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Facebook Co-Founder Gives Up U.S. Citizenship Before IPO

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Facebook Co-Founder Gives Up U.S. Citizenship Before IPO

Postby zzm9980 » Sat, 12 May 2012 8:26 am

He lives in Singapore now, maybe lurks on the forums? :P

http://www.bloomberg.com/news/2012-05-1 ... e-ipo.html

Eduardo Saverin, the billionaire co- founder of Facebook Inc. (FB), renounced his U.S. citizenship before an initial public offering that values the social network at as much as $96 billion, a move that may reduce his tax bill.


I could have sworn US law specifically prohibited renouncing citizenship for the purpose of tax avoidance. That seems rather difficult to prove, but then, if there ever WAS a case it should be easy to prove, wouldn't this be it?

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Postby carteki » Sat, 12 May 2012 2:22 pm

From what I've read he's done very little to contribute to Singapore in the time that he's been here (although the mothers are throwing their daughters at him like you won't believe). The Gahmen will see this as a feather in their cap - but really there are many more people with less money who contribute more to SG society.

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Postby aster » Sun, 13 May 2012 12:10 pm

I think I read somewhere that ditching US citizenship doesn't mean you stop paying Uncle Sam straight away. Apparently that only happens some years down the road...

And if they deem taxes was the only reason you did this, then you could have trouble entering the US even as a "tourist" in the future.

Forget the "by the people, for the people" BS. The US gov't is now the overseer and citizens are just subjects of a huge, overwhelming regime.

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Postby BillyB » Sun, 13 May 2012 12:33 pm

The whole IPO has been handled poorly.

Zuckerburg going to client sites in his hoodies, the instagram deal that he personally negotiated (paying 1bn for a firm with less than 20 employees and no revenue), pitches getting changed, and now this. They are either playing some sort of silly power trip games, or just have no handle on how public companies are perceived and the level of scrutiny they are constantly under.
On the flip side, the citizenship could prove a valuable PR tool in attracting Asian investors.

People are fighting to get a piece of the action which means its oversubscribed. There is such hot demand for these shares - artificially inflating the price.

Facebook will be now under more scrutiny and growth pressure than before to deliver meaningful results. Advertising revenue is the key, but it hasn't been growing at anywhere near the rate it needs to.

I'd expect everyone involved to make a killing in the short-term (bookrunners, facebook management, institutional investors) And then a lot of people will get badly burnt. but the smart guys will have dumped most of it by then.

I heard one commentator refer to facebook shares as 'muppet bait' - I'd concur with that.

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Postby sundaymorningstaple » Sun, 13 May 2012 12:47 pm

From the Singapore perspective, I would have to wonder just what a carrot it could be? Only to the shallow puppetmasters called the local gahmimt could really see it as a plus. I personally see it as just another stop in the guys travels. Remember he is actually Brazilian and only took up US citizenship in 1996 or 98 so if he's taken up Singaporean citizenship now, then I reckon it's only a stepping stone in his travels, but with that kind of money every government would like to make hay while the sun shines. I don't see where he's got that much to contribute to the country anyway. He didn't contribute that much to FB either and that's why he's been out for a long, long time already.

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Postby carteki » Sun, 13 May 2012 5:32 pm


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Postby carteki » Mon, 14 May 2012 2:15 am


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Postby aster » Mon, 14 May 2012 7:52 am

BillyB wrote:I heard one commentator refer to facebook shares as 'muppet bait' - I'd concur with that.


Wasn't Groupon the prime (and most evident) example of this? Even here we discussed how that one was going to tank...

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Postby zzm9980 » Mon, 14 May 2012 9:21 am

aster wrote:
BillyB wrote:I heard one commentator refer to facebook shares as 'muppet bait' - I'd concur with that.


Wasn't Groupon the prime (and most evident) example of this? Even here we discussed how that one was going to tank...


Disclaimer: I'm not a market wiz, but I worked in Silicon Valley through my 20s and know plenty of people in many of these 'hot' startups.

IMO, the problem with Groupon is/was that it's model doesn't scale effectively. The most expensive cost in most of these companies is human capital. Finding effective employees, and then paying them. A company like Facebook, or even Zynga, should be able to effectively scale their model to handle more demand without a proportional increase in employee headcount. You spin up new servers, deploy things in parallel, bla bla. All things being equal, a good operations team can just as effectively handle 10,000 or 100,000 instances in a well designed infrastructure.

