I Think Facebook Just Seized Control Of The Internet
techcrunch.com
techcrunch.com
Sooner or later, we're going to trend backwards away from all this. Just like it's hip to be environmentally conscious now, it will be hip to be privacy conscious when the generation growing up giving away all their personal information grows to realize this ultimately can lead to an unhealthy world. This sense of enlightenment, that our natural impulses in the short term can have undesired consequences in the long, is the foundation of movements that define generations. Usually the thing that kicks it all off, though, is a major event that brings these long term consequences to the surface. I certainly hope for this one, it doesn't cost any lives.
That is one possible explanation, but I think it is really simpler than that: People like to talk about themselves, and they like to find out what other people are doing and talk about that too.
No shit Sherlock. The web has always been social and about sharing information. There's the <a> tag, one might say linking to your friends page is encouraged, and the "default" is no authentication. Meanwhile I, apparently, can't even read the facebook developer docs without signing up. Yeah, real social.
I remember when Altavista was supposed to be the beginning and end of search.
I remember when Palm was the final word in mobile devices.
I remember when Friendster was THE social network to rule all social networks.
I remember when Hotmail was the be-all-end-all email.
I remember when Geocities was going to rule the Earth from horizon to horizon.
I remember when Yahoo! was synonymous with the Internet.
I remember when Kozmo.com was going to replace the governments of all civilized nations.
I remember when Boo.com had a bulletproof business model and first-mover advantage.
I remember when Go.com was going to be the portal to our shiny new future.
You'll have to forgive me for being a little skeptical. Sites like Techcrunch have been serving up this kind of myopic nonsense to the eager echo chamber for as long as I can remember, and they're rarely correct. None of them saw Google coming until it was too late. None of them told me that Apple was going to be the 7th largest company and a dominant player in music and mobile devices until Apple was the 7th largest company and dominant in music and mobile devices. No, it was all about revolutionary "game-changers" like Pointcast or WebTV or RealNetworks or something else that had a legitimate period of success but did not, in fact, have the lasting impact that was promised by sensationalist publications.
Umm... yes they did.
From 1998:
"Yes, there is a better search engine While the portal sites fiddle, Google catches fire. ... There is a better way to build a search engine. And a Silicon Valley start-up company with the unlikely name of Google.com is showing the way."
http://www.salon.com/21st/rose/1998/12/21straight.html (Yes, it's Salon, not TechCrunch - but it was 1998.)
Wired did similar articles. Here's one from 2003: http://www.wired.com/wired/archive/11.01/google.html
None of them told me that Apple was going to be the 7th largest company and a dominant player in music and mobile devices until Apple was the 7th largest company and dominant in music and mobile devices
I'm sure they didn't use those words. But here's a prediction from 2008 (by Gartner!!!!) which talks about a $225 shareprice: http://www.appleinsider.com/articles/08/03/26/morgan_stanley...
More broadly, I'm not sure what your point is. Of course predictions are usually wrong. But the point of Techcrunch isn't the predictions, it's the analysis behind them. Often that's wrong, but the details of why their analysis is wrong is often where the interesting parts of the technology industry lay.
At least Techcrunch provided some reasoning.
Your prediction is worded in a way that makes it hard to argue with, because "relevant" is so subjective. I know a lot of artists find MySpace VERY relevant.
However, to attempt a rebuttal, taking the Facebook case:
If Facebook is to become less relevant than it is now I would argue it's growth would have to stop, or at least slow down. According to the linked article it is currently accelerating, and usage of Facebook APIs OUTSIDE of Facebook is increasing enormously.
Growth like that doesn't just stop, unless there is some external factor.
So far, Facebook have proven themselves to be reasonable technically skilled, so I'll rule out technical problems.
It's possible some kind of legal issue could slow them (privacy lawsuits or something?). However, lawsuits take such a long time to play out that it would probably be at least 2-3 years before any negative verdict against Facebook would make them change what they are doing, and even then it won't shut down the site. If Facebook have 2-3 years more sustained growth it would be unprecedented for them to shrink from half-a-billion users to something less relevant than MySpace in another 2 years.
