Facebook: A Ship Lost in the Dark of Night
Facebook went public a week and a half ago. The IPO, thought by many to be the grandaddy of them all instead was a dud, as the stock barely rose on the first day of trading and actually fell an additional ten percent on the second day. After that, came allegations that investors had hung the company out to dry by selling the stock off prior to open because they felt like the social network did not have a viable monetization plan. The money, while made by those who were in the company early, is for the most part gone. Everyone who has gone in since is now in the red.
I’ve been rather harsh on the company since its opening. Even though I’m in social media and work on community management for a living, I have always found it necessary never to fall in love with one particular social network unless there is a true and tried business purpose. For me, Facebook has been that revolutionary tool that has changed the way that we communicate, but the more and more you view the site with its ads (and if you use the mobile app, more is on its way), newfangled features, the more you realize the social network that we have come to love is lost. In other words, they too understand that the Internet is finally bored.
Don’t get me wrong however: Facebook has come a very long way in the past 8 years from the dormitory of Mark Zuckerberg post-female rejection to a site that has as many people as 16 percent of the planet. From the point of a view of a product, there has been great success, but from the point of business even though the company has had the luxury of being on top, there have been many cracks. The $1 billion purchase of Instagram and subsequent releasing of its own app, for example, shows that Facebook is scared of what might be. The bringing back of college roots to its communities after it left the very concept 5 years ago is yet another example of a company that isn’t sure what to do, but codes for the sake of coding, with the anticipation that something fun and useful might come out of it - like Facebook chat.
The other aspect of the company that is particularly frustrating for users is the usability in general. Recently as I have typed to people, I’ve gotten the notification that I might be typing spam. In fact, after congratulating Zuckerberg on becoming married to his wife Priscilla Chan, I was banned from posting a comment on pages I subscribe to for a week. It is however, not as bad as many individuals I know who hit networking caps and cannot go over 5,000 friends despite literally knowing everyone they meet and adding value to their lives. With engineers running a company who don’t socialize (and hey, what is the point when you make hundreds of thousands anyway?) creating a company whose sole point is to socialize, this creates a conundrum, and one that I find is very troubling.
The next few months are going to be interesting. For the industry, the end of Q3 should be a rather poignant look at where Facebook is in regards to advertising and its revenues. Will people pay $2 to get their status updates featured? Will more people click on advertising? Will the company try to change up the interface again to make things look more streamlined?
Time will tell. Come back soon and we’ll analyze it!
Thoughts on the Facebook IPO (Take Two)
It was quite a week for Mark Zuckerberg. He had a birthday, got married, and oh - his company went public at a valuation of $104 billion dollars.
The debut of Facebook was rather interesting. Depending on how you think about it, the introduction of Facebook on the NASDAQ was either a dud or perfectly timed. Closing up 23 cents can be viewed either as a perfect valuation or signaling that social media is a bubble or that there were external factors affecting the stock price, such as the debt crisis in the European Union that currently has the overall stock market on a tumble. I think in nicer times, Facebook might have seen the 10% uptick that most were expecting.
I reviewed my thoughts on the Facebook IPO earlier in February of this year when they first announced that they would go public. I did not purchase any stock Friday, but I do have some new thoughts since that have come off the IPO.
- Social media has arrived - Not that it hadn’t before, but Facebook’s day one trading volume certainly shows that its here. Whether to stay is another thing.
- Social media is already on our minds - Of the 19 Social Media IPOs in 2011, 82.4% of those stocks (16 stocks) are trading below their opening day value. And because of that, investors are wary.
- A Maturation of Time Past, But Still Lots to be Done - I would argue that the IPO was a maturation of what Facebook has done for itself over the past 8 years. There are some wonderfully rich folks out in Menlo Park now, and the effort is certainly deserved with the money made. Facebook Pre-IPO has served as a great place for information, news and political gathering, but post-IPO sees a different world in the need to monetize through advertising. 44% already don’t click on Sponsored Stories, General Motors just dropped a $10 million dollar ad campaign and 46% think its a passing fad. We also thought video games were a passing fad too, in the 1980s, by the way - and look where that went.
