What the Facebook IPO means for IT leaders

There’s a saying in financial circles – one that has been conveniently ignored many times in the past – that says: “If it looks like a bubble, and it feels like a bubble, then it’s a bubble.”
So, does a $100bn valuation for Facebook look like a bubble? Did its purchase of Instagram for $1bn feel like a bubble? Does the ballooning valuation of Apple – $500bn and growing – seem like a bubble to you?

To any normal person it certainly does, but nobody in financial markets is saying it is. At least, not until they know it’s a bubble, by which time of course they will all say they knew it was a bubble all along.

It’s hard not to draw parallels with the dot com boom and bust of the early 2000s, but it’s equally as hard now to be a doomsayer as it was before the markets crashed that last time. The Nasdaq exchange that houses many technology stocks has never again reached the peaks it hit in the midst of the internet bubble in 2000 – but to have said so at the time was like doubting the Emperor’s new clothes. It certainly feels like that now.

There’s little doubt the markets are desperate for a success story to alleviate the economic gloom and the downward spiral of the Eurozone. Facebook has been the business success story of the past five years, and investors want a share of that reflected glory.

For the tech community in general, the glow that Facebook emits is a good thing. It brings investment to the sector, and more importantly attracts skilled workers. Hopefully it will encourage young people to consider a career in technology – that so few do these days remains a ticking time bomb for UK IT.

But if this is a bubble, and all that corporate “Like” for Facebook falls flat, the consequences for IT could be catastrophic. A flight from tech stocks would occur, venture capital would go elsewhere, innovation would be stifled.

So for IT professionals, the importance of the Facebook IPO rests less in the inflated valuation, and more in the need to engender long-term confidence. IT leaders need to ensure they deliver to their stakeholders the confidence in technology to overcome what may yet be a loud burst ahead.

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