

How Facebook Can Become Bigger In Five Years Than Google Is Today - benofsky
http://techcrunch.com/2010/10/02/facebook-bigger-google/

======
sbaqai
Key quote: _"This is not about the revenue streams Facebook has; it’s about
the revenue streams they’re about to have."_

Everyone who's been defending Facebook's $33B valuation is projecting the
success of some yet-to-be-developed or nascent product at Facebook. Projecting
growth based on past earnings and current growth rate is one thing. But
imagining hypothetical revenue streams of yet-to-be validated products is
batshit crazy. It doesn't matter how obvious or inevitable people think it may
be or what the trends are. There's no track record with any of these if-they-
wanted-to-they-could-do-this-tomorrow-and-make-billions products.

 _"Facebook Credits are poised to be this generation’s American Express"_

Am I the only one that thinks Facebook isn't as omnipotent and in total
control of its user-base as people like to think? Everyone is making these
projections about users just falling inline with Facebook's potential revenue
models, but they forget the shitstorm that was Beacon. Clearly, Beacon was a
direct grab at a sustainable business model and it violated many of their
user's trust. Facebook may act like its a benevolent dictatorship, but there's
always been an element of democratic decision-making at the behest of angry
users. And those concessions always occur at the boundary between potential
profitability and privacy.

So many are quick to use Google as a benchmark when Google itself was an
extraordinary circumstance. It was recently mentioned that Larry and Sergey
were willing to part with their company for $750,000.[1] Now, you could argue
if Bill Gross never existed, Google would never have be Google because they
wouldn't have developed Adwords and have a perpetual license to Overture
patents. And Google's advertising is its flagship product, accounting for 97%
of its revenue.[2]

Google was a net win for the internet. It helped structure and organize the
majority of information available on the net, and combined the best interest
of their users (accurate, quality search) with the best interest of businesses
(targeted advertising, purchasing intent). They unlocked tremendous wealth on
a new platform and reaped the rewards.

Facebook has clearly had a social impact. Just like text-messaging and AOL
Instant Messenger did. But the question of if it has unlocked any huge wealth
the way Google has is yet to be seen.

[1]
[http://www.sec.gov/Archives/edgar/data/1288776/0001193125091...](http://www.sec.gov/Archives/edgar/data/1288776/000119312509150129/dex992.htm)
[2] [http://tech.fortune.cnn.com/2010/09/29/excite-passed-up-
buyi...](http://tech.fortune.cnn.com/2010/09/29/excite-passed-up-buying-
google-for-750000-in-1999/)

------
vaksel
this is the same crap we used to hear about myspace and friendster.

Techcrunch needs to lay off the crack...facebook might be a billion dollar
company...it might even be a 2 billion dollar company...but there is no way
it'd beat Google.

They compare it to Google revenues...but Google's ad product is a lot more
effective. On Google the user is searching for widget, and Google tells them
"hey widgets are 90% off at this site". With Facebook you are reading your
friend's profile, and Facebook tells you "hey, I know you are busy, but this
might possibly be of interest to you"

The rate of return is a lot worse with Facebook, because you can only target
by demographics...not intent

~~~
revorad
The funny and scary point this post made was that maybe (just maybe) Facebook
is bringing back the inefficient TV ads that Madison Avenue loves in the form
of Facebook banner ads.

Facebook ads might make more money than Google ads precisely because their
effectiveness cannot be measured (just like TV and billboard ads). Sure,
engineers will cite poor CTRs but "brand managers" will be eager to dismiss
that as oh-so-2001. They are not buying clicks, they are creating "brand
awareness on the largest website on the internet".

~~~
pkaler
Madison Avenue is about demand generation not demand harvesting. You can't
market to people that don't realize they have a problem or a need.

You could invent the wheel and there will be no demand to harvest because
everyone has always dragged their dinner back to the cave. A caveman will
never do a Google search for a wheel.

~~~
il
FYI, it is impossible for any single company to generate demand, they can only
create products that meet existing demand. Demand rises organically over time
through the combination of all market forces, cultural trends, etc.

Trying to educate a market that they need your product is a losing
proposition. Trust me.

