Facebook's (FB) initial public offering on Friday sucked up almost all the available media and investor attention last Friday. After all, here was investors' first opportunity to buy a piece of one of the world's most exciting companies. But Facebook's public offering has been something of a flop. Priced at $38, the stock popped to as high as $42 in the opening hours before settling back toward $38. It remained above that crucial level only because Facebook's underwriters stepped in to spare themselves — and their clients — the embarrassment of seeing the stock fall below its IPO price on its first day of trading. By Monday morning, Facebook was trading below $35.

Did the IPO fail? Well, Facebook got the money and valuation it wanted, and the investment banks will collect their commissions. But in many ways, that's asking the wrong question. The IPO of Facebook wasn't a one-day event. It has been a months-long process. As we pointed out last fall when Groupon went public, thanks to rapidly growing private exchanges like SecondMarket, the price discovery that an IPO enables can take place long before the media frenzy of an initial public offering.

Back in the day, when a hot company with scale and a lot of interest came along, there was nowhere for investors to express their enthusiasm about a company until the IPO officially happened. SecondMarket has changed that. The company manages periodic share-sale programs for privately held companies, and has emerged as an exchange where qualified investors — hedge funds, mutual funds, institutions, rich investors — can buy and sell pieces of privately held companies, including Facebook. Founder Barry Silbert's goal was to help companies and their employees gain liquidity without the hassle of a public offering.

Thanks to SecondMarket, big-shot investors no longer have to wait until an IPO to express their enthusiasm about a company. And that means the froth and pop that used to take place exclusively on the NASDAQ or the NYSE in the opening trading days can now take place weeks or even months before the official IPO. That's clearly what happened with Facebook.

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SecondMarket has constructed a great timeline on Facebook's share price and market capitalization. The company also sent me a spreadsheet with data on the number of transactions it facilitated in Facebook shares, the monthly average weighted share price of those transactions, and the estimated valuation. The timeline shows Facebook's price per share rising from $6.81 per share in February 2010, or a $15.66 billion valuation, to $21.32 per share, or $49.04 billion in December 2010 — a three-fold increase in the space of a year. For the full year 2010, there were 126 trades in Facebook shares on SecondMarket. In 2011, interest in Facebook's shares continued to rise, and so did its price and valuation. For the full year, there were 402 transactions. The stock hit $34.14 per share in July 2011, giving the company an estimated value of $85.35 billion, and then settled back to $30.38 per share, (worth about $76 billion) in December 2011. In the space of two years, hundreds of transactions had pushed the value of Facebook up nearly seven-fold.

In the first months of 2012, the number of transactions soared again — to 137 in the first quarter of 2012 alone. And why not? Facebook was moving toward an initial public offering. Once its shares were available to hundreds of millions of investors around the world, the stock would certainly boom. There was no way the most significant IPO of 2012 was going to start trading at a value lower than the one set in the comparatively exclusive private exchange. So, according to SecondMarket, in every month in 2012, the average weighted stock price and estimated valuation grew: $31.72 in January, $34.09 in February, $36.05 in March 2012 and to $42.72 in April 2012. The more the IPO seemed like a sure thing, the more people were willing to pay, figuring there were a host of greater fools willing to pay more.

It didn't quite work out that way. Nobody has any idea what will happen to Facebook's price over the next several years. But it's already apparent that the system and process through which the company was brought into public hands didn't work as designed. Anybody who got in on the IPO price is already down on his or her investment. So, too, are many of those who had the privilege of buying in before the IPO. Facebook came public at a value lower than that assigned to the company via SecondMarket in April, and is already slipping back toward its March valuation.

On the other hand, it shows that the capital markets are getting a little more efficient. And ironically, private exchanges like Secondmarket are contributing to further democratization of the markets. It used to be that only individuals got suckered into overpaying for IPOs they were desperate to get in on. These days, it happens to big investors first. SecondMarket says that 85 percent of those who bought Facebook shares on Secondmarket were institutional investors.

Daniel Gross is economics editor at Yahoo! Finance.

Follow him on Twitter @grossdm; email him at grossdaniel11@yahoo.com.

His latest book is Better, Stronger, Faster: The Myth of American Decline and the Rise of a New Economy.