Facebook revenue to be billions in 5 years: board member
reuters.com
reuters.com
But seriously folks, look around. The unpredictability of the internet is just too high to be making statements like this, I don't care how much evidence you have.
Andreessen told Reuters that the world's most popular online social network could pile up $1 billion in revenue this year if it pushed harder on selling advertising.
Seriously? Like how much harder? Putting more ads on the site? Charging more for them?
This is bubble talk if ever I heard it. He wants to get press for his new investment fund. He has to say big things so that people talk and want to give him money and want him to invest in their companies. So transparent.
They say: [Twitter] needs to focus on increasing its number of users and improve the features it offers so that no rival can swoop in.
Oh boy. Really? So no rival can swoop in? The more Twitter develops its features, the easier it is for a rival to swoop in. Just copy them. It really isn't that hard. Facebook could copy them. Google could copy them. Lots of people think Wave is a more advanced twitter already.
And then he says this: MySpace focused too much on selling advertisements
Isn't that exactly how he said Facebook could be making billions? So really what he is saying is, "If facebook sold more ads, they'd make more money, but then they'd lose their users, so they wouldn't make money, so really, facebook can't make much more money."
Read between the lines and you'll see that the whole scheme is faulty.
I agree with pj - especially given how many times Andreesen and Horowitz are named in the article, this mainly reads like a PR piece for their new VC fund. (pg had a great essay about PR pieces, I can't find it right now).
2008: $210 million, 2009: $230 million. Extrapolating wildly maybe 600 million, but they'd have to double their revenue increase for that to work (10% / annum to 20% per annum). I fail to see what magic they're going to pull in order to make that happen.
Also, revenue definitely isn't profit, look at youtube.
Sadly, there are lots of people who probably think exactly like that, and in a serious fashion.
Jacques Mattheij j@ww.com
I don't expect it to be close either, they're going to go skyhigh or they'll wither away, it almost has to be the one or the other. The real test is whether once they've maximized their reach they will manage to keep their users instead of go on a decline.
Every product has a lifecycle, so far there are only very few internet sites that have managed to beat that.
FB is a very good product with great timing, but for me personally it has already come and gone, it was fun for a while, then it became a distraction and then a drag.
They are still growing like mad though, but then again, so was myspace before they imploded.
There is also a virtually untapped market on Facebook for virtual objects. The gift system does exist, but I feel needs improvement. Social networking sites in Asia make the bulk of their money off of this feature, not ads. If FB beefs up this aspect of their business I think 2 billion by 2014 is a reasonable goal.
All that being said, the sentiment that "he is selling something" seems reasonable. They could be ramping up for an IPO or, more likely, going for another round of private investments to fuel growth.
To be taken with a grain of salt:
http://alexa.com/siteinfo/facebook.com+google.com
So, at a daily reach of 2/3rd of googles they have managed to score about 10% of googles income.
I don't see facebook getting several times the size of google and I don't see how they could possibly get close to the clickrates / cpms that google is getting for their traffic.
It doesn't get much more targeted than search traffic, facebooks citizens revolt whenever the company tries to pull in a direction where they can monetize the traffic better.
'Facebooks' come and go, geocities, myspace and so on...
To my feeling they're already over their top, but then again I could be mistaken, which will cost $100 :)
For FB to make that 2 billion (that's a lot of dough) on their users they'd have to become roughly 10 times their current size at the same conversion rates, so they'd have to have a reach of 200%, which is impossible.
I think they'll top out somewhere in the 600 to 800 million range and then they'll either stay there or they'll be upstaged by someone with a better idea.
I dunno if they'll find something like that, but it's not something to be instantly ruled out.
True, but at one point that was true of search engines, too. Sometimes the music stops and a winner plants their seat in the most profitable position.
Many of the entrants so far have been happy to follow the strategy Mark Cuban recently outlined in his anti-freemium post. "More importantly, when you see your BlackSwan company appear and you know they will kick your ass, rather than ramping up to try to compete, get out. Sell." There's much to recommend that strategy, especially if you'd rather own an NBA franchise than a web company.
But Facebook has plenty of Nth generation advisors and investors who want to escape the flame-out/sell-out cycle and go for the Google-sized enduring win -- Andreesen among them. That changes the questions:
Is there a niche for a universal, well-tended social/identity network platform? (I think yes.)
Will one gorilla dominate that market? (I think yes, it has many of the same network-effects and natural-monopoly aspects as search or operating systems.)
