

What If Facebook's IPO Dreams Are Built On As Much Hype As Groupon's? - dmk23
http://www.forbes.com/sites/ericjackson/2011/11/23/what-if-facebooks-ipo-dreams-are-built-on-as-much-hype-as-groupons/

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reso
What a shitty article, right from the beginning.

>Google Hates Facebook

Sensationalism.

>Facebook’s rapid ascension is arguably what prompted Larry Page to tell Eric
Schmidt to step aside in January so that he could take the reins of Google and
make it more streamlined and efficient.

No its not. Larry has always wanted to be CEO and they decided that he was
ready, after 10 years of waiting.

>But, hold on for a second. What if advertisers don’t care about
personalization? That’s a big what if — but what if they don’t?

They do. That's not an 'if', its a 'no'.

>There are several possible ways for Facebook to make money: (1) highly
targeted ads, (2) charging publishers to have a Facebook Connect integration
(which is currently free), and (3) data analytics of users’ behavior/patterns.
At the moment, their over $4 billion in revenue comes from option 1. The other
2 might be great businesses as well, but let’s focus on the first.

The suggestion that Facebook would charge for connect integration is absurd.
Similarly absurd as that they would charge users.

~~~
joe_the_user
Yes, the article is bad however the problem itself remains.

Article: But, hold on for a second. What if advertisers don’t care about
personalization? That’s a big what if — but what if they don’t?

Parent: They do. That's not an 'if', its a 'no'.

Yes, advertisers care about personalization currently. They've been taught its
great. The big question is whether they can actually turn their belief into
money because if they can't that belief won't hold even if they're currently
shoveling money into Facebook.

Many, many people have made argument that Facebook can't monetize on the order
of Google because people don't go to Facebook to buy things. Of course, many
others have attempted to debunk this objection, I don't think we glibly say
things are settled one way or the other 'till Facebook is making Google-scale
dollars on a multi-year basis.

~~~
nl
_The big question is whether they can actually turn their belief into money_

They can

 _I don't think we glibly say things are settled one way or the other_

It's settled enough for people to be spending large amounts of money on
Facebook (as well as on Google)

At the moment you can get very precise estimates of click-though rate for an
ad on Facebook. The rate is less than on Google search, but generally more
than the broad internet.

~~~
pork
Parent doesn't deserve to be downvoted. Multi-billion dollar businesses
(revenue that is, not "valuation") have been built on targeted advertising.
Isn't not a fad. Jeez.

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mikedougherty
This article is just false comparisons and strawman arguments.

Why is Facebook's IPO anything like GroupOn's? Completely different business
models.

G+'s existence is used as an excuse to compare Google with Facebook, but G+
wasn't even a thought when Google IPO'd. Again, completely different business
models.

The author then makes up the particular case of an "Ivy League Northeast pet
lovers" demographic and says that things like Tide, Mission Impossible, car
companies don't want to market to them. This is not how targeted advertisement
would ever work.

* You market Tide to demographics that are in charge of the buying decision for laundry detergent in the household (this knowledge has been around for literally decades: soap operas) - how about people who talk about doing laundry in their status messages? Or how about people who list their children on their facebook profile and don't list an employer?

* You market Mission Impossible to people who say they like Mission Impossible (and similar movies/series) in their "Stuff I like" section or by using their "likes" from sources like IMDb, etc. Maybe they also check in to movie theaters regularly - especially if they often check in with a certain group of friends. Show those friends the same ad.

* You market cars to people who seem to have the income to afford a car (using job descriptions, maybe seeing how often and where they eat out using checkin information to get some sort of estimate on disposable income) and maybe you even filter that to people who complain about their car. On top of that you could even filter by the last time the user got a vehicle - this is now an event you can add to your timeline.

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viscanti
Total users is a poor measure of value. Google's search is so valuable because
people are using it to actively find something. Advertisers are looking to let
people know about their product/service, and the most valuable time is when
someone is actively looking for it.

Facebook, as currently constructed is much less valuable to advertisers,
because most people aren't using it to find out information about
products/services, and if they are, they're going to that brand's Facebook
page.

Facebook is still mostly "potential". The hope is that they can find a way to
monazite their large user-base. The Facebook platform with credits has room to
grow, but how many more iterations of Farmville are there? The biggest
potential I see is with Facebook commerce. If they can leverage the credits
system into an easy to use payment system for things other than Facebook
games, they might have a winner. None of that is guaranteed though.

~~~
paganel
> Facebook is still mostly "potential". The hope is that they can find a way
> to monazite their large user-base.

