
Gmail Creator: Facebook Has The Potential To Be Worth More Than Google - stevederico
http://techcrunch.com/2010/09/23/google-facebook/
======
points
Correction: "Facebook employee says Facebook has the potential...."

I think it's fairly silly. Google is profitable because people searching for
things on the web are trying to find stuff. They have intent to
buy/visit/signup etc.

What intent do people have on facebook? Wasting time? Playing games? Chatting
to friends?

It's in a different league.

~~~
apollo
I think this is the reasoning behind the Facebook Questions product that
they're trying out right now. If it works, it's a way to harvest intent.

------
manish
I am curious about how Facebook will manage to hold on to its users if some
other more attractive social networking site opens up. We do remember what
happened to Myspace and Orkut. Google could hold on to search because it was
very hard for a new company to build Google kind of search infrastructure.

~~~
minalecs
I'm actually thinking as younger generations come and find a new place to
hangout I think Facebook can be unseated, not easily but in the same way other
social networks have fizzled. Google is just a utility, and I think most
people really don't care what search engine they are using, just bing and
yahoo.. hasn't really given anybody a real reason to switch. Where as when it
comes to social status, and hanging out where the cool kids are.. this can
cause a shift very fast.

~~~
protez
In addition, it makes more sense to put some ads for free utility service, but
the same ads can be very annoying in the contexts of social communication.

------
lukeqsee
On paper.

Stock valuations are pretty crummy anyways. They are only an indicator of
_potential_ earnings (that's why a stock can go down when earnings are good:
the forecast was bad).

No, that doesn't prove the article. Any company has the _potential_ to be
"worth" more than <x company>. It's a moot point.

Enron looked great _on paper_. It was worth nothing. Bernie Madoff looked
great _on paper_. He was worth nothing. Facebook looks great _on paper_ , but
in reality they are just hitting profitability. We'll see how long they last.

~~~
brown9-2
What other method is there for us to measure "worth" though?

~~~
Retric
Actual cash flows are worth more than potential cash flows. Realistically you
need to sum the probably of profit discounted by your risk tolerance. A dollar
is actually going to be worth a little less in the future, but it’s extremely
likely to be worth something. Gold value is a little more random but it’s
slightly less likely to be worth nothing. All the way out to lottery ticks
which are worth more as entertainment than their inherent cash value.

------
richardw
Maybe. The value attached to looking at friends' photos isn't nearly as high
as that of finding solutions to just about every problem you'll encounter in
your job.

Ask yourself this: if you had to work for a year without Google or Facebook,
which would you choose to give up? One provides answers for me daily. The
other I visit far less than HN. One is active - I'm searching. The other is
passive - I'm being amused. In the former, I'm more likely to be convinced to
spend money. The latter...well, I haven't spent a cent yet.

------
nivertech
Everybody and their grandma are already on Facebook. Recently I noticed, that
all the (non-tech) people with netbooks on train - mostly use Facebook.

You can hear word "facebook" every hour on mass media and even in TV
advertisement. Hell some TV ads even talk about FarmVille. I doubt Facebook
has a lot more growth ahead of it.

For me twitter has much more value, than Facebook. My only use for Facebook is
to check for various events in my area, for which I even don't need to login
into the fb website, since they spamming me with email so frequently.

~~~
simonsquiff
"I doubt Facebook has a lot more growth ahead of it"

Don't confusing lack of user growth with lack of company & profit growth. But
I don't think even user growth is anywhere near static.

~~~
nivertech
Facebook is an entertainment company. They compete with TV networks for
eyeballs. If somebody spend more hours per day on facebook - they spend less
hours per day watching TV. Or do you know of any plans of Facebook to
diversify into non-entertainment business?

I for one don't understand, why they don't have fmail (Facebook Mail)?
Providing free email was the first thing that any successful Internet company
before them did (i.e. Yahoo, MSN, Google).

New mediums can be used to break FB proprietary APIs, same way as Apple used
mobile to promote HTML5 over Flash. Android and TV can be used to create and
promote Open standards.

