Let's keep it simple
1. People start private companies or corporations
2. Private Companies have shares
3. The original owners of the private company can issue as many shares as they like, every new issue of shares dilutes the value of the original shares.
4. The owners of the shares have certain rights
5. The issued shares are called the share capital
6. The issued shares increase the risk to the owner’s liability until they are "paid up"
7. One day they seek external finance so they issue some shares and sell them to a private investor (sometimes called a venture capitalist).
8. The investor hopes one day to get a a return on his investment
9. The investors shares have a value which may be £1 per share even though he may have paid a lot more or a lot less.
10. This process can be repeated again and again, each new issue devalues all shares
11. One day the company decides it wants to go public and hires a city firm to manage an "initial public offering" of share to be traded on the stock exchange. The shares offered may be any percentage of the company.
12. The money raised goes to the owners and investors who sold a percentage of their holding to the market.
13. Thereafter, every quarter the company issues results forecasting future results (profits)
In between, all the investment banks, hedge funds and other investors employ analysts to guess the impact of daily events to each and every public company
14. Sometimes the companies want more money from the market so they either release more shares or they create new ones which dilute those out there (which may upset investors),
15. At other times they may buy back their own publicly traded shares.
One day they may be bought in a "take over", the very thought of this sends the publicly quoted share price of the company being bought UP.
16. So if they are bought their price goes up.
17. and so it goes on.
If you are a really good business owner, you manage your growth, reinvest your own profits, make good acquisitions and never go public. Going public means you have to cowtow to what the market wants or expects, it means if your competition fail your price is marked down. Ideally you don't sell up until you have built up enough hype, conquered your market and are ready to get out. Growing a company to worldwide status usually requires an IPO.
Now if Mark was an owner of the original shares and has been at stage 7 above he could have been paid billions by a venture capitalist for a stake.
Facebook sells ads, has income from games and is working on the monetisation of the site. It is no different from Google, before they bought YouTube, now you get ads.
Mark is paid on the potential of the company to make money in the future, it is the same risk or gamble we all take when we buy any asset, from a gadget that we hope will not depreciate before we have got bored with it to a house we might hope to sell one day to old granny putting money in a post office savings account.
The hype is measured by the number of users, so rather than bitching vote with your feet if you feel so bad. Goodness knows he has done enough for people to realise he will abuse their personal data. Now that might be a reason to hate him but not because his is rich.
Personally I think all facebook users are sad twats who publish their life online and waste most spare moments reading the sad activities or looking at the naff photos of their "pretend friends".
Biting the hand that feeds IT