~~~
dtby
I'm not sure what your claim is here: "Say's Law is hokum." or "Marketing is
bunk."

~~~
il
Neither? Judging from the downvotes my comment has been misunderstood. My job
is marketing, so I know better than to say it's bunk. For those who still
don't understand, here's what Eugene Schwartz, one of the greatest marketers
of all time says: "What are you doing when you market something? You are not
creating demand for a product. If you think that you are creating demand for
your product, you’ve doomed yourself to a lifetime of hard work and failure.
You can’t create demand for anything because demand is too large for you to
create. The demand has to be out there. The demand has to exist before you
even walk into the picture...You cannot create demand. You can only channel
demand. Demand is there. Demand is enormous. The bigger the demand, the better
your ad is. You are getting in a boat and letting the stream carry you. Just
don’t think that you can paddle up against the stream."

------
mikedanko
But I don't use Facebook. I work in a department of seven, and they all are
extremely reluctant to even check their Facebook accounts. Google? We use it
all day. Google is like Linux, you can't even count how much you use it until
you actually talk to an engineer.

Facebook just reminds me of ICQ. It was all hot shit, everyone thought it was
going to take over the world, but it was just left to little old ladys who
LOL'd at everything you had to say. Which, according to schedule and my wife's
age, is probably going to be about another 10 years. Facebook gets another 10
years before it's ICQ.

~~~
natrius
You and your department aren't normal. I think their actual usage data tells a
much different story than your anecdote does.

~~~
mikedanko
We're totally not normal. That, I'll agree with.

Usage data, smoochage data. The point of bringing up ICQ was that at one time,
for what seemed like a long time, it was king.

People seem to have given up and consider Facebook the winner of this era of
the Internet. My point is that stuff comes along too often, and changes so
much, that it won't matter eventually.

Besides all that are we really talking about two competitive products? People
still haven't even decided what Facebook really is, nor have they really
defined it either. Why? Because no one can figure it out.

~~~
natrius
Your point about ICQ was fine, but the first paragraph of your original
comment was inconsequential.

------
jacquesm
Facebook may become bigger than google, but they'll never be more important
than google.

If facebook would suffer a 1 month outage it would be a 'meh' event, nothing
you couldn't live without. If google would be down for as much as 24 hours it
would seriously impact a very large number of people and businesses.

~~~
dstein
I think you're overestimating the chances that in the future Google will play
as important a role as it does today.

Google was the first to solve the "search problem". They won't be the last,
and finding information is only one aspect of one thing people do on the
internet. Google has not been very good at making money in any other way.
Competitors in the search engine business are emerging. I can totally foresee
a scenario where Google's core business shrinks quite a lot over time, and I
have a sneaking suspicion they do too. They're scared, whether they admit it
or not, their acquisition spree is evidence.

~~~
jacquesm
> Google was the first to solve the "search problem".

Google definitely wasn't the first to solve the search problem.

~~~
dstein
That's subjective. I consider Google the first "good" search engine.

------
chipsy
Towards the end, the article inadvertently hints at how Facebook may actually
collapse: a death of a thousand papercuts from more focused sites that include
social features. However, this may come about in two different forms.

One way is akin to the "wheel of reincarnation" effect where social features
centralize, then fragment, and then centralize again. One can easily see this
in the lifecycles of most online discussion venues - a focused start, and then
a gradual change and dilution of the site's character that hits a tipping
point at some critical moment. Facebook has already gone far, far away from
the "college facebook replacement" angle it started with, but it hasn't yet
hit the landmine that might cause its own self-destruction.

The other way is the emergence of a dominant open system that is pound-for-
pound similar in purpose and usability, and simple enough to run that it
becomes a commodity. This can take eons of "internet time" to happen. Desktop
Linux remains a work-in-progress(but one getting closer and closer to its
competition), and Jabber, as a pure instant messaging platform, is still just
one of many systems. So if a standard emerges for social networks(and we
haven't _really_ settled on one) it will still probably take decades.

------
yurylifshits
Here is another argument for Facebook: hiring potential.

Right now, Facebook is the most attractive large tech company in the world.
Out of 10 new geniuses 8 will go to Facebook, one to Google, one to Apple.
Facebook is smaller (you can get a bigger project immediately), at Facebook
your commits go live at the second day on the job ("Move fast and break
things"), Facebook options are much more attractive, and also working for
Facebook can get you laid (seriously, working there has much more sex appeal
than working at other tech companies).

Because Facebook can snap the cream of the next generation of talent, it will
be in ideal position to take on any big opportunity over the next 5 years.

~~~
klochner
Options are only more attractive until they go public, which won't be 5 years.