~~~
regularfry
They're an entertainment company, yes, but they are hugely more available than
TV. It's not generally true that hours spent on Facebook replace TV-watching,
because TV isn't generally watchable in all the situations Facebook is. That
spare 5 minutes to half-hour in the office can be filled by Facebook, for
instance, where TV simply isn't practical.

------
ttunguz
There's a parallel conversation happening on Quora:
[http://www.quora.com/Will-Facebooks-ad-platform-overtake-
Goo...](http://www.quora.com/Will-Facebooks-ad-platform-overtake-Googles-ad-
platform-in-the-next-5-years-in-revenue-terms)

There are two large advertising buckets: direct response (pay for performance)
and display. Today, the online advertising market is about 25B of which 16B is
direct response and the remainder is display (loosely speaking). Facebook may
not win a larger share of direct response dollars, but they may enable
branding dollars to move online.

Many are calling for the shift of offline brand dollars to move online. In the
offline world, display advertising is much, much larger than direct response.
The TV ad market is $70B alone annually, not counting radio, print and so on.

Because of its scale, Facebook can present a one-stop shop to many advertising
agencies looking to shift spend from previously mass market TV to new media.
Should this happen, a potentially equally large chunk of ad dollars may end up
in Facebook's coffers because like Yahoo, Facebook can provide the following

(1) A huge audience: largest photo & gaming, and 2nd largest video site on the
web with the most amount of minutes of any website (2) A gargantuan amount of
consistently high quality ad inventory (16% of all display inventory according
to eMarketer) (3) Best in class user targeting and demographic understanding
(4) Multiplatform (gaming, photos, etc) and multi-environment (web, mobile,
off-Facebook web) targeting (5) Consistent reporting across all these media

The other significant revenue driver that no one has discussed is Facebook's
enormous local ad opportunity - analyzed here:
[http://expostfacto.posterous.com/facebooks-local-ad-
opportun...](http://expostfacto.posterous.com/facebooks-local-ad-opportunity)
The local ad market is 133B according to eMarketer
(<http://www.emarketer.com/Article.aspx?R=1007939>)

Facebook quadrupled ([http://gigaom.com/2010/06/02/facebook-advertisers-have-
quadr...](http://gigaom.com/2010/06/02/facebook-advertisers-have-quadrupled-
since-2009/)) the number of advertisers on their platform last year, my guess
is entirely due to SMBs moving to the platform. With the the rise of GroupOn
(the fastest growing business in the world according to Fortune), the
addressability of SMBs and their enormous advertising spend moving online,
Facebook's 150MM mobile users coupled to great demographic data might very
well be another huge pot of gold.

If Facebook can capture even 5-10% of either market, they would be generating
between $6-10B annually at a huge CAGR which you could argue the public
markets might value at crazy P/E ratios, maybe even the 95+ of the Chinese
exchanges, in which case, Facebook's market cap may approach or pass Google's.

------
stevederico
Facebook will be worth more than Google because Facebook has solved the
chicken and egg problem. In order to leave Facebook for a same or better
experience, I need all my friends to move as well. However, I could switch to
Bing tomorrow and not need anything/anyone else to move with me for a better
experience.

~~~
lsc
and what of friendster and myspace? both of them had the same advantages.

~~~
c1sc0
yes, but they entered the market at a point in time when the masses were not
ready for social media. Myspace was for kids, friendster was for early
adopters.

~~~
lsc
Eh... I don't know. I think there is actually a disadvantage to everyone being
on the network. I left facebook when both my mother and my stepmother joined.
I don't think I'm alone in this need to compartmentalize my personal life in
ways that facebook doesn't support.

Now, my professional life, well, I'm on linkedin, and I like it quite a lot.
But facebook has lost it's compartmentalization, and I think that's bad. It
used to be just for college kids, which is a great niche, everyone else wants
to be in the same place as the cool college kids. But if mom starts showing up
at the local watering hole, I think the kids are going to find a new place to
hang out.

The thing about linkedin is that yeah, I want to compartmentalize my
professional life to some extent... but it's one way compartmentalization. I
mean, while I don't really want all of my personal life to bleed into my
professional life, I mean, my business partners and customers don't need to
read about my relationship problems. Not that I'm ashamed of my personal life
or anything; it's just unprofessional, and I think impolite to shove that in
their faces. But the other way around is fine; I'm okay with casual friends
reading up on what I do at work.

Really, the compartmentalization of my private life is very complex, and I'm
not a very private person.

Just my opinion; I'm clearly not an expert at this sort of thing.

------
javery
Will Paul Buchheit ever get to just be Paul Buchheit instead of always being
the "Gmail Creator" in every article?

