I think that the network effect is the big reason that Facebook can’t be easily duplicated. Certainly you could switch to another social networking platform, but what’s the point, when everyone you know is on Facebook?
Do you have a link? (Or are you referring to the letter to shareholders I mentioned a few posts back?)
No doubt, the CEO of Myspace was hoping this was true as well.
Yes, exactly. We’d love to make the switch to Google Plus but only a tiny fraction of the people we care about have G+. We live in hope that it will take off and we’ll abandon Facebook when a majority of our friends migrate. We’re kind of trapped by the herd.
To a certain extent, you have a point, but MySpace was never very good at “lock-in” or in the marketing department. On the other hand, FB has their hooks all up in everybody’s business.
Getting people to leave FB would be sort of like getting people to get a new phone number, but with a separate new carrier that everybody you know also has to join to be able to call you.
Google is probably the only one who could conceivably do it by pulling in everyone using Google+'s integration with all of their other services. (read: hooks) The war’s not over on that score, but FB would probably have to tarnish their image (more than it has been) in a major way that caused an uproar and mass migration of the herd.
(ETA: Heh, I wrote this before even seeing the post above it. Eerily prescient delayed ninja’ing!)
The full
[quote]
(User-driven discontent | MetaFilter) is: “If you are not paying for it, you’re not the customer; you’re the product being sold.” Turned into a lovely cartoon.
Zuckerberg calling users “customers” is just [del]propaganda[/del] PR.
Zuckerberg knows how to build a website that people want to visit. He is not nearly as good at building and running a business. That are not the same activity. Letting him control the business side of Facebook, as setup by the IPO and previous deals, is really, really stupid. It’s time for the adults to supervise things.
The nitty gritty is:
- Facebook does not create anything. It is not an intellectual cult like Google or a happiness-creating instant-gratification thing like Instagram. It’s not adept at dealing with corporations and connect celebrities to the common man, like Twitter. In short, it is an elaborate address book and rolodex. That’s all.
Like AOL did, it provides a product that can easily be replicated and only through initial selectivity and a simple interface did it become highly sought after.
and 2) The PE ratio was absolute and utter shit.
If you are nominally intelligent, you knew these two things and you knew to stay the eff away from the IPO. I saved a few friends (and parents and friends parents, the 50+ generation) oodles of moolah.
Amazon was a pioneer in online shopping. Its search function leaves the competition in the dust. Millions can search for the most obscure cleaning product (like bluing agent or hardwood no wax floor shine) and are immediately given exactly what they want, with product rankings according to popularity (and thus, incentivised to buy products with a “guaranteed” quality).
Ten years ago they provided impeccable service, quick and clear check outs, prompt shipping and aggressive prices. They still do that today, just on a bigger level. It was only a matter of time before they made insane profits.
Apple was and Amazon is run by passionate, brilliant, egotistica, optimistic savants who for **years **focused on a positive customer experience and well curated products. Zucks fell into this situation trying to be cool.
He is, at his core a nerdy recluse – designed to be first chair violinist, never the conductor.
I like Facebook as is. I hope they don’t change it. Not everything has to make money
After the IPO they do.
Suppose they continue business as they’ve always done without changing anything. It pisses off the shareholders who think they’re going to get rich, and they pull out their money. Wouldn’t FB be in the same position as before the IPO, but with a little more cash since not everyone’s going to sell? I understand that in America and Wall Street and stocks in general, everyone’s out for themselves to get as much as they can before other people get wise to it, but FB doesn’t have to make the maximum amount of dollars it can. They can simply cruise along making just as much as they’ve always made and still survive, couldn’t they?
First, you’re misunderstanding how the stock market works. Every time someone sells stock, that means that there’s necessarily someone else *buying *that same stock. Second, FB already got its money from the sale of that IPO stock. Even if a bunch of dissatisfied stock holders sell (to other buyers) that doesn’t directly affect how much money FB has from the sale of the IPO stock. Sure, if they wanted, FB could decide to buy back some of their own stock, but that’s different, and would be under their prerogative - they wouldn’t just automatically buy it back from anybody looking to sell.
You have to understand that there is A LOT of FB stock still in the hands of the owners/investors/employees of FB. All of those people really WANT to make money on their ownership of FB. Now that the company is publicly traded, the way those people make lots of money is if the stock goes up and they sell some. Sure, the employees themselves still get paychecks, but that’s just for their immediate expenses - a whole lot of their nestegg and savings is tied up in FB stock and depends on the stock going up, or at least staying the same. When the stock goes down, their net-worth directly suffers.
I assure you, “making just as much as they’ve always made and still surviving” is not something any of these people are interested in - they want to get rich!
Well I understand that they want to get rich. But I don’t see anyone able to pressure Zuckerberg into changing given his control over the company. And they are already rich, if only on paper, these people just want to be richer.
I’m more interested in talking about if they HAVE to get more revenue in order to survive as a company. It doesn’t look like they need to, so to me, someone who doesn’t think that you need to always get as much money as you can, I’d be content to simply stay as I am and run FB the way I’ve always ran it.
As the CEO of FB, which is now a publicly traded company, it is now Zuck’s duty and obligation to see to the interests of the shareholders. Yes, he still has full control, but the market is already discounting the price of the stock because of that. When any one person maintains absolute control even if all the other shareholders were in dissent, the stock market doesn’t like it quite as much as they would - particularly if that controlling person is seen as a wet-behind-the-ears and unpredictable kid.
So, yeah, with full control, MZ has the power to neglect the bottom line and not look out for shareholder interests, but that would be very stupid, would lead to lawsuits galore, the price of the stock would plummet causing discontent and defection among key employees who hold stock, and then it just all goes downhill from there. FB would never again be able to raise money from investors on favorable terms. If that were to continue for an extended period of time, at some point, MZ might lose his controlling share due to dilution, and he could then be kicked to the curb.
It’s much easier and better for everyone if he just plays the game by the rules, and always strives to increase shareholder value. Should he continue to falter at doing that for too long, there’d probably be efforts to pressure him to bring in a partner to buy some of his stake and wrest control away from him.
Facebook was and is profitable. Just because it’s not as profitable as some stockholders would like makes lawsuits and calls for Zuck’s head unlikely.
I didn’t say otherwise - I was responding to the question with the hypothetical worst-case scenario.
ETA: But there are already plenty of lawsuits…
Zuckerberg has always been about making money on Facebook. That’s the entire point–to make money by selling people’s information.
The thing is, it took until a couple years ago for Facebook to become profitable. I don’t think that, if Facebook were publicly traded at that point, his investors would have gone along with that. It makes sense that Zuckerberg thinks that he knows best.
At least, it does in a society like ours where those who do well are encouraged to think they did it on merit alone.
If someone else was going to make Facebook, they would have made Facebook.