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Facebook Ownership and Social Media Success

By Joel Redmond, CFP

We hear often about social media and ways to use it to promote business, make connections, and even rekindle old flames. What about one of the most obvious implications of social media: the incredible wealth they confer on their founders? We here look at three separate social media companies: Facebook (NYSE: FB); LinkedIn (NASDAQ: LNKD); and Zynga (NASDAQ: ZNGA).

In the US, the Securities and Exchange Commission requires Form 3 to be filed by executives, insiders, partners, and directors of public companies who own significant amounts of their own stock. Let’s look at some of these filings to get an idea of the real-world value that these three separate companies have conferred on some of their executives.

Facebook Ownership

Eduardo Saverin is a 10%+ owner in Facebook, which debuted last month at $38/share. According to the filings, Mr. Saverin is the owner of 53,133,160 shares of Facebook, which meant that at the IPO, the market value of his stock was $2.019 billion.

Nor is Mr. Saverin alone. The SEC’s EDGAR (Electronic Data Gathering and Retrieval) website lists 28 other Form 3s filed, all on 17 May. Here are a few other individual owners, the number of shares they owned at the IPO, and their value at IPO (Class A shares only):

Mark Zuckerberg: 413,801,850 ($15.72B)

Sean Parker: 65,998,657 ($2.51B)

Eduardo Saverin: 53,133,160 ($2.019B)

Peter Thiel: 5,982,174 ($227.32MM)

Marc Andreessen: 3,035,700 ($115.36MM)

Sheryl Sandberg: 1,899,986 ($72.2MM)

LinkedIn Ownership

Let’s now look at LinkedIn, which debuted at $45 in its debut in May of 2011. Here is a small list of individual owners and the value of their stakes at the IPO price (again, Class A shares only):

Michael Moritz: 16,840,309 ($757.81MM)

Jeff Weiner: 3,521,237 ($158.46MM)

Reid Hoffman: 2,028,942 ($91.30MM)

David Henke: 850,000 ($38.25MM)

Form 3 also reveals entity ownership. For example, Bessemer Venture Partners has created an entity called Deer VI & Co, LLC* that owns 4,578,253 shares of LNKD as well (initial value: $206.02MM).

Zynga Ownership

What about Zynga, the immensely popular gaming site linked to Facebook? The IPO price was $10 in mid-December 2011. At that time, here were examples of beneficial owners of the stock and the value of these (Class A) stakes:

Mark Pincus: 105,053,318 ($1.05B) 

Avalon Ventures: VIII LP* 34,680,608 ($346.81MM)

William Gordon: 15,193,494 ($151.93MM)

Reginald Davis: 378,510 ($3.72MM)

So what’s the point of all this? Well, among other things, we can see that the initial public offerings of these firms have created a few dozen extremely desirable clients for financial planners! But, more importantly, we can get a real picture of the direct correlation between social media and the overall wealth of our economy. If all of the liking and friending and tweeting and posting accomplishes nothing else, at least it has helped a few dozen innovative and enterprising souls to accomplish the financial independence for themselves that most financial planning clients can only dream of. None of these people would have achieved what they achieved if they ignored social media. How can we afford to?

*Typically nomenclatures like these denote private equity funds.

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