Can the Facebook team avoid the nightclub-like fad boom-and-bust cycle? (I think probably; they're certainly wise to the problem and building defenses like crazy.)
Will being the de facto monopolist in this market involve massive new revenue streams (beyond advertising) that can now only be imagined? (I also think yes. Distrust and fraud are the biggest drains on internet value creation; a trust-network anchored in real-world relationships is the ultimate countermeasure.)
All we need is a couple of infamous outages and facebook will have 'jumped the shark'.
Facebook's crowd will always be difficult to monetize. I am already pissed of by the banners I see around (never ever clicked one), so the only reason I go there is to notify people of something from time to time. It really has taken the functionality of an Address book, and hell it is annoying climbing up that www for a small piece of information. The board of Facebook says that if they placed more ads they could start earning a lot. I say if they do that, I am a goner same moment. Same if they try to sell me something.
Valuing Facebook in 5 years? Ridiculous. I doubt it will even exist in 5 years in the form of today. I see a major shift in computing coming up in the next few years, and Facebook and Google and all those disconnected clusters of multiple identities merged.
Value of Facebook currently is (-) minus all the money they've spent. I doubt they will ever compensate for that. Investing in Facebook though is a good scheme to launder money.
I also see the next bubble. Overestimation and over-expectations of "startups" and websites that will never create value. I see a clear shift to desktop computing again away from the ill-responsive web.
I have ad-blocking turned on on all websites, by default, so I don't get a good sense of what advertises on Facebook unless I happen to see someone else's Facebook feed (as, for example, a family member's) on a computer without ad blocking turned on. It all looks like schlock.
What I have seen on my own home page feed on Facebook is a small number of some of my more remote Facebook friends who go absolutely NUTS over the Facebook quiz applications. I enjoy posting links via the Facebook link application to webpages on the marketing tricks and security holes embedded in Facebook quizzes. (Many thanks to HN readers who post some of those links here on HN.) I'm trying to use positive peer pressure in my circle of Facebook friends to make it uncool to respond to Facebook quizzes at all, and I'm gratified to see that several of my friends immediately put all my new links about the perils of Facebook quizzes up on their personal Facebook feeds.
So I think this is the problem: sophisticated users will not only not fall for the schlock on Facebook, they will try to educate their friends about the schlock. I don't know if Facebook has a revenue model that overcomes the cost of serving up lots of pretty pictures and videos to unsophisticated users. (I don't think Facebook is anywhere near as technically savvy about reducing bandwidth or running server farms as Google, but I could be mistaken.) It may be that a lot of the users who have the highest-quality conversations to share will jump ship and find yet another online community--that has happened many times since the 1990s, and I always follow the flight to quality.
And, yes, I agree that sometimes Facebook has appallingly poor response time. That might get a lot worse as the user base expands.
I agree with all the stuff you said, good points all, but I don't know if I agree about Facebook's serverfarmrunning-bandwidthreduction. They offer a lot of services to their millions of users and they're rarely down. I don't know how to compare them outside of that, but I doubt they're at all poor at this.
That said, I look at with a combination of nostalgia and pity. I miss aspects of it, and I pity their loss of self as they attempt to become MySpacebook.
MySpace wants to be Facebook, Facebook wants to be Twitter and what I want is a foggily undefined thing that is none of the above.
I see the end of Facebook, veteran that I am of three generations of social networking.
Just saying.
When MySpace got huge, it was because of the social tail. Big bands joined, lots of kids joined to talk to those bands, those kids' friends joined, till every high schooler was a member. Facebook didn't get to succeed in a void. MySpace pracitcally did, because Friendster was fairly minute when MySpace got big and Friendster was a sterile, inept social network. Facebook entered a stuffed market and beat the company with the monopoly, because they, not MySpace, understood how to make a social network, and they understood what people wanted out of such a web site. Now that they've got it, they're not going to lose, period, unless something happens to disrupt how people live lives. Their monopoly is as real and impregnable as Google's.
I was there at the center of the transition, and I can say firsthand that the approach of high school students to MySpace versus their approach to Facebook was entirely different. They joined MySpace for boredom and to show themselves off. See Ze Frank's episode where he mentions MySpace and freedom of expression: It's something like that. Kids would use MySpace to show off their crappy, unreadable pages, because MySpace wasn't ever about the information on those pages, it was about expressing yourself, regardless of if anybody else really cared, and they didn't.
