For early investors in social-media companies, the past year's high-profile initial public offerings have generated epic windfalls. Since early 2011, venture capitalists and executives have cashed out to the tune of billions of dollars. The most prominent insider so far is Peter Thiel, an early investor in Facebook, who sold some 20 million shares--worth about $400 million--after the three-month lock-up period preventing insiders from selling their shares ended. That brings Thiel's total Facebook cash haul to over $1 billion.
For public investors who participated in the IPOs, however, these social-media giants haven't been anywhere near as lucrative. Following the insider cash-outs,...
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