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Facebook’s IPO: How Hype can Overpromise and Under-deliver

Facebook’s Initial Public Offering last Friday was no subtle financial maneuver. Even people who have never traded stocks in their lives have been talking about the social media company’s big step forward in publicly trading stock. Financial Analysts have been debating for months, since the IPO was first announced, about whether the platform could be the next Google or if it was just a popular fad, to fizzle out as quickly as it rose.

Captivated by the hype and the notion of making substantial amounts of money off such a huge and popular product, thousands of people bought up shares and expected the price to skyrocket. As it turns out, the stock went the opposite direction, and continues to dwell below its IPO price. Is this an indication that the company will be a failure or that its price will never substantially grow? Not necessarily. But this article isn’t about financial metrics or price predictions—it’s about how perception of a current market can make or break you.

Hype is important, clearly. How could you possibly be successful without generating and maintaining the excitement of your customers, clients, and general population? But if you’re trying to establish yourself as a consistent, long-term company, you want to be careful of “the fad effect.” While many fads have turned out widely successful, all of them have one thing in common—they fell out of fashion.

By building yourself up too much and building too much hype around your business or product, you’re putting yourself at risk for two reasons. One, you could be focusing too much on style and not enough on substance. And two, you’ll be sensationalizing yourself to the point where people will invest in you (one way or another) because of the hype and nothing else. With this extraordinary expectation, people will inevitably end up disappointed, and this can only be bad for your future prospects.

So while it’s important to get people excited and energetic about your company, it’s equally important to set realistic expectations. That way, you can manage your publicity effectively, and for the long-term. Otherwise, you may end up with a host of disappointed thrill-seekers that didn’t take the time to fully understand the nature of their endeavor.

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