US STOCKS-Wall St rebounds, but investors dump Facebook | Reuters.

Whether Facebook is “worth” $100bn or (as one serious voice suggests) $30bn is neither here nor there – unless, of course, you bought your stake on Friday. The P/E ratio is way out of whack with comparable companies like Google – though, as can be plausibly argued, Fb is on the way up and its biz model has yet to be fledged. But that (see below) is at least as big a problem as it is an explanation.

To my mind, three issues are at stake here.

1. The deeper we move into the digital economy, and the more digitally-powered a company or product is, the faster we may expect the forces of innovation to do their terrible work. That is, companies such as these are already aging fast. I was much amused by the blogosphere discussion last year – as IBM’s remarkable 100th anniversary was being noted  – of  “which great companies will be around 100 years from now?” The innovation process is not building vast new brands to take the place of those slipping into the sinkhole of the “old economy” 20th century. It is developing pathways of creative destruction along which products, services, brands, companies, will flow with less and less friction. Facebook may yet prove  a cash cow before it goes the way of all cash cows. I’m doubtful. But whatever the future holds, the exponential character of digital disruption will ensure it holds it more quickly and more briefly than we would anticipate. (AOL. MySpace. Oh, I know it’s different this time. It’s always different this time.)

2.  More specifically, while Mark Zuckerberg has proved remarkably adept at driving his vision and pulling around him highly competent executives to enable it, the Murdoch-style governance structure that gives him enormous power in the public company and its sparkling but remarkably undiverse board do not bode well. This is not the place for a catalog of questions around privacy and business models; suffice to suggest that the lock-down approach that has been adopted is not well-suited to rapid adaptation and response in a rapidly-changing environment. How well the founder’s vision of a company intended for social good that only incidentally plans to make money (I hope that’s a fair summary) will cope with market pressures raises a related set of problems. It is a thousand pities that (as I have argued before) a more innovative and appropriate model than IPO was not developed that would secure the social purpose of Facebook.

3. Three specific factors convince me that within X years we shall not have, say, 3 billion members of a Zuckerberg walled garden. One is interoperability, and the fact that technologically the social media experience will fast become a utility in which hacks and competitive requirements destroy the moat around the castle and in the process the option for economic profit. Second, perhaps through the deployment of anti-trust measures, global governments will not permit the emergence of a Facebook that essentially serves as a private planetary telecommunications and postal system of several billions of members reporting to one man in an office on the West Coast of the United States. Third, and more simply, while Facebook was created for college students it has been driven by teens. Teen culture moves on. And with it the culture of cool. Now everyone’s mom, dad, and grandparents are being recruited to Facebookland, it will be no hard task for the Next Cool Thing to do its thing. Oh yes, barriers to exit are presently high. But that sure isn’t cool either.

Guys, innovation in Century 21 is all about change and disruption. It’s a really bad time to be making bets on the future of terrific inventions and great new companies that have yet to deliver. Which is another reason why the IPO model, as applied to entities like that one,  may have had its day. IMHO.