Zuckerberg facing tough IPO questions

Social networking giant Mark Zuckerberg is probably regretting holding a roadshow to try and push his company’s coming IPO.

The move has meant that he has to face potential shareholders who are already asking him tricky questions like why he spent a billion dollars buying Instagram, a photo-sharing app with no revenues.

Zuckerberg is not used to being questioned. Normally Facebook has run more or less on his whim, now hundreds of potential investors are getting the chance to hit him with tricky questions such as how to you spell antidisestablishmentarianism.

According to the Daily Telegraph, Zuckerberg had to explain why he decided to go ahead with the sale with very little involvement from Facebook’s board of directors.

He told the would-be shareholders that Facebook had decided to buy Instagram when it saw the company’s user data cross a “tipping point”, from which they believed it would grow significantly.

Zuckerberg explained that the Facebook needed to move quickly once it learned the photo-sharing app was interested in being purchased. Twitter was also interested in snapping up the hot start-up.

While that sort of decision is good if you are a thrusting startup, shareholders want a little more caution and a little less Alexander the Great style of management. Observers are not sure if Zuckerberg’s explanations are good enough and he might need to emphasise a little more of how he is “a safe pair of hands.”  But that is the sort of thing where roadshows are bad.  They do tend to show up people for what they are, and not what they want a press release to project.