When people used Facebook, they still used it partly to alleviate boredom, but much more importantly, they started communicating. Facebook's central model is the newsfeed. They had it long before any other site. After Facebook added it, then came MySpace, Twitter, Tumblr, and even the smaller things: Flickr's contact tracker and similar ways to follow friend activity. Facebook was the company that realized a social site had to be not just about giving people a way to connect, but about pushing the connections. When I update my status on Facebook, all my friends see it. When I upload a photo and tag a friend, all my friends and my friend's friends see it. In essence it's a bunch of connected pulpits. If a friend of mine takes my picture, I don't need to point it out to all my friends, because it's pointed out automatically. If I post on a friend's wall, other people can join in instantly.
Because Facebook's based on privacy, there's no risk if you're half smart about it. I can do anything you want to and you'll never see it. Hell, I can insult my family members while they're friends with me if I've put them on Limited View and they'll never see me complaining about them.
The thing is, social is not "cool". It's a way of living. For people who use Facebook at all, the site has become a central part of communication, same thing as talking on a phone or texting or emailing. Are cell phones not hip any more? They were around when I was a little boy, and they're still around today. Facebook is a success on that magnitude. It created and defined the methods of communication that we now take for granted, and it's still ahead of the game. Did you know that before Facebook, there was no such thing as "wall-to-wall" view? You'd have to follow a conversation by reading two profiles at once. There were also no social tagging systems in place. Facebook came up with that. And poking got made fun of then and gets made fun of now, but I got hook-ups because of poking and I suspect high school kids are still taking advantage of that.
Facebook is a global site. It doesn't try to be edgy; its only innovations are the enormous ones. It's simple. People miss how simple it is because it does so fucking much. But my 50-year-old mother knows how to upload photos and write notes and post on walls. So does my 75-year-old grandfather. My 14-year-old brother just joined, not because he thought it was cool but because his friends were all talking on it. I have no family member over the age of 10 who doesn't have a Facebook account. Furthermore, I've got friends who all experiment with cutting-edge applications and sites; I experiment myself; there is nothing coming up that's taking on Facebook. The closest is Loopt, and the only people I know that use Loopt use it as a Facebook app. More than half the people I know that use Twitter use it to update their Facebook status. Twitter's not a direct competitor to Facebook, mind you, but a lot of the people who comment here don't remember that. To them, a huge millions-person application must compete with a similar site that offers similar functionality. It doesn't. Twitter is public; Facebook is not.
Facebook's privacy was its killer feature when it started; it still is. Even with its push for public profiles now, it understands that people use Facebook to be part of an isolated community that they care about. The people who go public aren't changing that at all. In a sense Facebook's eating its cake and having it, because it has sacrificed no functionality to appeal to the attention whores, but it's given them what they want, probably because casual users are benefitting. I no longer use Flickr or Vimeo: I link people to my Facebook photos and videos. It's great because I can link you to my photo albums if I want to, but you can't see my face outside the photos I make public; you can read my comments on them, but you can't read comments made by friends. There are no leaks in the system. I can be public and my friends can be hidden and we still use the same site.
Because of the app plugin system, nobody has a thing to gain by avoiding Facebook's walled garden. Digg has a Connect With Facebook button prominent on its site. It loses nothing it had before, and it gains Facebook users; if I'm a Facebook user, I can use Digg without having to get a second account; I suddenly use Facebook even more than I did before. I use Delicious and Last.fm and they both tie in with Facebook. My friends that use Delicious and Last.fm both use it through Facebook. It's brought us closer together online. I made a new friend out of a casual acquaintance because he saw me listening to a song on Last.fm by a musician that he liked that I didn't know he liked.
The point I'm trying to make here is that these things are part of living for me and my friends. It's not something we use because we think it's rad and unique. We use it because it provides us with a convenience. It's no longer addictive, even: With their last redesign, Facebook removed almost all the things that were irritatingly engaging. I don't get app requests or see people I don't want to see. I can block it all off. I can also, however, talk to any one of my friends without knowing their IM address, I can invite them to anything going on (an acquaintance of mine invited me to a hypnotist show he's putting on out of the blue, and thanks to Facebook we're suddenly talking a lot about things because we've found something to talk about), and I can do nearly anything I want to. People use Facebook notes to blog now, they store links on it, they keep their family photos there. We never once think of it as "using Facebook" just as we never consciously notice we use Google instead of Yahoo or Bing. So when those 8-year-olds grow up, they'll join Facebook despite their parents using it, because using Facebook doesn't mean ever once seeing your parents. It means seeing your friends, and being involved in their lives.
tl;dr
I disagree with what you said.