The Facebook – Goldman Sachs Tie Up

January 5, 2011

The pundits are on the move. The cattle prod was the deal between Facebook and Goldman Sachs. Sure, a Russian outfit had its beak in the bird bath, but the real action was Goldman’s alleged $450 million. You can read “What Everyone Seems to Miss In Facebook’s Private or Public Debate…” and learn the real secret behind the deal: Accountability to its customers. Okay. The Reuters’ take is that the New York Times’s analysis is wrong headed. Interpretation of SEC rules, guidelines, and letters is a tricky even when the SEC tries to explain a point clearly. “Why Facebook Won’t go Public” makes the deal an exercise in fortune telling.

The view from Harrod’s Creek is different. Facebook is hot. Goldman Sachs wants a piece of the action and to be in a position of control or at least to have a shot at control. The reason for the deal is money. Mr. Zuckerberg and his band of Xooglers understand Goldman Sachs’ magic when it comes to money.

Customer care, SEC prose, and other explanations of the deal are groupthink. Why make more of the deal than it is: A deal about money for Facebookers and Goldman Sachs. What about the other investors? Maybe.

Stephen E Arnold, January 5, 2011

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