Secondary market: Loser
facebook now second market

Before startups like Groupon (GRPN) and LinkedIn (LNKD) went public in 2011, the IPO market for techs was essentially frozen -- thanks in part to the dot-com bust a decade earlier and the credit crisis of 2008.

Enter SecondMarket, which in April 2009 launched a private-company stock marketplace to facilitate deals between employees with stock and investors interested in buying. The pent-up demand for Facebook shares in particular propelled SecondMarket into the spotlight. Facebook accounted for 40% of the exchange's total trades in some quarters.

But with so much riding on Facebook, questions about SecondMarket's viability popped up as soon as the social network filed for an IPO. Would there be a need for the company after Facebook went public? SecondMarket managing director Adam Oliveri dismissed such concerns at a conference in February 2012, joking that "eBay (EBAY) still exists, even though Beanie Babies went away."

But just one month later, SecondMarket laid off 10% of its staff. "In a post-Facebook world, we have decided to eliminate some positions that are no longer core to our company's long-term mission," the company said. The bloodletting didn't stop there. SecondMarket went through another round of layoffs last month. CEO and founder Barry Silbert blamed himself in a blog post.

"I admit it, I screwed up. I have done a poor job managing our cost structure," he wrote. Still, he insisted that he remains "extremely optimistic about SecondMarket's future." SecondMarket didn't reply to a request for comment on this story.


- Last updated May 17 2013 10:46 AM ET
Search for Jobs