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Twitter can take IPO lessons from Facebook -- on what not to do

Sharon Gaudin | Oct. 8, 2013
Facebook's feeble offering offers a cautionary tale on how not to take a popular company public.

Facebook's vision of itself didn't match up to investors' visions of the company, he added. "They thought they were much bigger than they really were so they had to spend the last year rebuilding. It took them a year to lick their wounds," Kagan said.

Facebook also got a lot of attention, mostly negative, during a pre-IPO roadshow that saw a 28-year-old Zuckerberg show up at major Wall Street meetings wearing a hoodie sweatshirt. While ultra casual attire is his trademark, it didn't make a good impression on the suit-and-tie clad professionals on Wall Street.

The financial community saw Zuckerberg as a kid who didn't respect the business world or the big players in it.

"Mark Zuckerberg was seen as aloof and full of disdain towards Wall Street, which was translated as disdain for investors as well," said Dan Olds, an analyst at Gabriel Consulting Group. "This meant that every misstep by the company came under greater scrutiny and generated more negative news than might have been the case if Facebook and Zuckerberg were seen as respectful of Wall Street."

Olds also suggested that Twitter, as much as it's able, avoid negative bombshells before its IPO.

Just days before Facebook's IPO, for instance, a major customer, General Motors, cancelled a $10 million advertising deal with the social network. The automaker concluded that its paid ads on Facebook weren't helping it sell products.

Rob Enderle, an analyst at Enderele Group, suggests that Twitter create a so-called rapid-response PR team to keep such negative news from spinning out of control before its IPO.

 

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