Now with Groupon, their model is based on CSRs and Sales People dealing directly with Mom and Pops and SMBs the world over, selling them on the service, then effectively marketing and selling it to customers all over in a manner that will turn a profit. So to scale, you need good employees in each of these local markets. Hiring someone good is always a challenge as you can only glean so much from interviews. Hiring someone good, remotely, for a market you're not even 100% knowledgable on, is a huge challenge. The alternative is to just buy out local companies doing similar things and try to merge them. I'm not an expect on that either, but I sure as hell imagine there is a finite number of acquisitions you can effectively merge under one roof and make profitable over a set period of time. And I suspect Groupon's effective finite number is much smaller than what their shareholders will want.

Now, for something parallel to Facebook, I would personally look at LinkedIn or Zynga. Zynga is good because they both have such a parasitic relationship with each other. I'd suspect you'll see their stocks swinging pretty closely together with each other.

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Postby zzm9980 » Mon, 14 May 2012 9:26 am

carteki wrote:and then this on the taxes ...
http://www.forbes.com/sites/timworstall ... -tax-bill/


Yeah, this is what I thought:
but he has to pay tax as if he liquidates his entire portfolio on the day of his renunciation.


Either he found a way to slip around it (and plans to avoid the US for the rest of his life), or is swearing up a storm and hating himself for not renouncing sooner, and feels he has income potential in the future to justify the hit now.

The Yahoo link makes me think of him as a burned out drunk who's lucky to be in Singapore, or he'd have a 7 figure a year coke habit. :D

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Postby BillyB » Mon, 14 May 2012 10:11 am

zzm9980 wrote:
aster wrote:
BillyB wrote:I heard one commentator refer to facebook shares as 'muppet bait' - I'd concur with that.


Wasn't Groupon the prime (and most evident) example of this? Even here we discussed how that one was going to tank...


Disclaimer: I'm not a market wiz, but I worked in Silicon Valley through my 20s and know plenty of people in many of these 'hot' startups.

IMO, the problem with Groupon is/was that it's model doesn't scale effectively. The most expensive cost in most of these companies is human capital. Finding effective employees, and then paying them. A company like Facebook, or even Zynga, should be able to effectively scale their model to handle more demand without a proportional increase in employee headcount. You spin up new servers, deploy things in parallel, bla bla. All things being equal, a good operations team can just as effectively handle 10,000 or 100,000 instances in a well designed infrastructure.

Now with Groupon, their model is based on CSRs and Sales People dealing directly with Mom and Pops and SMBs the world over, selling them on the service, then effectively marketing and selling it to customers all over in a manner that will turn a profit. So to scale, you need good employees in each of these local markets. Hiring someone good is always a challenge as you can only glean so much from interviews. Hiring someone good, remotely, for a market you're not even 100% knowledgable on, is a huge challenge. The alternative is to just buy out local companies doing similar things and try to merge them. I'm not an expect on that either, but I sure as hell imagine there is a finite number of acquisitions you can effectively merge under one roof and make profitable over a set period of time. And I suspect Groupon's effective finite number is much smaller than what their shareholders will want.

Now, for something parallel to Facebook, I would personally look at LinkedIn or Zynga. Zynga is good because they both have such a parasitic relationship with each other. I'd suspect you'll see their stocks swinging pretty closely together with each other.


Facebook looks like it will be a momentum stock. The company has no fundamentals to support the valuation, and they don't appear to have the advertising growth to generate the revenues required to support the share price.

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Postby zzm9980 » Wed, 16 May 2012 10:45 am

http://sg.finance.yahoo.com/news/facebo ... -pain.html

[quote]Saverin spokesman Tom Goodman said Sunday his renunciation was prompted not by tax considerations but by U.S. rules that make it more difficult for U.S. citizens to live and invest overseas.

“U.S. citizens are severely restricted as to what they can invest in and where they can maintain accounts,”

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Postby Barri » Wed, 16 May 2012 11:54 am

I hope he looks. Because my facebook isn't working for 3 months now!

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Postby zzm9980 » Wed, 16 May 2012 12:04 pm

Barri wrote:I hope he looks. Because my facebook isn't working for 3 months now!


There is a 'known issue' with Facebook for iPad via Singtel (MIO, Fiber, or 3G) apparently...


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