2.6.17

The not so virgin birth of Facebook and its murky underbelly!

Is Mark Zuckerberg’s Facebook just a Self-Initiated nerdy Basement Start-up or are there much bigger powers at play, and for what reasons?

Over the period from 2004 to 2011 Facebook received the following funding:
  • June 2004: Peter Thiel $500,000
  • May 2005: Accel Partners & Peter Thiel $12.7m
  • April 2006: Accel, Thiel, Greylock Partners & Meritech $27.5m
  • October 2007: Microsoft $240m
  • November 2007: Li Ka-Shing $60m
  • January 2008: European Founders Fund $15m
  • March 2008: Li Ka-Shing another $60m
  • May 2009: Digital Sky Technologies (DST) $200m plus $100m
  • November 2009: Elevation Partners $90m
  • June 2010: Elevation Partners $120m
  • Jan 2011: Goldman Sachs (GS) $450m
  • Jan 2011: DST $50m
  • Total funding $1.335bn excluding loans.
The CIA is well known for its covert funding of start-up companies which it can use for its own nefarious purposes, particularly data mining.
Though In-Q-Tel, a CIA venture capital front, apparently did not overtly fund FB directly, there are however personnel ties with funders like Accel Partners which ponied up $12.7m very early on in FB’s formation!
This will have given them a 6.88 share in the company, and if this was direct equity it would now be worth a handsome $30 Billion!

James Breyer was the manager of Accel Partners and also Chairman of National Venture Capital Association while Gilman Louie CEO of the CIA’s In-Q-Tel served on the board with him at the same time.

Also note the flood of real big-time money flooding into this start-up after the initial $12.7m by this venture capital company Accel Partners, totalling $1.335bn, excluding some big time loans of $100m by TriplePoint Capital.

Now what company in their right mind would pony up a cool $12.7m to a start-up out of a dormitory with no revenue and is merely a site which allows users to publicly disclose all their political leanings and views, publicise all their social activities, their travels and every move they make, their jobs, education, social history, memberships and affiliations etc?

This sounds the perfect tool for covert Data Mining the kind the CIA/NSA are most interested in!

Happy camper amongst his Tribe! Be that as it may, the CIA-NSA et al now certainly have direct backdoor feeds from FB’s network and your IP address and whatever you post is recorded in real time, stored for posterity and can be used against you in any shape or form, at any time, anywhere!

The long list of privacy breaches by Facebook and its onerous practices with your personal information, your preferences, your views, what sites you visit, what you search for on your mobile and every click you make on your device are well known; every bit of data minded from your activity, whether on FB itself, or while working on your device, is stored, monetised, sold and passed on to whomever pays FB for it, and that includes the Deep State's long arm; aka CIA/NSA et al.

There are alternatives aplenty to the biggest spy-machine ever invented! Facial recognition technology which is now omnipresent in CCTV surveillance, and which FB also uses extensively, now has your effigy tagged with your complete identity, and your visage can be picked out of any crowd on any road you walk down, in any car you drive and any demonstration you might participate in; you've given the tyrannical nanny state your entire life and identity via Facebook!

But to really frustrate their efforts in spying on everyone, I suggest that everybody should tag themselves with other faces so that their algos really get confused and can never identify your effigy, unless they do a thorough manual investigation!

The only step you can possibly make to minimise their ability to spy on you is to uninstall the Facebook App on your mobile device and use Mozilla Firefox instead, not Google Chrome, this short of shunning FB altogether, which is of course the only wise and sane action to take in light of their nefarious, predatory behaviour against you and your personal privacy!

MS reportedly spent billions in a vain attempt to defend the $38 IPO price! Facebook was floated in May 2012 and the book-building process was not only fraught with irregularities, it was a downright shambles if not outright fraud.

Morgan Stanley, as the underwriter of the IPO, made several changes just before the float and increased the asking price per share from between $28 to $35 to a range of $34 to $38, with the final asking price at the top of the range, namely being $38 while they also increased the number of shares to be floated by 25%.

This brought the total capitalisation of FB to within reach of the magic $100 billion.

