Zuckerberg Facebook IPO to Make Him Richer Than Ballmer

Facebook Inc. (FB)’s $11.8 billion initial public offering will cement the status of 27-year-old Mark Zuckerberg as one of the world’s richest men and put his social network among the highest-valued companies in the U.S. Facebook is offering about 337.4 million shares for $28 to $35 each, according to a regulatory filing yesterday. At the upper end of that range, the co-founder’s stake would be $17.6 billion, making him richer than Microsoft Corp.’s Steve Ballmer and Russian steel billionaire Vladimir Lisin, who are both twice his age, according to the Bloomberg Billionaires Index.

Zuckerberg, who began the service for Harvard University classmates as a 19-year-old in his dorm room, built Facebook into the most popular social-networking site in the world, topping 900 million users last quarter. Now he has to prove he has the leadership skills to deliver enough growth to justify the company’s valuation, said Paul Saffo, managing director at Discern Analytics in San Francisco.

“The whole story about the Silicon Valley is hard-working, entrepreneurial tech geeks getting big payoffs,” said Saffo, whose firm provides analytics to institutional investors. “The challenge he has is: Can Mark grow as quickly as his company has grown? And can Mark grow faster than his company has grown? Because, of course, that’s what a leader must do.”

Mark Zuckerberg

Passing MySpace

Zuckerberg, who has developed a reputation for introducing new products quickly, helped the company supplant MySpace as the most popular social service while also navigating competitive threats from Google Inc., Twitter Inc. and other social-media sites. The company has expanded its appeal by enabling developers to build applications on top of the platform, offering users music, movies, e-commerce options and other extras.

“They stayed nimble, like a startup of a smaller size,” said Jeremiah Owyang, an analyst at Altimeter Group. “The culture encouraged them to experiment and innovate on a regular basis, even when they had the lead.”

Facebook’s IPO would value the company at as much as $96 billion. It is offering 180 million of the shares, while existing owners such as Accel Partners and Digital Sky Technologies are offering 157.4 million shares, according to the filing. Zuckerberg is offering 30.2 million of his 533.8 million shares. The majority of his net proceeds will be used to pay taxes associated with exercising a stock option.

Majority Control

He may control about 57 percent of the voting power of Facebook’s capital stock outstanding after the offering, according to the filing.

Zuckerberg has shown patience in bringing Facebook to the brink of an IPO. After starting the company in 2004, he rolled it out to other college campuses, reaching 1 million users by the end of the year. Zuckerberg also received a key investment from Peter Thiel, who made much of his wealth as a co-founder of online-payments service PayPal, later sold to EBay Inc.

It wasn’t until 2006 that Zuckerberg opened up the service so anyone could join. Facebook accumulated 12 million users by the end of 2006.

Zuckerberg was able to woo other investors along the way to handle the growing user base. That included software company Microsoft (MSFT), Accel and Russian investor Digital Sky.

Facebook, while preparing for the IPO, has remained active on other fronts. After being sued by Yahoo! Inc. (YHOO) in March for patent infringement, the company has been looking to buy intellectual property from other owners of it. Facebook plans to spend $550 million on some of the patents Microsoft had earlier said it would purchase from AOL Inc.

Microsoft CEO Ballmer's net worth was $15.4 billion as of yesterday, according to the Bloomberg Billionaires Index

BLOOMBERG

Carlos Slim, $68.4 billion, Mexico: Holdings in telecommunications, banking, mining and construction, as well as Philip Morris, Saks Fifth Avenue and The New York Times

Bill Gates, $62.1 billion, U.S.: Co-founder of Microsoft

Warren Buffett, $44.3 billion, U.S.: Chairman and CEO ofBerkshire Hathaway Inc.

Ingvar Kamprad, $42.7 billion, Sweden: Controls Ikea Group.

Bernard Arnault, $42.5 billion, France: Owns about 46 percent of LVMH Moet Hennessy Louis Vuitton, the world's largest maker of luxury goods

Amancio Ortega, $38.9 billion, Spain: Owns 59 percent of Inditex, the world's largest clothing retailer, which includes the Zara chain

Larry Ellison, $38.2 billion , U.S.: Owns 22.5 percent stake in Oracle, the world's third-largest software company by sales

Charles Koch, $33.9 billion, U.S.: Co-owner, chairman and chief executive of Koch Industries in Wichita, Kan.; oil refining, gas pipelines, commodity trading, ranching and paper pulp

David Koch, $33.9 billion, U.S.: Co-owner and executive vice president of Koch Industries

Eike Batista, $29.7 billion, Brazil: Controls five publicly traded commodity and logistics companies

Mukesh Ambani, $26.5 billion, India: Owns 44 percent of Reliance Industries, operator of the world's largest oil refinery complex; also a director of Bank of America

Li Ka-shing, $25.6 billion, China: Runs Hong Kong's Hutchison Whampoa, a conglomerate with interests in ports, shipping, energy, construction and mobile phones

Sheldon Adelson, $25 billion, U.S.: Majority shareholder of Las Vegas Sands, the world's largest casino company

Christy Walton, $25 billion, U.S.: Widow of John Walton, the second son of Wal-Mart founder Sam Walton

Stefan Persson, $24.5 billion, Sweden: Single largest shareholder in Hennes & Mauritz (H&M), Europe's second-biggest clothing retailer

Jim Walton, $23.5 billion, U.S.: Youngest son of Sam Walton; heads the family's private businesses, including Arvest Bank and Community Publisher

Lakshmi Mittal, $23.2 billion, India: Owns 41 percent of ArcelorMittal, the world's biggest steelmaker; also a director of Goldman Sachs

Samuel Walton, $23 billion, U.S.: Oldest son of Sam Walton; has been chairman of the world's largest retailer since his father's death in 1992

Liliane Bettencourt, $22.8 billion, France: Owns 31 percent of French cosmetics company L'Oreal, which controls the Kiehl's, Lancome and Garnier brands

David Thomson, $22.6 billion, Canada: Controls media and technology giant Thomson Reuters.

— Bloomberg News