For posterity's sake let's make this clear: the SEC rule regarding 500 owners is as follows:
> Companies with more than $10 million in assets whose securities are held by more than 500 owners must file annual and other periodic reports. These reports are available to the public through the SEC's EDGAR database.
It requires firms to file special reports. The reason why people presume that it means that the firm must go public is simple: there are only a few additional requirements to go public, and the economic advantages in many cases outweigh the paltry effort.
For posterity's sake, this is worth repeating: THERE IS NOTHING FORCING A FIRM TO GO PUBLIC. NOTHING.
It would be more accurate to say that Facebook decided that it would rather go public than stay with <500 owners. It was hardly "forced", since there's nothing forcing you to have more than 500 owners of a company!
If you keep a handful of owners and pay employees with cash-money instead of equity, you can stay private forever. Mars, Inc. was founded in 1911, has revenue ten times as much as Facebook, and has never been forced to go public.
