
15B More Reasons to Worry About Facebook (2007) - luu
http://allthingsd.com/20070925/15-billion-more-reasons-to-worry-about-facebook/
======
ktamura
In 2007, I was just graduating from Stanford and vividly remember how my
classmates perceived Facebook: they pretty much echoed Swisher's sentiment in
the article. With the exception of a couple of really smart folks who wanted
to "own" a significant part of yet-to-be-built Facebook, the most accomplished
CS grads were joining Google in droves (Google was hot and on a hiring binge).
Problems are Google seemed grander and more challenging and less toy-ish.

Microsoft was another popular destination at Stanford at the time. If Facebook
was toy-ish and Google was cool, Microsoft was "respected". Many deemed
Microsoft to be the McKinsey of tech: spend a couple of years there, build
their resume and join or start a start-up. I even knew someone who took a job
at Yahoo! over one at Facebook (Needless to say, most everyone who had offers
from either Google or Microsoft chose them over Facebook).

Hindsight is 20/20 =)

~~~
colmvp
Someone once told me that he joined Facebook before it surpassed MySpace. Had
he stayed and waited for his stocks to vest, he would make serious bank. Like,
life changing amount of money. Instead, he joined another company before any
of it vested and well...

Hindsight is 20/20 but missing out on that would haunt me.

~~~
meric
Every other day there's a stock somewhere around the world going up 1000%,
because of a miraculous biomedical or geological discovery, or invention, and
life changing amounts of money could be missed by not borrowing a personal
loan from the bank and putting it all on that stock. If someone had the
foresight to know what was going to happen, they would make bank, and
occasionally someone did.

Everyday we're missing out.

If your friend stayed and Facebook had fallen through and your friend missed
three pay checks it would haunt him against working at startups too...

~~~
greyman
> life changing amounts of money could be missed by not borrowing a personal
> loan from the bank and putting it all on that stock

But this is different from already being employed at that company and not
seeing the potential.

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jondubois
I'm going to withhold my judgment on the matter until after the next market
crash. I think it's impossible to judge the value of anything in this messed
up 0%-interest economy. Crazy money is going around and inflating not just
valuations, but revenue, profit margins, etc.

Everyone is looking at Price/Earnings (P/E) ratios (which are currently quite
bad, but not horrible) and are completely ignoring the fact that earnings
themselves might be inflated by the low interest environment. Maybe if
interest rates were higher, companies wouldn't spend anywhere near as much on
Facebook advertising.

With that said, I think the current economic environment is more like 'froth'
than a 'bubble'. A bubble can only get so big before it pops - Froth can keep
building up to a considerable volume before it starts to deflate.

Economy is a bit like ecology - If you raise the temperature (interest rates)
by 5 degrees (5%), you could end up wiping out many species (companies)
because of their complex interdependencies.

~~~
bobm_kite9
I agree with this, but for one thing. What makes you think interest rates will
rise?

Governments set interest rates to combat inflation, caused by wage or price
increase. However, we've had 0 rates for 7 years, and QE to combat deflation.

If you believe (as I do) that the value of the worker is decreasing with time
(due to substitutability with technology), it kind of stands to reason that
we're not going to see much wage inflation anymore.. doesn't it?

Or, is there another kind of inflation I haven't considered?

~~~
jondubois
I think the economic value of people overall will decrease (a lot will lose
their jobs) but the value of workers (increasingly specialized ones which
cannot be replaced by machines) will keep increasing (until they too become
replaceable).

I think the value of all physical assets will decrease dramatically (due to
constant increases in economic productivity). So in effect, those who manage
to hold on to their jobs for the longest will be able to accumulate the most
wealth in the end.

...Then in an effort to optimize energy consumption, machines will genetically
engineer us to require fewer and fewer resources. Until we become amoeba.

~~~
bobm_kite9
Yeah I think I basically agree. I'm not sure about physical assets though. The
way to price those is to PV the future cash flows. However, if interest rates
are zero, PVs are infinite.. so we need a different approach. Or, if we
continue to use PV, then as rates get lower, physical assets increase in
price.

But yeah, I'm pretty sure the amoeba will have zero-rates.