There was a chart navigating the interwebes a couple of months ago documenting
"time-on-site" for both FB and Google. As far as I remember FB had just
managed to topple Google on that criterium, which supposedly made the latter
"scared shitless" (to paraphrase a comment I remember reading on that story).

Edit: I've found it -
[http://articles.businessinsider.com/2010-09-09/tech/29987553...](http://articles.businessinsider.com/2010-09-09/tech/29987553_1_google-
sites-comscore-facebook)

~~~
locci
Google is a search engine, not a content provider: the less time I spend on
it, the better it works.

On a personal note, I very much dislike the walls facebook builds around its
experience: it annoys me almost as much as content farm popunders.

------
theDoug
What if Forbes did some reporting and didn't just end blog posts with question
marks to talk about imagined controversy?

Poorly written article. It's a shame that Forbes, for whatever prestige it had
in the 80s, has turned into garbage on the web.

------
cleaver
I walked into an Apple store a few weeks ago. I'd estimate that about 80% of
the people who were trying out a machine were on their Facebook page. That's
not hype. (It's actually a bit frightening.)

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austenallred
Facebook makes profit. End of discussion.

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wavephorm
One thing is for sure, when the Facebook IPO implodes it'll take down the
entire startup ecosystem with it.

~~~
signalsignal
The situation is more like this, IF the Facebook IPO implodes, it'll put the
entire startup ecosystem on hyper-cocaine-steroids.

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CPlatypus
Two differences between Facebook and Groupon immediately occur to me. First,
despite everything else that's wrong with it, Facebook's business model does
not depend on persuading small businesses to sell goods and services at less
than their cost. Second, Facebook has generated significant value in the form
of non-replicable technology, infrastructure, and connectedness to just about
everything else on the net. None of this is true of Groupon. There is nothing
hard to copy about Groupon, and "find more suckers" pretty much sums up their
business model. These are the differences between a company with staying power
and a company without it, so only a fool would expect similar IPO outcomes.

------
hendrix
It is, except with a more addictive business model...

Back in the day (freshman @ uni so 2006) all the cool kids were making
facebooks. You had to have a .edu email address which let you into that uni's
network. Only the students/recently graduated could participate. Now everyone
and their dog have facebook accounts.

To make something popular and or "exclusive" one needs to have a niche of
exclusive/cool people willing to use that product and a bunch of other people
that don't have access to it. This is EXACTALLY what Zuck did at Harvard. He
created the ultimate cool kids club at the most exclusive university in the
world. This would have been impossible at almost any other university, also
Harvard doesn't have the nerdy reputation of some other universities in
Massachusetts. Then they opened it up to the masses, and all the
parents/people who are not students/hs students got accounts and the
exclusivity went downhill. But that isn't their main strategy anymore, it is
to keep people yearning for human interaction, but without any negative social
consequences... There is a VERY good reason that it is not a good idea to ask
a girl/guy on a date via facebook, which is the exact same reason which makes
it so popular aka no negative social consequences (can look @ the cute girls
bikini pictures all day long and you don't get yelled at) but only to an
extent. That is the facecrack.

So yes, they will be able to maintain the facecrack of pseudo-social
interactions. They will not be able to grow with the exclusivity that they
once had though. This is until the next exclusive thing comes along though.

tldr:

1\. FB grew out of Harvard and associated exclusivity & worldwide appeal

2\. FB uses pseudo-social interactions to give its users a limited amount of
good feelings, but does not have the consequences of real life interactions.

3\. FB will cease to be king of the mud pit if something more exclusive comes
along.

~~~
reso
Facebook has 800 million users. All semblance of "exclusivity" and "cool kids
club" has long since dissipated, but they've still added 300 million users
since last summer.

The method by which they launched the business seven years ago is not very
relevant to predicting their IPO success.

~~~
libraryatnight
I think it's transitioned from exclusive cool kids club to "Well everybody is
there, if I'm not, I won't have any idea what my friends are up to."

~~~
mattmanser
Only reason I still maintain an account is because you don't get invites to
nights out if you're not on there. Incredibly annoying walled garden you can't
break out of atm.

~~~
juiceandjuice
Held hostage by your own friends.

At this point, facebook is becoming a universal service on many levels, and at
this point, even though it's an apples and oranges comparison, it's probably
more worthwhile to have a facebook account than a landline to your home.

------
1010101111001
I find it amusing to read an article that talks about a potential 100bln IPO
and at the same time asks how this company will make money. If that is still
an open question then something is very wrong with this picture.

But some people, e.g. at Goldman, do make good returns from these hyped IPO's
no matter what eventually happens to the business, so these IPO's no matter
how ridiculous they may seem do make sense for those people. Their risks are
sufficiently limited. The more hype the better.