- Monetization - A Question of How - It’s going to be argued how Facebook will monetize off the rest of us. As much as Zuckerberg and his team of engineers can tell us, the end users, that they will focus on shipping good code and making a good user experience, shareholders are going to ask for more. And when a product is based upon the efforts of its users, Facebook is going to ask for more clicks on advertising, the buying of $2 status update features and possibly even ads on its mobile platform. Will users click? Will the user experience suffer? Will we see a defiant CEO push back and as a result, see stock price drop in favor of what the engineering crowd sees as optimal? A curious quandary indeed, and it should be interesting to see play out.
These are some of the initial thoughts that I have on the IPO. Going forward towards the end of Q2, Q3 and Q4 we’ll see more numbers on Facebook earnings calls that will tell us if users truly respond positively or if its the beginning of something else. I’ll share my thoughts then.
In the mean time, tell me what you think. Did you buy stock? Let me know in the comments below or on Twitter @albertqian.
Albert Qian is the writer for Albert Qian: The Social Media Dude.
Instagram, Facebook and Internet Boredom
The dust has finally settled on the Facebook/Instagram merger. A week later, many are still asking why this acquisition ever happened, and the answers number in the many. Whether you believe its the competition from Pinterest, the defense against Google or just Zuckerberg being Zuckerberg and hustling as CEO, the reasons could be endless. All I know is that there’s a party cooking in this valley, and boy, the cooking is better than ever - Almost like you’d think its 1999 all over again.
The Internet has become an interesting place in the last 20 years. Since Tim Berners-Lee launched what we call the Internet revolution, the landscape has gone from rotating GIFs and Geocities pages with poor design to a more mature area. We bank online, shop online, message others online and find the love of our life online. With the advent of Facebook, we now make friends online, stalk past lovers online and see how others embarrass themselves. Everything that you came to know in High School in reality, is now plastered all over your Facebook timeline as well as your news feed.
As Facebook prepares on its eve of going public next month, its important to consider what the Internet has become and where its going. The purchase of Instagram is not as much Facebook’s show of power that $1 billion dollars is a drop in the bucket, but more so that the Internet is Facebook as much as Facebook has become the Internet and our reliance and our fourth need in today’s world, beyond food, water and sleep. Most major sites that you go to now give the option for Facebook login for commenting, account creation as well as Liking. Two have become one.
But as much as two become one and the Like button becomes a part of our personal ecosystem of habits on the Internet, the Instagram acquisition by Facebook points to a larger picture: Facebook relevance. Much as we talk about Yahoo! and Google in the natural lexicon of day to day conversation, both have become engrained in our heads. There is nothing special anymore about the two, besides the fact that you can get your email on both, use both to search, get your news and watch the occasional happy video featuring kittens and some home furnishings.
That’s right - I’m implying that Facebook has officially become boring.
The Instagram acquisition for Facebook points to the fact that the Menlo Park company wants to remain cool, and wants to retain the image of being the thing you should talk about everyday, all day. Whether you believe that the move was to circumvent Pinterest’s rising popularity, Google’s potential purchase or just because Zuckerberg felt like it, the ultimate point is that Facebook is again showing why it wants to be Facebook, and not MySpace, Google, Yahoo, Cisco or any other major Silicon Valley tech giant that has faded into everything else. When the core product is watching what others do online and connecting each other to be closer, you can only go so far. Humans after all, no matter how social, do get tired of each other. As one person told me today, “Facebook is boring now”.
So as we move into the middle parts of 2012, we’ll undoubtedly see one of the greatest IPOs ever to come across Wall Street. In the cocktail parties afterwards, people will discuss how Facebook has officially made it, and that social media is here. Our news networks will replay the story of the boy who dropped out of Harvard, struck it gold and invested with Sean Parker, all while inspiring an Oscar winning biopic. The problem however, lies deeper and beyond the billions that will be invested and the nice Yachts purchased - all that is about the now and the present and what happens in 2013, 2014, and so forth. Beyond what growth and power social media has - and that is here to stay - the networks that we engage upon with for social media will change. The battle for that change however, will go to the company that promises to change the game with attention and spice, rather than defensive and luxury acquisitions.
And that fight for attention, brings us to this new era. Let’s make it a good one.
Thoughts on the Facebook IPO
Last week was a big week for Facebook. On Wednesday, they filed their papers for an Initial Public Offering slated for May, and predicted to be one of the biggest technology IPOs ever. On Saturday, the company celebrated 8 years in business.
