Comments on: Facebook: The smart money exits A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 By: running Mon, 21 May 2012 23:50:29 +0000 Mr.Zuckerberg made out like a pirate in a black hoodie, good for him, but its looks like the cats finally out of the bag for Facebook stock, as for it being hype, the whole stock market exchange is built on hype or chance

By: MaryWilbur Fri, 18 May 2012 16:32:07 +0000 I’m avoiding this like the plague. This is 100% hype. The only people who will make money are the insiders who are cashing out. Fools rush in where angels fear to tread.

By: gyris Thu, 17 May 2012 11:09:46 +0000 Its all hype. Only suckers believe the hype. GM has already pulled out advertising. More to come when they see the returns are just not there. GM is a great beacon because the company has to be frugal with its expenditures considering it returned from the grave not so long ago.

By: WeWereWallSt Thu, 17 May 2012 00:08:42 +0000 We admit that a lot of what we learned in business school hasn’t stood the test of time. Debt isn’t cheaper than equity. And there really is no risk-free security.

But one thing we’re sure is right is this: when the insiders are selling — and, boy, they sure are selling this piece of you-know-what — the stock is over-valued.

Insiders cashing out? All we can hope is that they spend a lot of the next several years giving fraud depositions and defense testimony. They are fleecing the public — the same fools who made this time-sink so popular. We love the irony.

By: mfw13 Thu, 17 May 2012 00:02:41 +0000 A combination of what skyman123 says “any attempt to monetize the user experience will take away value” and IntoTheTardis says “after a while it became obvious that most of the people we know or knew are boring as hell”.

The need to monetize users has through advertising has already been thoroughly analyzed, but I think most people are underestimating the fact that there is a limit to how much people want to interact with their friends. Continuously updating your Facebook profile takes both time and energy, something that for most people is already in short supply. Nevermind the time and energy it takes to keep up with all your friends on Facebook as well.

Right now I would guess that a huge portion of Facebook’s users are single and not in the workforce (either because they’re in college or unemployed)…i.e. people with a lot of free time. However, as they get married, get jobs, and have kids, a lot of that free time will disappear, and the amount of time they have available to spend on Facebook will decrease.

Most people forget that Facebook, by virture of being dependent on its’ users to generate content, is up against two of the most immutable forces in nature…laziness and entropy.

By: handleym Wed, 16 May 2012 22:23:01 +0000 AdamJ23 — your post is an example of my point.

You think Facebook is in the “blue web pages” business. I am pointing out that it is not — it is in the “human(s) to human(s) communications” business, and that is a huge business. Each of the examples I gave is, yes, competing with an existing business — but the assumption is that Facebook can leverage what it already has to do the job better.

Consider my communal movie watching example — yes in theory you can cobble together something like that with NetFlix or Amazon or iTunes. But Facebook is the guy that can write, on Joe’s page: “Joe is currently watching (and mercilessly mocking) ‘Green Lantern’ with Bill, Mike and Sue — do you want to join them?” And this will work, because Joe’s, Bill’s, Mike’s and Sue’s friends are all already in the habit of looking at Facebook pages to see what their friends are doing.

A bet of Facebook is a bet on
– people will find ever more ways to interact with friends via the internet
– Facebook will do an adequate job of supporting these new interaction modalities
– competitors will not do as good a job.

I’d say history so far bears out all three of these assumptions.
(The third might be controversial, but Google+ is struggling, Ping is basically dead, and Twitter, while successful, does not have the history of growing its vision and cope like Facebook has.

The dark horse COULD be Skype. But MS is so paralyzed with internal empire building and civil wars that it seems unlikely that they will ever get their act together enough to unite their Skype users, XBox Live users, and all their various other network property users into a single social network — heck they can’t even get their act together on a single branding strategy for all these properties.

Apple is the other dark horse. They have the single userID sorted out, and have access to part of the social graph through iChat and FaceTime. What’s not clear is if they are even much interested in this space — they tend to be very focussed and to ignore areas where they don’t have any obvious advantage.)

By: AdamJ23 Wed, 16 May 2012 21:01:41 +0000 handleym- I don’t see any of those examples as obvious ways of making money- they all involve Facebook attempting to start an entirely different business (businesses which, as you so kindly pointed out, already have competitors which tremendous market shares). Maybe I’m crazy, but I think its more reasonable to value Facebook based on the business it is currently in, not new businesses that it might enter. And as everyone here realizes, the business that they are currently in, while it has value, is not anywhere near the insane valuations people seem prepared to buy its stock at.

