Mark Zuckerberg - Facebook

Facebook IPO – 4 Lessons For African Tech Startups

By Tefo Mohapi

Facebook has been through a tumultuous couple of days, from the Initial Public Offering to having shareholders lodge lawsuits against them within 4 days of the IPO. Though African Technology Startups have their own unique challenges like limited access to finance and a scarce number of Venture Capital (VC) companies on the continent or VC’s that actively invest in Tech Startups in Africa, there are lessons to be learnt from the whole Facebook IPO fiasco.

Image courtesy of Facebook.com

1. Hype

Hype (or Marketing) is good. It serves to make your service / product popular and raises awareness amongst potential users and investors / financiers, but marketing is much like (sometimes) propaganda – the problem starts when you believe your own propaganda. In the case of Facebook, the majority of Facebook staff and shareholders believed that their company was worth over $100 Billion, thanks to the pre-IPO marketing. Understand the purpose of marketing and hype, and use it to your advantage, more importantly you must be able able to back it up should circumstances require you to do so.

2. The Suits

The Suits – investment bankers – should only be part of your plan if they fit in with your company’s strategy. Also, it is important to ensure – just like anything and anyone else you introduce to your business – that their goals are aligned with your business goals. Morgan Stanley’s goal (in the case of Facebook) seems to have been solely to cash in their chips as quickly as possible, by any means necessary, irrespective of the consequences that Facebook will experience.

3. Timing

4 years or more ago, Facebook was the dominant social network. It had just overtaken MySpace and had also started attracting an older user base than the typical MySpace user. There were under 500 million users registered on Facebook; and Twitter, Instagram etc. were nowhere near as popular then as they are today. With the potential upside of potentially more users joining Facebook and their potential competitors still in their infancy, this was an opportune time for Facebook to list given the potential growth; but then again, this is all in hindsight.

4. Mobile

The facebook user experience has always been much richer and better on a Desktop than on a mobile phone. Given that we carry our mobile phones everywhere we go and use them for Internet access most of the time, one would have thought Facebook would invest heavily in the early stages in a Mobile plan that ensures that the Facebook experience is richer on the mobile device as opposed to a desktop. This also explains why the likes of Twitter have slowly been creeping up on Facebook’s territory because they seem to execute a mobile plan first as opposed to a desktop plan (the Twitter Desktop experience is less desirable than the multitude of Twitter mobile apps). As an African startup this is very important because most Africans first experience with the internet is via a mobile phone.

(Tefo is an Entrepreneur, Technology Journalist and Business Analyst who is passionate about Technology and Africa. For more information go to: www.tefomohapi.com)

Post Author: Tefo Mohapi

Entrepreneur | Business Analyst | Technology Journalist Passionate about Technology and Africa. Analytical, Articulate and Meticulous Analyst of Information Systems and Business Processes. For more visit www.tefomohapi.com

Leave a Reply

Your email address will not be published. Required fields are marked *