The story of Facebook is a pretty folksy one, having been told once by founder and CEO Mark Zuckerberg himself, and again in an Oscar-winning film, “The Social Network”. Regardless of whether the tool was born from a rejection by a woman (as the movie seems to take the viewpoint of), the network has gained almost 800 million people, and about half of those log in daily.
The journey here has been a tumultuous one, but also one of great success. When the company started in 2004, MySpace was gaining traction, Friendster and Bebo were on the market, and the term “social media” had yet to be coined. Blogging was the term of the day, and that’s how most companies and people managed to maintain a level of “sociality”. Beyond that, everyone still used email.
The first few years of Facebook were mostly limited. To gain an account, you had to initially have had an email with a college. Then the network opened up to high schoolers, and then eventually to people with a regional affiliation, then to anyone who had an email account. Opening it up to everyone invited the concept of spammers, but in this day and age, if you want to be big, there are some things that you simply have to put aside - spam is one of them, unfortunately.
I touched Facebook for the first time in the Fall of 2005. It was late September, and I finally snagged an account. I was exploring MySpace at the time, but did not find much of it - my fears mostly came from design-stupid people who would either fill their profiles with mundane items, upload schizophrenic inducing backgrounds or play music when I landed on their page. I instantly fell in love with Facebook at the time because it was simple, sleek and it made sense. I didn’t know that it would become a crucial part of my career some day.
Fast Forward
Fast forward to February 1st, 2012, when Facebook decides to file its IPO papers. The papers claim that the company will try for a $5 billion dollar IPO, and the company is estimated at $94 billion dollars, with 12% of its money coming from Zynga and the majority from advertising.
My initial thoughts are of great interest. I have yet to review the S-1 in great detail, but the world of social media is about to change. From the definitive entrance of Wall Street and shareholders to potentially charging Facebook Page owners to peddle their brands and wares, social media, the tool best known these days for taking down Egypt, perpetuating the Occupy Protests, and being faster than reputable news sites, the nostalgia and the nuances feel to be pretty much over. My account, to a shareholder, is potentially not just another number, but an advertising unit. Someone to deliver advertising to in pushy ways, clouding the experience that was once enjoyed. Though Facebook claims that it will just continue to make products without bending to the pressures and wills of the investors, the pressure will be there. And it will be strong.
In all, however, the IPO shows that social media is now a permanent part of our lives. Zynga and Groupon’s IPOs merely showed us that social potential was gearing up, but Facebook’s addition into that will put a stamp on something that social marketers have always known, and corporate clickies have always feared: social media is here, here to stay, and there is absolutely nothing you can do about it. Businesses, knowing that Facebook has finally decided to go public, will now have to grapple with the fact that engaging with an audience, producing content and being meaningful to customers at all times is not just an optional job you hand to an intern, but a position you give to someone higher in the organization.
In Closing
Another one of my earliest memories of using Facebook for potential was in the Fall of 2008. I was in Hong Kong, a world away from the United States, studying abroad. It was early November, and it was election day. I sat on the floor of my apartment, my laptop to my right and the television tuned to CNN to hear the latest breaking news.
As the clock struck noon local time, all polls had closed out on the West Coast, and my Facebook feed, then a self updating automated feed, went into overdrive. Barack Obama had won the election, and as he was walking up to the podium, my feed exploded with joy, activity, and raw emotion. Nevermind that the Bush era had come to its close, but rather that social media had for me, fulfilled a potential then - a potential to be used as a communications tool far beyond what the Wall Street Journal, the AP, or any newspaper could offer - that even though news sources could provide me news, my friends could provide commentary, beyond the news, and into an era of relationship based marketing and information.
Come May, this all changes, again.
What are your thoughts on the Facebook IPO? Comment below, send me a tweet @albertqian or email me!
Social Media Funding
From VentureBeat:
The Securities and Exchange Commission may adopt rules to let internet-age technologies be used in fund-raising.
The agency is considering whether to let fast-growing companies use social networks such as Facebook and Twitter to raise funding by tapping thousands of investors for small amounts of money
This means that more than ever, startups are going to have to find as many ways to evangelize themselves as possible. If the SEC goes through with this though, I think there would definitely need to be more regulatory insight on how things happen here. I can see ethics breaches happening.
