On May 18, 2012, many of us expected Facebook stock to hit the public market with an explosion. There was a revival of hope reticent the first dot-com boom. Facebook’s valuation went up over the road show week and excitement was high as Mark Zuckerberg rang the NASDAQ opening bell.
I, like many other retail investors, wanted to ride the opening wave and make some quick money before the stock settled back down near the IPO price (which it often seems to do). I had thought that many retail investors were going to be stupid and push the price of the stock up, so I would be able to profit and get out in time. Instead, I became one of the “stupid” retail investors that lost some money.
Rules for successful business decisions
While this experience exposed the validity of many rules of good investing (which I will leave to the countless other articles circulating out there), it also illustrated some important rules of success in making business decisions.
Don’t get caught in the hype.
A new trend will rise from time to time that gets everyone excited. In the context of Facebook, it was social networking. Everyone gets caught up in it, but that does not mean it will be around forever; remember there was a time when MySpace was the king of social networking. Instead look below the layer of hype to what is really at play. If you have a career opportunity, don’t get caught by a flashy title you could get or some big name company- go with the right fit for you. Consider what your real day-to-day would be in the job and not just the glamor and sexiness of what you think you may be doing.
Get as much info as possible.
By now many of us have read about how Facebook gave potential institutional investors nonpublic information about how they were lowering earnings estimates and not expecting as strong of a 2nd quarter financially. This information was not clearly provided to the public. If I had seen this information I probably would not have invested (or at least not as much as I did). In the case of your career, gathering as much information as you can is key to your success. When making an important decision, researching, asking questions and using your resources to uncover vital information can mean the different between choosing one option over another. Take the time to get all the information so your decision is more educated.
Think in both the short and long term.
When investing in Facebook, I thought just about making a quick buck. While this short term outlook is one investment strategy, it is important to also consider the long term. When taking on a certain project or new job, or building a new business it is important to think about both what is around the corner and what is farther down the line. When you have this dual perspective it will help you build the right brand so you look good in the short term without making any mistakes that would jeopardize your long term reputation.
Don’t make choices based solely on what you like or are familiar with.
Everyone is on Facebook, literally everyone. We are all familiar with the site and the way it enhances our lives, but that does not mean it is going to be a great investment. My mom loves the retail clothing chain Chicos. A few years ago she decided to buy stock in the company. She figured that there were locations popping up everywhere and she thought the clothes and accessories they sold matched her (and your friends’) style. The stock proceeded to grow before crashing down closer to its all-time low. Just because you know something and like it personally doesn’t mean it will be successful. Just because you like a certain executive at your company, and align yourself with him or her to mentor you toward promotion does not mean that they are the right person to get support from. Just because you like them does not mean that they will be at the company to help you move up the corporate ladder.
Only time will tell what happens with Facebook. Most of the hype has passed, much more information has been disclosed, there will be a transition from the short to the long term, and the familiar Facebook we know today may change as they adapt to monetize their mobile platform that everyone is questioning them on. Remember that all these points apply to each of us, the brands create and the careers we build. Just like Mark Zuckerberg is for Facebook, we are majority shareholders in our own careers and we have the controlling interest to make important decisions on our own to follow the path we want to take.