Bloomberg TV: Scott Galloway On Goldman Investment In Facebook

Scott Galloway, professor of marketing at NYU Stern School of Business and founder of Red Envelope, appeared on Bloomberg Television's Inside Track this morning with Deirdre Bolton to talk about the deal between the two companies. Galloway, who also founded Firebrand Partners--which has invested over $1 billion in U.S. consumer and media companies since 2005, says that Goldman may bring Facebook public, but that in his view, going public is "vastly overrated." He also says that the losers here are the SEC, NYSE, NASDAQ, and the "whole industrial complex around taking companies public." Excerpts are included below, courtesy of Bloomberg TV. On what Goldman stands to gain in offering clients the opportunity to invest in Facebook: "In addition to potentially being an investment with a lot of upside, there's a lot of ancillary benefit here. One, it's likely that Goldman has the inside track on being on the cover if in fact they do an IPO. Two, the private wealth group now at Goldman is really one of the only places in the world you can get Facebook stock. So if you're a high-net worth client of Goldman, UBS, and any other organization, there's only one place you can get Facebook stock right now, and that's a fairly compelling point of differentiation." On the possibility of Goldman bringing Facebook public: "My current view, and I'm a little biased because having spent a lot of time on boards and taking my own company public, I think going public is vastly overrated. I think this next generation of entrepreneurs has realized that and it's fine to access these private market transactions, get liquidity, not have the SEC filings or those pesky analyst calls to deal with, so I think what you have here is--everyone is talking about how Google is the big loser here--I actually don't think Google is the big loser, I think that the SEC, the NYSE, the NASDAQ, and the whole industrial complex around taking companies public is the loser. I think a lot of these companies are showing that they don't need the public markets." "I don't know what their current acquisitions plans are, but I think it's gotten to the point where the downsides of being public perhaps outweigh the upsides--some of the liquidity, the branding impact of an IPO. They basically are able to get their investors liquidity, they have financing, they have capital, which are really two of the primary reasons you go public in the first place and they've avoided a lot of the negative. It seems to me that this is a great way for them to go. They've also put a big number in the private markets, a valuation of $50 billion, they're now worth supposedly more than Boeing or Time Warner. It seems to me that it's a death move and a move that a lot of companies are following." On what Facebook will do with the money: "My sense is that they have so much momentum that they probably don't need to do as many acquisitions as some of their competitors who are trying to play catch up. I think they use it for continued growth, innovation, product development, providing liquidity to their employees and investors. And try to be the meanest, biggest kid on the block--look at Apple, they have $50 billion in cash and has always had a big cash pile. I think a lot of these young CEOs emulate Apple and Steve Jobs." On if Goldman will look to do more deals like this: "It seems as if it's a trend. And there's even some other benefits we talked about--you've got to think that Goldman's private wealth management guys now have the inside track to manage what will be the significant wealth of some of the Facebook employees. In addition, some of the branding--Goldman's got to wake up this morning and feel good about having their brand next to a story like this and some of the other stories they've been associated with over the past few months. This is a great branding event. They're on the cover and it also signals innovation. It's a unique financing structure, it's probably the hottest company in the world--those are nice core associations to have if you're an investment bank."