Another good counter-argument is the likely-hood of an IPO in the next 5 years. Apparently, Facebook had $700 million in revenue last year, and should do $1.1 billion this year (http://www.insidefacebook.com/2010/03/02/facebook-made-up-to...). If they IPO'ed now, with a P/E ratio of 20 (Google & Apple = ~24, Microsoft = ~ 17), then they'd be a $20 billion company. That buys a lot of relevance.
EDIT: Note that is a revenue figure, not an earning (as pointed out below), so the numbers are wrong. I'll leave it here, though, because the point is more important than the numbers - if (when) Facebook IPO's they will raise a LOT of money.
Facebook's P/E ratio is almost certainly negative at this point, but they are growing so fast that P/E ratio is not a good way to predict their market cap.
I agree it's pretty crazy to try & predict this, but still... If they have profit margins similar to Google, then they'd still be a $7 billion company (and I'd argue their P/E will be much higher when they float)
Of course, the $1 billion is revenue, not earnings, so that number is likely to be lower (or negative) and the ratio is likely (if history is any guide) to be higher due to that, so this kind of calculation is pretty pie-in-the-sky.
(Note the error I made above regarding their earnings, though)
Bigger, more established companies generally have (much) lower P/E ratios that new companies (eg, Google had a P/E ratio of 118 at their float price, and had a lot of criticism for pricing too low. See http://www.businessweek.com/technology/content/aug2007/tc200...).
I'd be very interested in what you think a non-fanciful market cap number is - and how you arrive at it!
My point is that when they float, they will raise a lot of money. It might be $5 billion, it might be $20 billion, it might be $50 billion. In any case, they are going to be sitting on a big reserve of cash.
Your point was that they will be irrelevant in 5 years. My argument is that - ignoring other factors - any company in the tech sector sitting on a few billion dollars in cash is far from irrelevant.
Market cap is defined as "a measurement of size of a business enterprise (corporation) equal to the share price times the number of shares outstanding of a public company".
My point all along is that you are engaging in wild, unfounded speculation about a non-public company, using wholly inappropriate metrics.
Why? MySpace's growth slowed. Nothing grows infinitely--the math doesn't work. There is always a limiting factor that slows growth eventually, whether it be external or internal.
Contrast this with Google, where I can find information, get maps, check my calendar, listen to my voicemail, and chat with my friends.
I am not sure which one will "win", but I know which one is actually useful for me right now.
"In my opinion, Facebook still has a ways to go towards improving its actual site if it’s really going to be the long-term center of the web."
Sign me up for some techcrunch bannagee please.
What am I missing here?
And sharing location ("I'm having beer at the pub. Come and join me")
Oh, and they use it for little things like product recommendations ("I need a new washing machine. what do people like?")
And then there's the whole "how do I fix my computer/car/whatever". Lots of people don't Google for it - they just ask on Facebook and wait for the original poster to Google it and reply to them
But yeah.. apart from these things it's pretty useless really.
[1] a slightly-educated guess
[2] and many others as well, obviously
Seems to me facebook is just a bunch of people screaming for attention and collecting "friends" like baseball cards. Useless.
Perhaps if all your contacts, relationships, events, etc were already on Facebook, you might think you couldn't live without it.
More seriously, I know enough people who disdain/distrust Facebook that this seems ridiculous to me. Then again, maybe I know the wrong people.
Everybody is a friend, no colleagues, much less family, or people you admire. eliminating privacy and reducing relationships to simplistic formulas to be sold to marketers.
Fact is, all my relationships are complicated, not just one. including my relationship with facebook, one i'm not particularly attached to either.
So they are saying that Facebook wants to become like Digg and Reddit? I just don't see that happening. Maybe if you're a power user who collects friends and has hundreds of people posting stuff you can do that, but it takes a large community to find all those interesting links. And the larger your community becomes the less personal it is and the more it becomes saturated with irrelevant stuff. So it seems that Facebook can be either a great place to find interesting stuff online or a personal place for you and your friends, but not both.