~~~
azsromej
Homer constantly refers to 'swift-footed Achilles'; and you can't google
Bjarne Stroustrup and not see 'creator of C++'; we may be stuck with Gmail
creator Paul Bucheit. Makes the name easier to digest on casual mention, or
something.

~~~
javery
I don't mind the reference, but it seems like the title is often just "Gmail
Creator" and not a mention of his name until the end of the first or second
paragraph.

------
ericd
Google controls the internet, they're the gatekeepers of pretty much all
traffic. Their algorithms determine who receives traffic and who doesn't. You
can get your business attention by paying Google for the privilege. Facebook
has no such ability yet. Search advertising just works much, much better than
display ads.

That said, they do have a lot of users and a lot of explicit data about their
users, and they could use that to bootstrap FB into something else. But until
they figure that out, it's all just potential.

~~~
vyrotek
Except it takes 1 second to just switch to another Search Engine and I'm on my
way again. So while they are one of the biggest 'gatekeepers' now, they still
have to keep people happy or they'll leave in a hurry. Facebook? Not so much.
People are stuck there and Facebook loves it.

------
antichaos
Follow-up question: why specifically does Paul Buchheit think that "Facebook
has the potential to be worth more than Google"? [http://www.quora.com/Paul-
Buchheit-1/Why-specifically-does-P...](http://www.quora.com/Paul-
Buchheit-1/Why-specifically-does-Paul-Buchheit-think-Facebook-has-the-
potential-to-be-worth-more-than-Google)

Paul answered: "Because the future is in people."

~~~
statictype
_Paul answered: "Because the future is in people."_

As opposed to the present or past?

Paul writes a lot of thoughtful stuff but that throw-away line doesn't make
any sense.

Any profitable venture is always about the people. When has that not been
true?

------
DuncanIdaho
What keeps bothering me is - why nobody sees the danger Google represents to
Facebook.

I mean if Google wanted to - they could IMHO mow down Facebook. They have
waaaay more personal information about all the Facebook users that are also
Google users (I believe that is majority of Facebook users), which would
enable them to leverage that information and create a much better user
experience.

If they could really put their mind to it that is. Unfortunately Google cannot
seem to manage that kind of focus - beyond adwords that is. And forget Buzz -
that was a miserable failure and probably even wasn't ever meant to be
anything beyond Proof Of Concept.

However Google just might be working on a FB killer as we speak. In my
oppinion Google has better infrastructure, more resources and is in a position
to really give FB a run for it's money.

~~~
brown9-2
I think you are missing the key to "mowing down" Facebook which Google can't
conquer with a technical solution: convincing hundreds of millions of people,
many of them barely computer-savvy, to switch their routines from Facebook to
the Google Social Network.

~~~
DuncanIdaho
I'm not missing anything - like I said Google at present is unable of such
strong focus/commitement.

But... If google were headed by Steve Jobs or Larry Ellison - like persona,
then you could see what I mean :)

------
lefstathiou
In my view there is no doubt that Facebook will one day be worth more than
Google.

Facebook is stickier, it's users spend multiples of more time on there than
any Google site, their user base will undoubtedly break a billion at some
point and the level of competitioin is too fragmented and scattered to mount a
significant assault. In other words, the eco system they have created will
sustain their lead for many, many years.

Just as Google has become the defacto search engine to the world, Facebook is
rapidly becomming the defacto social network to the world. Alternatives will
always come up, but we cant compare facebook to Myspace. On myspace, people
used persona's but Facebook is real. People eventually grow out of their
myspace profile but you dont grow out of your facebook profile because its
you.