By: handleym Wed, 16 May 2012 20:40:38 +0000 I’m no Facebook fan, but I think these comments are misguided.

On the investor side, the issue is not an assumption that Facebook WILL make money, it’s an assumption that Facebook MIGHT be the next Google. This sort of bet is likely dumb for an individual investor, but makes sense as part of a broad portfolio.

On the money-making side, Facebook has done a pretty good job so far of continually seeing itself not as “your personal web page” or “your personal web page + email replacement” or “your personal web page + email replacement + photo-sharing”. They keep expanding their ambitions — basically anything that involves your interaction with other human beings they see as part of their remit. It seems awfully foolish to assume that this is not something monetizable (and not only through ads). Throughout history people have been willing to pay good money to communicate. Facebook today extends that trend in ever more abstract ways — look at their being really the first federated ID system to take off on the internet.

How could they make more money? Some obvious examples

– get into the same sort of business as Skype — offer voice and phone calls and charge for extra features

– get into the same business as Dropbox — provide the basic photo/video sharing they have now, but charge money for more than a certain amount of storage

– get into the same business as Pandora/Netflix — provide ways to share music and video between friends and charge for the experience. Eg — synchronized movie viewing — we all see the movie together in sync, but on widely separated screens, there’s a backchannel (text or voice chat for us to comment and make snyde remarks), when one of us pauses for a bathroom break, the movie pauses for everyone.

– get into the same business as Amazon Prime — offer an annual membership fee which provides all the above benefits and continually adds more.

To assume that Facebook HAS to make money by serving up more and more obtrusive ads (with the inevitable result that they will drive users away) is really limited thinking.

By: IntoTheTardis Wed, 16 May 2012 19:16:24 +0000 Personal anecdote. Both my wife and I went full in with Facebook a couple of years ago with all that that means — “friends” and reconnecting with lots of people we had forgotten about years ago. For a while it became the equivalent of the old slide show for us. Hey, look, what we did on vacation, Hey, look what we did last night, Hey, the kid’s taken up the saxophone, Hey, I lost fifteen pounds, Hey, where’s a good place to eat in your town, Hey, I got a promotion, Hey, isn’t this a great song? etc. The truth is, after a while it became obvious that most of the people we know or knew are boring as hell. And the rubbish they would send us to look at! Bit by bit we got tired of the whole shtick and checked in on it less and less often. I haven’t bothered to look at any of the Facebook junk clogging my inbox in months. And forget clicking on ads. No way. So, I guess my point is, are we the only ones who feel this way? Sure, Facebook may have 800 million accounts but how many of those are active? I’ll wager far fewer than Zuckerberg would ever admit to.

By: skyman123 Wed, 16 May 2012 17:08:07 +0000 Well good luck to people who buy this, but I wouldn’t go anywhere near it. The valuation is just stupid given the downside risk and given that I haven’t heard anything about how Zuck intends to triple the valuation.

Furthermore, I’ve advertised a lot on Facebook and I can tell you, firsthand, I have no idea how he’s going to pull even CLOSE to what Google does. There are many reasons for this (some which I won’t state publicly but I encourage you to try advertising) but I’ll state one iron-clad observation:

I own a small business on the side. I have a VERY successful Facebook page. If I advertised on it at all, I mean in any overt way, it would die. It’s all about providing a social area for people, NOT to directly advertise to them. That’s why it’s so successful. I know no one clicks on the ads and that they hate them. If there were more it would kill off the page, and I’d start looking for another venue. I’m sure I’m not alone. Remember this observation by a close friend of mine: Having a Facebook business page (or even your own) is like throwing a cocktail party. People come by, talk for a while, comment, then they move to the next small party. Anything interfering with this will kill the experience. Unless Zuck knows something he’s not saying I don’t think he knows a way around this. In fact, I’m going to say there IS no way around this. So the paradox here is any attempt to monetize the user experience will take away value. And if there were any charges for the site, Google would never charge and clean house and so would the next company to produce a site. So in the end, what justifies the valuation or an “investment”?