
Facebook Revenues Up to $700M, On Track Towards $1.1B - ALee
http://www.insidefacebook.com/2010/03/02/facebook-made-up-to-700-million-in-2009-on-track-towards-1-1-billion-in-2010/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+InsideFacebook+%28Inside+Facebook%29
======
startingup
My suspicion is that Facebook revenues could be much higher than they are
letting on. I say that as a non-Facebook user and a fairly neutral outside
observer. If they were being coy because revenues were actually too good, it
wouldn't be the first company to do so. Google was coy about its revenue in
the 2002-3 timeframe, and it surprised a lot of people when it was later
revealed just how much they were making.

Here is my theory: Facebook's traffic, measured in terms of users or page
views is about even with Yahoo. Facebook has the added advantage that every
single page view is a from a logged in user, who has provided Facebook with a
fair amount of personal information, far, far more than what Yahoo has.
Facebook has considerable information from the users' profiles as well as
their various activity streams that Facebook tracks. This should enable
Facebook to target its ads more precisely than Yahoo can, and therefore
achieve at least as much revenue as Yahoo. From an advertiser perspective, it
would seem like Facebook, with its vastly superior knowledge of user behavior,
should be a better bet than old-school Yahoo. Of course, Facebook probably
hasn't pushed its sales efforts as hard as mature Yahoo; still, I would expect
Facebook to be doing a goodly fraction of Yahoo's revenue, which is running
north of $6 billion per year.

If you buy my theory, long term, Facebook should overtake Yahoo in revenue; in
fact a lot of Facebook revenue will likely come by stealing advertisers from
Yahoo. So the company with the most to fear from Facebook is not Google but
Yahoo.

~~~
muhfuhkuh
Maybe facebook will be one of those powerhouse private technology corps like
SAS that make money hand over fist but stays private to do whatever the hell
it feels like in terms of personnel benefits and R&D expenditure.

------
jackowayed
> _The company has been roughly doubling its revenues every year — 2007 came
> in at $150 million. We expect that trend to continue for the foreseeable
> future, making Facebook a multi-billion dollar company within the next few
> years. The question is becoming how Facebook can hit the inflection point
> where its revenues increase much more quickly._

Um, doubling every year sounds pretty good. Can they, or any company that's
hit that size and revenue level (it's easy to 10x or 100x your revenue when
starting from near 0) really hope to do much more than double revenue yearly?

------
bwh2
Something has always bothered me about companies like Facebook and Google that
generate such a high percentage of their revenue from advertising. They strike
me as quite vulnerable.

~~~
csytan
Why? Advertising has been around for hundreds of years, and is involved in
nearly every medium of communication. I'd wager that a high percentage of HN
users who own businesses are advertising on Google or Facebook.

~~~
bwh2
Well, my main issue is that for said companies, ads are essentially the only
source of revenue. So what would happen if that source of revenue was cut off?
Perhaps an ad blocker becomes wildly popular. Well, that destroys Facebook and
Google's revenue model.

But it's also the nature of ads. I've never intentionally clicked on an ad.
Anecdotally speaking, I've observed that the more sophisticated a user is, the
less likely s/he is to click an ad. So in my opinion, a revenue model based
solely on ads doesn't seem to bode well in an increasingly tech-savvy society.

~~~
freshfunk
I'm a pretty sophisticated web user and I have intentionally clicked on ads
while doing Google searches. Why? Because I was looking to purchase something
and I was looking for merchants. The organic listings were either equivalent
or less relevant. Perfect example: Sending my mom flowers for Mother's day. I
really don't have a favorite retailer I go to. I just go to Google.

Many people make this argument that the only thing Google has really made
money from is ads. I take it to be FUD. Many business do extremely well by
being really, really good at one thing.

------
jcromartie
And yet: <http://i.imgur.com/3HM89.png>

~~~
sorbus
[http://techcrunch.com/2009/09/15/facebook-
crosses-300-millio...](http://techcrunch.com/2009/09/15/facebook-
crosses-300-million-users-oh-yeah-and-their-cash-flow-just-went-positive/)

While I didn't find anything newer (in about 20 seconds of googling), facebook
was profitable, and I see no reason that it wouldn't still be so. If someone
feels like putting in the effort of finding newer information which proves
this wrong, please do; I would love to be proven wrong (well, not really; but
if I am wrong, I would like to know about it).

~~~
jcromartie
People have to use various non-straightforward meanings of "profitable" to
define Facebook as such.

~~~
sorbus
"Cash flow positive" sounds pretty straight-forward to me (would you care to
explain how it is not?); sure, it may not have been profitable over its entire
lifespan (which is perhaps your definition?), but once your cash flow in a
given period of time becomes positive, if it stays positive you'll make up for
any historical loss eventually.

~~~
bwh2
Cash flows aren't exclusively tied to operational activities. You can lose
tons of money on the operational side, but make up for it in investments and
debt, thus making your company cash flow positive. I'm not saying that's the
case with Facebook, but it's entirely possible that on the operational side
they are losing money but still remaining cash flow positive.

~~~
RyanGWU82
The term "cash flow positive" generally refers to cash flow from operations. A
company that closes a round of financing would end the year with more cash in
the bank, but no one would call such a company "cash flow positive."

------
megablahblah
So no one here thinks Facebook will go the way of MySpace within 1-3 years?

~~~
ahi
3-5. Way too many competitive threats for it to stay on top forever, but
Facebook needs time to ossify and get slow.

------
gojomo
On track to win my bet with jacquesm:

<http://news.ycombinator.com/item?id=689993> :)

~~~
il
As someone who actually spends a lot of money on Facebook ads and thus has a
little more insight on where those revenues are coming from, I'll take jaquems
side too.

A significant portion of that increase in revenues is due to ad policy changes
and deals with branders rather than any type of growth that could be
sustainable in the future.

~~~
gojomo
I'm happy to take more action. (It's like a few shares of Facebook stock!)

Same amount, same terms? (FB revenue>$2B for 2014 I win, <$2B revenue you win,
murky situations go to an HN poll?)

I don't think FB has yet found their revenue-rocket equivalent to AdWords --
current ads are not it -- but I think they will.

~~~
il
Allright, I'm down for $100 for the same terms, my email is in my profile so
you know how to reach me.

What happens to the bet if FB is acquired?

~~~
gojomo
On the original jacquesm bet, I suggested we use the apparent revenues of
Facebook-as-a-division. That might be tricky to measure depending on the
acquirer's reporting and integration plans, but as I suspect any acquirer will
be -- (1) a giant public company with detailed quarterly reporting; and (2)
eager to keep 'Facebook' as a separate brand/division -- I think it's
ultimately resolvable to sufficient confidence for someone to concede (or
defer to a poll result). However, if you prefer for an acquisition to mean
"bet's off (no action)", I'd be OK with that, too.

Just express a preference before an acquisition happens, or my preference --
calculate it as a division -- should stand. (I like FB to make this revenue
target standalone; I like them as part of Google/MSFT/Apple/Disney/etc.; I
like them in a box, I like them with a fox; I like them in a house, I like
them with a mouse.)

