Facebook made ~$200mm in 2008. It's pretty clear they could profit on those revenues, and instead are choosing to invest in further growth (with outside capital). Why is the parent comment's belief so widespread here on hn?
They took a $150 million loss in 2007, and then made projections for 100% growth (and hired 100% more staff) for 08, which we now know is a recession year.
That means they are still losing money. It doesn't matter if they have $1B in revenue, if it costs them $1.1B to operate, things are not sustainable.
I meant that they had ~$200mm in revenues, not profits. As I said, I think it's very clear that they can operate at a profit with those revenues, and are choosing to invest in future growth. Huge investment in growth isn't "sustainable", in that you can't do it forever.
It's fine if you think they're going to fail in their bid to take over the world -- I'm undecided, personally -- but it's silly to claim that they're "unprofitable" without acknowledging that they could be if that was their goal (or refuting that point).
> but it's silly to claim that they're "unprofitable" without acknowledging that they could be if that was their goal (or refuting that point).
But you do the exact opposite. You are claiming that they could be profitable but you don't back it up. I'm not saying you are wrong, just that you haven't flushed out your point at all.
I too could say that General Motors could be profitable, they'd just have to stop paying pensions, salaries and leases on equipment.
So the question to you is how can Facebook be profitable if they pay out more than they take in?
it doesn't matter how much money you have if you run out of cash.
The problem is that Facebook thinks its Google...when it is not. This is why they spend so much cash trying to hire a ton of people. Just to make people think they are bigger than they are.
What they are forgetting is that Google was profitable before they started hiring people left and right.
My belief is that with straight up direct ad sales and limited targeting ads, MySpace cleared $1B this year. That's the potential upper limit of how much Facebook can make with just straight up ad sales.
But having a much more complete understanding of relationships, Facebook wants to find something more effective and profitable than AdSense. That's what Mark Zuckerberg really pitched to everyone that has invested into Facebook: his team's ability to reinvent online advertising.
The products they have so far -- Beacon, Social Ads -- are kind of lame but Facebook Connect is getting pretty big and they have quite a lot of money and time to work on it.
But all this doesn't matter. Facebook isn't profitable! And somehow this affects hackers around the world.
Of course this would affect hackers around the world. Anything that Google, Microsoft, Apple, etc. affects hackers because so many hackers are employed by these companies. Facebook is the same way, the churn of ideas that goes through each of these companies matters because only through working with other hackers do hackers develop and refine their own ideas. Without these large companies subsidizing hacker side projects we wouldn't get any of the idea building that spins into new companies and growth for our economy.