The decks were stacked against the mug punters form the word go:
Pertinent financial information was made available only to insiders, i.e. the big WS players and associated companies.
A vital downgrade in revenue forecast was not publicly made available and only furnished to the same ‘major investors’ aka insiders, leaving the mug punter public out in the cold, as always.

FB even withheld and refused to provide vital information to the Securities and Exchange Commission, SEC, which requested information regarding the way FB counted its mobile users and the revenue stream it generated from these users.
This is important key data in making revenue projections, since at the time, and still is, the migration from stationary PCs to mobile devices was in full swing and while the future is clearly with mobile.
The main question here with mobile is how can FB manage to squeeze paid for ads into a pocket size screen and still deliver the information stream users actually log into FB for.

Just prior to the IPO General Motors announced that it will terminate its advertising with FB, citing ineffectiveness and lack of discernible benefits.

But all these shady shenanigans and underhand racketeering is topped off with the way Facebook’s share registry is structured.
Zuckerberg has created two classes of shares; Type A and Type B!

Type A is for the mug-punters and Type B is for Mark Zuckerberg and these type of shares carry ten times the voting power of Type A!
So Zuckerberg retains total control and his stake would have to fall below five percent for him to lose control over the company; his word and dictate is law.

With Zuckerberg having in excess of 50% of voting power on the board of directors, FB could list itself under an onerous provision which allows such nefarious states of gerrymander to exist even in publicly traded and owned companies: the ridiculous and iniquitous ’Controlled Company’ exception for corporate governance of public companies!

With this exception there is none of the usual oversight of remunerations and appointments, usually carried out by independent committees, and most importantly no independent directors on the board!

This incestuous setup is the preferred method for totalitarian governance and is used by the likes of Google’s Larry Page and Sergey Brin as it was by Don Graham at the WaPo and many more.

The pricing of FB was an enormous stretch, valuing the company at 24 times earnings which made it $38/share and brought the total valuation to that magic $100 billion mark for the social network platform, where you can play kiddies games and share your innermost thoughts about what moves you and what you had for dinner!

Is Zuckerberg selling some of his holdings at the top of the market; at an insane P/E of 43? Opening trading was pushed up to $42 and this valued Mark Zuckerberg a cool $20bn at the time.

Since then FB has gone to a market capitalisation of $439 Bn and its share price now stands at a giddying $151.

With Zuckerberg retaining a share of around ¼ in FB this accords him a net worth of $65 - $75Bn presently.

For the year ended 2016 FB reported total revenues of $27.638 Bn and a net profit of $10.217 Bn, which gives it a staggering P/E ratio of 43!

As FB does not pay any dividends, one might be tempted to draw parallels to Enron and construe that the enormous stated revenues and profits are all smokes and mirrors, yet its balance sheet boldly reports that they have $8.9 Bn in cash and retained earnings of $21.6 Bn, up from $9.78 Bn the previous year.

A nadir of $18 might be a more appropriate valuation! All this enormous ‘wealth’ created out of a social network cobbled together in a dormitory at Harvard by one single guy is not all that what it seems.
There were lawsuits against Mark Zuckerberg alleging hat he had stolen the concept and the code which powers FB.

Twins Cameron and Tyler Winklevoss and Divya Narendra alleged that they hired Zuckerberg for their networking project they dubbed ConnectU.
They sued Zuckerberg for theft and copyright infringements and their lawsuit reportedly was eventually settled for $65m.

And Aaron Greenspan, who developed the social networking site HouseSYSTEM, which predates ConnectU and Facebook, also sued and settled with Facebook for an undisclosed sum.

So is Mark Zuckerberg gifted with the golden touch and almost invincible?

After closing of trading on 20 December 2013 FB was even included in the prestigious S&P 500 and S&P 100 indices, even though FB has ‘no discernible product’ to sell!
This immediately lifted the share price by 4% in after hours trading.

It seems that being a member of the Tribe awards the lucky pundit with a free pass and the full might and support of the entire system, entirely owned and controlled by the same select Cult; anything goes and you’ll never be accused or charged with doing anything wrong.

Billions are the reward for being born with a kosher spoon in your mouth!

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