~~~
stanleydrew
My brother is a very heavy Facebook user but he's still logged in to Gmail
almost 18 hours a day. I'd say he spends about equal amounts of time on each.

------
Maro
This blog post is all over the place.

First, we have the Gmail/FF founder saying that FB could be worth more than
Google. I guess that's something one can have a discussion about.

Second, then we have this tangential point about how the shares he received
for FF will be worth more than they were originally. No shit.

It states that when Friendfeed was acquired they received $30M is Facebook
stock. FB valuation is skyrocketing. But that doesn't mean, as the blog post
implies, that the FF valuation is also rising. In other words, if FB were
buying FF today, they'd be getting less stock for the same price of $30M.

Third, to make the post even more noisy, he brings in the Q&A site Quora,
where he heard all this.

~~~
Charuru
There's no law that says a blog post can address only 1 topic at a time.

These are related issues that inform one another.

------
lhnz
Yes, as long as they don't do a digg 4.0.

~~~
mikemol
People would have to Like the relevant blog post to provide feedback, or Like
any of the latest batch of "I hate the new Facebook design" groups that would
arise.

I wouldn't worry...

------
nhoj
I doubt it. Maybe facebook will be worth more on paper, for a short period of
time but Google provides a far far more valuable service and I think that will
show in the end.

------
xoai
In my point of view, Google is king in valuable information (just like
knowledge or things you're interested in, that you always want more and more)
and Facebook is king in social information (what you're not always interested
in but you usually feel sorry when missing it). It's hard to say what kind of
information is more important just like it;s hard to say wether Google or
Facebook is worth more than the other.

~~~
danieldon
Search is practically necessary for using the web. Social networking websites
are neither necessary for using the web nor for socializing.

~~~
xoai
Yes, true. But, I think, social networking websites was born just due to
lacking of social interaction (among real relationships) on web while people
was spending more and more time on it for searching valuable information.
Facebook just brings social information in real life on web and make social
interaction much easier (although I think it only keeps us further away from
real life).

------
andreyf
What does he mean that "it's already trading at $25b? It's private stock, no?

~~~
jackowayed
Secondary markets: <http://en.wikipedia.org/wiki/Secondary_market>

------
jonas_b
Revenue idea for facebook: Integrate something like WePay and give event
creators the ability to charge for tickets etc. FB takes 10%.

------
hackinthebochs
Facebook is the new homepage for a large number of people, and growing. What
happens if Facebook sticks a web search box on it?

------
lzw
I've been shocked to discover that the cool, nice, smart people I knew in high
school and college turned into bitter, closed minded, bigots in the
intervening decades.... Logging into Facebook means seeing stream of inanity
and reports about the night's drinking-- which I don't mind-- punctuated by
ignorant political outbursts and hating on the latest groupthink target for 5
minutes of hate- which I do find dismaying.

So I don't really see the attraction of facebook, and log in there very rarely
now.

~~~
edash
Why not just remove your old high school friends as Facebook friends? What
you'd have left is a small social network filled with only people you want to
keep in touch with.

Privacy complaints, not trusting Zuckerberg, objecting to valuation...those
are Facebook complaints I can comprehend.

But disliking the network of friends you created? That seems like your
problem, not Facebook's.

~~~
lzw
Oh, I've done that, but there isn't much draw to the site anyway, and the fact
that i finally joined when I was convinced that Facebook respected privacy,
only to find out that they are constantly making things public by default.

To be honest, the only reason I still have a FB account is a feeling that ill
need to integrate our products with the site in the future.

------
adlep
The engineering potential of Google is second to none. Founders of Google are
brilliant and morally impeccable persons who have been making a lot of good
choices for the company. Facebook on the other hand, has a CEO who is a
autistic semi-retard with a tendencies to screw people over and his luck is
about to run out... It all starts at the people at the top... Brin and Page
>>>>>>>>>>>>>>>>>>>>>>>> Zuck

~~~
baxter
I feel compelled to point out that multiple greater than symbols do not mean
"even more greater than".

