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Facebook follies

Original post made by Gary, Downtown North, on May 22, 2012

Can someone tell me why Facebook is a rational business model?

I understand Google and Amizon, but not Facebook.

I fully support free-market captialism, winners and losers. However I just don't get the Facebook model. How does chit-chat turn into ad revenues? GM pulled out, as they should have. Why would any business want to buy into the Facebook ad model? Is Facebook just building a database, then wants to go into viral marketing? If so, it will be behind the curve.

Weird.

Comments (23)

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Posted by James
a resident of Downtown North
on May 22, 2012 at 7:35 pm

Answer: they have 900 million customers.

Some of them former leftists. Some named Jerry.

My guess is back in 2004, neither Gary nor Jerry understood why Google had it nailed. Why they can offer cloud docs, mail, the android OS, etc for free.

Google had the GREAT model.

Facebook looks good. We'll see. If you don't get it, or don't think they'll support the price, there are/will be numerous ways to bet against it.


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Posted by Gary
a resident of Downtown North
on May 22, 2012 at 7:52 pm

"Answer: they have 900 million customers."

Wrong, Facebook may have 900M subscribers, but not customers. Google relies on specific searches, along with a profile of ad choices. Amizon is about selling, including "one-click" purchasing. Facebook is a weird deal, even though I support risk-taking capitalists.

Just don't get it. Neither did GM.


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Posted by Jerry really is...
a resident of Midtown
on May 22, 2012 at 7:59 pm

[Post removed by Palo Alto Online staff.]


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Posted by James
a resident of Downtown North
on May 22, 2012 at 8:22 pm

[Post removed by Palo Alto Online staff.]


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Posted by susi
a resident of Meadow Park
on May 22, 2012 at 9:35 pm

Welcome to the new palo alto. Where someone dares say something against an amoral start up, run by a posturing business naif, which tricks dopes into handing over their private info and sells it to the highest bidder THEN turns around and fleeces them with an IPO.
[Portion removed by Palo Alto Online staff.]


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Posted by Gary
a resident of Downtown North
on May 23, 2012 at 4:45 pm

I happened to listen to an NPR report on this fiasco this morning. A well known anaylyst, in the digital environemnt, said it was way overpriced. She also said that the information was out there, ahead of time. She also said that the business model is highly suspect, because ad revenue is declining, and there is no known solution.

This is an absurd business model, unless it can show that it will sell real products (new mousetraps), instead of pure hype. Solyndra sold hype, instead of lower-cost power; Obama funded Solyndra; Obama supported Facebook and Zuck (both ways). It is time to draw the line: Facebook/Solyndra/Obama are triplets, born of the same ideological mother.

Time to say goodbye to this irrational approach.


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Posted by James
a resident of Downtown North
on May 23, 2012 at 5:15 pm

Only Jerry/Gary could draw that line.

If you want to bash FB, sell them short and go on an investment board and trash talk.

FB had half a BILLION subscribers before Obama was elected.

Nice try.


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Posted by Sharon
a resident of Midtown
on May 23, 2012 at 5:30 pm



FBs future does not look bright

1/It sells adverting for revenue by the grow is way down and the shift to mobile devices on which the ad clicks do not work.

2/User growth is declining in the US and Europe, user growth is now in developing countries where the users have very little money so there is no point in companies paying for ads on FB

3/The FB brand has taken a huge hit with the news of litigation and mess of the IPO--the CEO is clearly not competent to run a publicly traded company and he never really wanted to

4/ The FB P/E and growth projections are grossly over stated


The stock is realistically worth much less than $10 per share and that is where it is headed.

FB may well go the way of MySpace within a few months.


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Posted by James
a resident of Downtown North
on May 23, 2012 at 5:34 pm

"FB may well go the way of MySpace within a few months."

There ya go. Gary, whats your prediction?


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Posted by Gary
a resident of Downtown North
on May 23, 2012 at 5:42 pm

"FB had half a BILLION subscribers before Obama was elected."

The question is: How does FB make money from its ad model? Nobody seems to be able to figure this out. I am thinking that it is a shell company, deriving profile information, then selling this inforamtion to willing buyers...who will then atempt to sell products. However, it is so nebulous... ethereal, smoke and mirrors...so Obama-like.

FB shills should announce theemselve, before they attempt to provide cover for this disaster. James?

BTW, my name is Gary, not Jerry. But have as much fun with it as you like. Is your name "James" or "Zuck"? Or do you report to Zuck? Or to the underwriters of this disaster? Or are you just a naive investor that bought into the hype?


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Posted by Jerry really is...
a resident of Midtown
on May 23, 2012 at 5:46 pm

Gary used to be a leftist, but then he fell in love with Sharon and now he wants to build a monument to Reagen. As usual both Gary and sharons prediction will be down to be wrong.


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Posted by Palm reader
a resident of Greenmeadow
on May 23, 2012 at 8:13 pm

James asked "Gary, whats your prediction?"

So Gary ran away, accusing him of shilling. What has he said positive other than the number of subscribers?

Gary, whats your prediction?

Sharon had the guts to predict Facebook will be down with MySpace soon. Gary runs. All those words and not the guts to do anything as bold as Sharon. Gary talks about chitchat, a digital analyst, behind the curve on viral, data base building, suspect model, declining rev, "This is an absurd business model", etc...