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paul
I love reading these old articles. Here's another fun one:
[https://news.ycombinator.com/item?id=1719975](https://news.ycombinator.com/item?id=1719975)

~~~
misiti3780
that was a good one - at some point in that thread someone bet him 10K he was
wrong - and offered to put the money in escrow - i wonder if it ever happened

~~~
Steko
it would have ended 2 months ago.

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djsumdog
I remember telling people only a few years ago that I felt Facebook was over-
valued.

It's made it's way to the top, and that still bothers me. The lack of decent
federated social networking protocols has left the world in the hands of mega-
sites.

~~~
Kinnard
What's an example of a half decent federated social networking protocol?
Basically, I don't know what you mean . . .

~~~
AndrewKemendo
There isn't one because it doesn't make sense. As facebook has proven, people
generally want one place that gives them the stuff they indicate they want to
see. A federated system means more work for the average person.

I think federated systems generally (even governmental) aren't sustainable
because they require too much effort from individual users for them to remain
good - so they trend toward single or few "owners."

~~~
EGreg
How about Wordpress? Powers 20% of websites.

~~~
jsnathan
It might power 20% of all domains, but that doesn't equate to 20% of
mindshare. Individual Facebook pages should be counted individually in this
context.

Wordpress also is not really a federated system, because the individual sites
are not interconnected.

~~~
colechristensen
I want to be very snarky with an unnecessary description of a hyperlink...
another day.

Wordpress sites _are_ to a degree a federated protocol beyond hypertext:
[https://make.wordpress.org/support/user-manual/building-
your...](https://make.wordpress.org/support/user-manual/building-your-
wordpress-community/trackbacks-and-pingbacks/)

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sjg007
In fact it was allthingsD that failed in 2013. This type of news is just
hyperbole... The media companies strive on conflict and will create it to get
eyeballs. Now that's a Ponzi scheme.

~~~
Scoundreller
I recently tried to go to their site. It auto-corrected to allthongsd.com,
which thankfully is still unregistered ;)

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golergka
Hindsight is 20/20\. I vividly remember how surprised I was when Yurii
Milner's DST invested in it on then-giant valuation; I just thought that
Facebook has run out of local fools and had to find a sucker from across the
ocean.

The magnitude of my stupidity at that moment is something I never want to
forget.

~~~
Grainy1
...and Kim Kardashian has more followers on Twitter than Bill Gates and all
the Presidential Candidates from both sides of the aisle put together.

So what? What does that say about society or the exec\brands that prop her up?
There is no dearth of misguided smart people in the world doing dumb shit.

Facebook was stupid in 2007. Imho it is stupid today. People worry about AI
causing unpredictable damage to society. I worry about Facebook doing it much
before AI does.

It is a social experiment that should have been run inside the safe confines
of a social science lab. Running social experiments on the real world, at this
scale just because the tech makes it possible, and advertisers fund it is like
watching the plot of Jurassic Park play out.

Maybe a quote from there is apt - "Isn't it amazing? In the information
society, nobody thinks. We expected to banish paper, but we actually banished
thought."

Kara Swisher's advice still stands.

~~~
golergka
Whether it's stupid or not is irrelevant. People don't give their money to
funds to do intellectual things with it. People (including you and me) give
their money to funds to turn a profit.

DST's investment in Facebook turned out a great profit. The general rant about
the "state of society" and Kim Kardashian is kinda irrelevant to this
conversation.

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knughit
Ah, 2007, when casually mocking nerds was still cool, before they became the
new billionaire class. How quickly pundits forget how they were bullies.

------
EGreg
I joined Facebook back in 2005 or 2006 I think. Was in the first million
people. I remember thinking in 2006 what I will record for YouTube. But that
was too much hassle. In 2008 the F8 conference the Platform was launched and I
was hooked. Then in 2008 the iPhone came out and the newly formed Andreessen
Horowitz offered money to anyone with an app. Remember those days?

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draw_down
It's the easiest thing in the world to shake your head and laugh at "crazy"
valuations. It's incredibly tired at this point, maybe it was less so in 2007,
but it's not an interesting activity in my opinion. And of course there's
never any pressure to walk any of it back, this is the Internet, down the
memory hole it goes.

Talking about the structural reasons for the crazy valuations may be slightly
more stimulating.

