got into the act.

MARK ZUCKERBERG: I'm going to make a tiny stick figure.

HENN: Choe was paid for his work in stock. And according to The New York Times, that stock could soon be worth $200 million. One of the guilty pleasures of an IPO filing is getting to peer inside a company as famous as Facebook and get a glimpse of who owns what. Of course, there's Mark Zuckerberg.

HENRY BLODGET: Obviously, he should be worth a tidy $25 billion.

HENN: Henry Blodget is the editor of the Business Insider and was the bad boy analyst of the last Internet boom. This time the bad boys are becoming billionaires, like...

BLODGET: Sean Parker.

HENN: Parker was Facebook's first president and before that he co-founded Napster.

BLODGET: The man who in the movie at least famously said a million isn't cool, a billion is cool - and he will have several of them.

HENN: In that movie, "The Social Network," Dustin Moskowitz had little more than a cameo. He was Zuckerberg's college roommate, but he could soon be worth $7 billion.

MICHAEL STERN: I mean, if he had been down the hall, we wouldn't be talking about him.

HENN: Michael Stern runs a website called Who Owns Facebook. He says Moskowitz wasn't the only winner of the roommate lottery. Zuckerberg's prep school roommate will walk away with a couple hundred million dollars himself.

BLODGET: A lot of people won the lottery here.

HENN: And Blodget says not all of these future billionaires are boys.

BLODGET: Sheryl Sandberg could be.

HENN: She's Facebook's COO. And after her options vest...

BLODGET: She's going to be one of the richest self-made women ever.

HENN: According to its filings, Facebook has close to 1,100 stockholders. Many more could benefit from restricted stock options, but Robert Frank, who writes the Wealth blog at the Wall Street Journal and is the author of the new book "The High-Beta Rich," says this doesn't mean all these folks will become instant millionaires.

ROBERT FRANK: More than half of this company is owned by just five large shareholders. So like most of America, wealth in Facebook is very top heavy, concentrated among just a few people at the top.

HENN: In Silicon Valley, it's become gospel to assume Facebook's IPO will create 1,000 new millionaires. And while that may well be true, Frank says really it's impossible to know for sure.

FRANK: Even those with a lot of shares will see their wealth fluctuate wildly. So the number of millionaires may change.

HENN: After all, this is a tech stock, and Franks says all this wealth is just on paper - at least for now. Steve Henn, NPR News, Silicon Valley. Transcript provided by NPR, Copyright National Public Radio.

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