In my previous posts, I suggested that Facebook (Nasdaq: FB) should offer an ownership stake -- sweat equity -- to all its customers (aka pretty much everyone). Compensating and incenting the people who actually do the "work" with equity just makes good business sense, as proven by the fact that employee-owned companies consistently outperform peer firms.
This insight is all the more crucial in the case of Facebook, where the product is the end-user customer/worker/developer. Failing to deliver a quality product, which equates to producing content that is mundane, thoughtless, uninspired, irrelevant, and meaningless, is Facebook's most significant business risk.
When the quality of "sharing" degrades to the point that customers keep the interesting and useful stuff to themselves, then there will be few nuggets to populate the data warehouses of the Procter & Gambles of the world.
When customers get lazy and opt for informational quantity over quality (a problem Facebook has already identified), then what to do with all this information becomes a much more serious matter. What would Facebook do with enormous mounds of cybergarbage?
This is one reason Facebook's superhyped IPO, set in every way to replicate past IPO setaside programs for the wealthiest investors, is a strategic error. Equally important is the fact that rewarding a paltry number of wealthy "qualified" investors does nothing to support Facebook's business model, which hinges on vast numbers of continually prolific users.
Furthermore, I would venture to guess that time spent on Facebook decreases as income increases. The likelihood of trading true leisure (beach sojourns, for example) for the work of Facebook sharing and caring is pretty small for those with high net worth. In contemporary words akin to those purportedly said by Marie Antoinette, let them Facebook.
Again, offering equity ownership as a direct incentive would be an incredibly savvy business move. But what about the practicality, the actual ability, and the wherewithal to execute this move? Really, how would the company logistically deal with 845 million small investors?
If you can send 845 million people a virtual box of chocolates through the Facebook portal, then incrementally distributing stock doesn't seem so crazy after all. (In relationship, the chocolates really do sound crazy.)
What is also not crazy: Democratizing investment in technology and capital, especially the kind with a fairly predictable revenue stream, would do more to improve the world economy than increasing/decreasing taxes, cutting/making work, or buying/selling real estate.
Now we bring up the issue of government. Yes, it is true that the SEC doesn't allow more than 500 people, let alone 845 million, to participate in the really choice profits that come before the bell. But hold on to your computer. Government, in this area, is rapidly changing. For all the complaints lodged at politicians and regulators, the work on this issue by the House Subcommittee on Capital Markets -- from taking thoughtful testimony to reasonably planning for unanticipated consequences -- has been excellent up to this point.
The subcommittee really should post its work on Facebook. But in case it doesn't, I'll cover the topic right here instead.