How long did it take before Facebook started sucking post-ipo employees from
google?

~~~
yurylifshits
With the appearance of "mezzanine" investors like DST, there is much less
pressure to go public. So Facebook's IPO can be deferred by a few years.
Google was not having this opportunity.

------
coreyrecvlohe
Let me just say from experience that Facebook ads haven't really generated the
same type of return as Google ads. The thing about Google ads is that they are
really good at capturing demand that is already out there, like for instance
in a niche market where people are looking for a particular product or service
(example, search "bike" and get advertisements for bikes of different types,
etc.)

What I find is that money spent on Google is money spent on trying to get
infront of people "who know what they're looking for." With FB, it's sort of
the other way around, where you have all these people you can get infront of,
but the demand is more opaque, and you're really searching for it instead of
capturing established channels like with Google search terms.

All of this is really just chatter, only FB can know how to monetize FB,
because they have the data, they have the information required to make a
decision on what to do, and chances are, like with Google (remember in the
early days they had no business model), they'll figure it out through just
sheer luck or chance. What's amazing is that they have gotten this far
already.

------
gwern
Facebook’s 2015 revenues will be >$28 billion —Adam Rifkin, TechCrunch:
<http://predictionbook.com/predictions/1821>

Did Rifkin make any other specific predictions? I thought about including each
source of revenue as a prediction but wasn't sure whether those predictions
were anywhere near as interesting/important as the overall sum.

------
iamgoat
So this article assumes Google is going to stay flat the next 5 years at 28
billion? Facebook has a lot of catching up to do, but Google isn't planning to
sit on its thumbs AFAIK.

As a company, Google is way more important than Facebook. Facebook connects
people, something that isn't difficult to do in ten other ways with 100s of
different services. Google on the other hand seems to be really trying to
change the world. Much like the Virgin Group.

Once the Facebook IPO happens, they would have more than enough cash to do
anything they want. Which I hope is more inline with these other companies.
Going outside their comfort zone and into entirely different industries to use
their wealth and resources to make a more impactful difference.

------
greenlblue
When was the last time anyone here used facebook to get something done and I
really mean get something done and create something of value? Anyone? As long
as facebook caters to teen type activities like gossip and displays of vanity
it can not compete with google in any serious way. The best it can do in the
long run is become a glorified dating site where your friends recommend and
vote on your dates and that is all.

~~~
Aetius
I don't even use gmail to communicate with friends and family anymore. Hell,
usually I don't even call them. Facebook is the only way.

~~~
jlgbecom
How do you send file attach attachments?

------
yef
I don't buy it, unless Facebook builds a search engine that incorporates
social data AND the result is dramatically better than traditional search.

------
protez
Why not bigger than this universe? Why would it be limited to the size of mere
Google in this multiverse where every alternative event can happen?

------
olalonde
Scary perspective. Once Facebook becomes the social layer in every application
out there, they will become too powerful. And I don't think Diaspora is the
solution (in its present form).

By the way, why isn't OpenSocial, OpenID, etc. getting traction outside the
tech community?

~~~
dgallagher
_By the way, why isn't OpenSocial, OpenID, etc. getting traction outside the
tech community?_

Regarding OpenID, you sometimes have to enter a "URL" as your username.
Absolutely bonkers.

\--------

EDIT: You know there's a problem when you need a giant how-to to login to your
service: <http://openid.net/get-an-openid/start-using-your-openid/>

Don't get me wrong, the idea behind OpenID is awesome. Its implementation is
not user-friendly, however.

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chopsueyar
Reads like a bad version of Douglas Rushkoff's _Exit Strategy_.

[http://www.amazon.com/Exit-Strategy-Douglas-
Rushkoff/dp/1887...](http://www.amazon.com/Exit-Strategy-Douglas-
Rushkoff/dp/1887128905)

------
FreeRadical
There is a possibility that the like button on external sites could morph into
an adsense competitor over time, if that is the case (and it is successful)
then fb revenue has the potential to really take off.

------
known
I think FB will face many lawsuits in future.

------
ankimal
I m waiting for spolsky to comment.

~~~
ankimal
I guess my earlier attempt at humor wasn't received too well.

On a serious note, I think there are too many ifs and buts for all this to
happen. Google for some "is" the internet. Facebook is a social network and
for it break out and become this behemoth which helps you do anything and
everything online sounds a little far fetched at this point.

But then again, Facebook users are addicts. In the absence of any real
competing service, they will stick on in spite of all the extra fluff. Their
problem will always be, if not Facebook, then what?