Facebook is trying to do something really innovative here. That's solid entrepreneurship, which is why it's receiving such violent opposition, as usual. They are trying to jump to the next curve, and that's great. If other networks jump in, this could change the very basics of how we experience web, with or without Facebook. I think Facebook is just first company to start this, just like some company started 'e-mail'; that company didn't own the world's communication.
What I really want to see here is, how much are people willing to use their 'real' identities outside of facebook window. Because most of legit users on Facebook use their real names (I think), and there must be a reason that whenever somebody uses an id to comment on websites, it looks like 'pinkgur92twilight_meow'.
The once-in-a-while that I do use it, I can't figure it out. Are there two or three home pages? It's impossible to find anything. Maybe I just don't spend enough time there. <insert #geezertag here>
It doesn't stop you using other services/sites/etc -- you just don't need or want to.
Every time I hear this meme repeated, I get the (depressing) image of roughly 400,000,000 stub accounts that were created to check out FB, and promptly abandoned to gather dust.
That's okay. If a popular product doesn't add value for me personally, then I shouldn't use it.
1. I reached a critical mass of friends where every time I was on I could click on "Chat" and see a few friends on.
2. I started chatting with a Facebook "poweruser"[1] who said she was going to "teach me how to be cool" by using Facebook better.
3. Partly thanks to (2), I started updating my status a few times a week, whenever I had something interesting[3] to share.
4. People started commenting on and "Like"ing my status updates.
5. I realized that it was pretty cool to be able to connect meaningfully[4] with people in a way that I couldn't before.
I love creating and building things, but social interaction with people I enjoy is just as important to me. Facebook is an invaluable tool in that interaction, just as a great IDE is an invaluable tool in programming. Just like an IDE, Facebook is most valuable when you are using it to its full potential. If you don't have a large number of Facebook friends and you don't use Chat and status updates, it's easy to miss the point. Perhaps you've experienced the difficulty in explaining the benefits of emacs or vi to an Eclipse or VisualStudio user?
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[1] I was at a Taco Bell one night after my friends and I left the bar, and somehow we started talking to a girl and her friends. I walked them home, she got my name, she added me as a Facebook friend, and now we chat on Facebook a few times a month. If not for Facebook, I probably would have never seen her again. That is what makes Facebook relevant, the ability to create new (and keep old[2]) connections that weren't even possible before Facebook got huge.
[2] Just tonight I was talking to a friend on Facebook when another girl said hello to me, a girl that I was good friends with a couple summers ago but haven't seen or talked to much since. Now we're probably going to meet up tomorrow night to catch up over drinks.
[3] For certain values of "interesting"
[4] With Facebook-as-it-is-now, it is possible to tell people that you are barely friends with, "I appreciate you and I'm glad to be friends with you," simply by Liking or commenting on a photo, status update, or shared link. It was hard to do that in the past without being drunk or creepy.
I have friends who have, combined, created hundreds of dummy facebook accounts that they do not use because while they do not have dedicated facebook accounts, they often want to see someone's profile or friend's list. So they hit "Sign Up", put in a fake e-mail address, fake first name, fake last name and register. Facebook makes this quite easy because they don't even require, last I checked, that you verify your e-mail address before you start using the site features.
It is pretty clear how deep the social links are that Facebook is truly that big. All your friends from elementary to college, all your relatives, nearly everyone is on there. Your mom is probably on there. That tells that the numbers are real.
I've seen comments on here that people doubt Facebook is as strong as it is. For young adults Facebook is synonymous with the Internet.
I'd be interested in the numbers as well, but the whole idea that because most of us on here don't use it, it can't possibly be doing as well as everyone else says is pretty silly. It's like Avatar, yes it did gross almost three billion dollars world-wide, and yes it's not the greatest movie in the world but the money and in FB's case the userbase speak for themselves.