Fess up Gary, say it. Prove to folks it's worth their time to read your "opinion".


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Posted by NoFool
a resident of College Terrace
on May 24, 2012 at 9:01 am

FB has so much data about their subscribers at their disposal by this point that it is staggering. They can therefore target ads in such a way that it is more efficient for advertisers. That being said, how many people actually click on these ads? FB relies on their users' stupidity. That's right. If all FB users were more intelligent, they would not be "liking" whatever they see pop up on their screen and clicking "OK" whenever they are asked if they are willing to not only give complete strangers access to all sorts of personal information about themselves, but also personal information about all the people they are connected with on Facebook! A very small percentage of FB users play the paid versions of games or make purchases through the ads. But that is a small percentage of an extremely large population. So as long as enough users continue to be stupid, FB will continue to be a successful business.

What makes FAR less sense is some of the satellite businesses that rely on Facebook. Zinga? Instagram? Instagram is worth $1bln?? I would almost pay to NOT see Instagram photos! As long as there is a large population of unintelligent users, these businesses will succeed and multiply.

I have been telling people for the past couple years that FB will be a distant memory in 10 years. There are many superior social networks. There were before FB, there are now, and there will be much better ones in the future. Unfortunately, so many people these days are on FB simply because "everyone else is." Once critical mass is achieved by one of the superior social networks, FB users will flock to this new network, leaving a MySpace-type ghost town behind...


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Posted by Palm reader
a resident of Greenmeadow
on May 24, 2012 at 10:20 am

"I have been telling people for the past couple years that FB will be a distant memory in 10 years" Does that mean gone in about 8 years, 7 years?

Gary: they all are willing to make predictions, step on up.


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Posted by Gary
a resident of Downtown North
on May 24, 2012 at 11:46 am

I didn't buy any FB stock, nor would I going forward. I did buy JP Morgan Chase, after its recent fall.


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Posted by Palm reader
a resident of Greenmeadow
on May 24, 2012 at 11:54 am

After all that kerfuffle, your declaration is: "nor would I going forward"

Wow. Whole lotta noise from Gary/Jerry about FB, with nothing to show for it.

I give props to Sharon and "nofool", at least they took a stand. Gary, after many posts trashing FB, waffles.


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Posted by Gary
a resident of Downtown North
on May 24, 2012 at 3:05 pm

Palm,

Did you buy into the hype? I didn't. Rational people should not.

Do you work for FB? If so, do you have stock options?

I happen to know a poor soul (friend of a friend) who bought in at 41, and he is still buying as it goes down. There is no guarantee of a pop. A sucker is born every day.

If FB gets down to a P/E of 12:1 or lower, I will start to take a look at it, but only if it develops a consistent revenue stream.


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Posted by Palm
a resident of Greenmeadow
on May 24, 2012 at 3:25 pm

Ggary, your answers - no, no, no. Why do you ask? I haven't hyped nor trashed (like you) facebook. "Gary talks about chitchat, a digital analyst, behind the curve on viral, data base building, suspect model, declining rev, "This is an absurd business model", etc..."

Others that have trashed fb have had the guts to make a prediction.

Not you.

"but only if it develops a consistent revenue stream. " You won't be able to afford it then.


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Posted by Gary
a resident of Downtown North
on May 24, 2012 at 3:51 pm

Palm,

Since I seem to get under your skin, I suggest that you ignore my comments. I will not buy FB, but you are free to do so.


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Posted by Palm
a resident of Greenmeadow
on May 24, 2012 at 4:18 pm

I'm not buying either. Just pointing out your annoying trolling against facebook and how at least Sharon and the others have the guts to make a statement.

Not you.

Why are you trolling against fb? Someone defriend you?

If it means so much to you, step up like Shaon and the others.


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Posted by Gary
a resident of Downtown North
on May 29, 2012 at 6:01 pm

FB is tanking, with good reason. It was a sucker play. There is no there there.


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Posted by Anon.
a resident of Crescent Park
on May 29, 2012 at 8:48 pm

All of these companies are incompetent.

FB plays games with our data and who knows what they do with all that data of connections between people and what they like.

Google has been doing search for over ten year and has not substantially improved or brought anything new to search. Servers game the system to get tons and tons of the same website and what good are thousands of results that I cannot use or have to in some way process to get what I want? Google does work, but on like a kindergarten level. And why one Earth would they need to make "Don't Be Evil" their motto? Funny how branding and public relations is often the technology of getting the public to believe the exact opposite of what the organization is going.

What these sites do is to offer the least possible useful thing they can to draw people in to use them while they take the results and process them about global sociological data.

If you ever read the book "IBM And The Holocaust" the Nazis were able to demographically slice and dice Germany and determine which minorities they could marginalize and ultimately criminally exploit and murder millions of people with simple census data and punch cards, then they disappeared, the unlucky ones killed or caught.

With the pyramidalization of our society we now see and the power and automation given to such a very few who can be certain we do not face something far far worse in the future.

Animal Farm indeed.


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Posted by reason
a resident of St. Claire Gardens
on May 29, 2012 at 9:18 pm

Cuz once they have their billions, they could hire talents and buy real companies.


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