The current crisis with Facebook isn’t rooted in its
management or even in its original design. Rather, the sources of its problems go
back to its IPO, which occurred in 2012 when the company was valued at $104
billion. Specifically, Facebook’s stock was priced by Wall Street on the
assumption that it was 1) the antithesis of privacy; and 2) able to grow
revenues more or less forever at a rate substantially faster than expenses. A
corollary of this second point was that the company would remain largely free
of the inherently unpredictable costs of human employment (Wall Street hates
people costs and rewards companies that keep them as low as possible).
