The botttom line with Facebook is that it went public far too early. It doesn't have its footing on solid ground as far as revenue growth, stability, and profitability are concerned. Its advertising model, dependent as it is on these much-maligned targeted display ads, is promising -- but has a lot of kinks to be worked out. The more I look at the Facebook IPO, the more I
don't see the conventional narrative, i.e., that the company itself is a flop, or that its ad model is inherently flawed. Rather, I see a company that was forced to IPO before its time, by taking on too many private investors and too much private funding. Furthermore, I see a bunch of the people behind that private funding basically giving Facebook as shiny of a paintjob as possible in order to make its public debut. But the paint was applied hastily, and it's all flaky and spotty at the big show.
To me, this cautionary tale is every bit as much about VC funding bubbles as it is about advertising bubbles. Sure, Facebook could never have been bootstrapped to its current scale. But it could have stopped taking on such massive amounts of funding, and, instead, opted for more organic growth until it found time to perfect its ad products and business model.
When we talk about the Dotcom Bubble of the mid 90s, we talk about a frenzied funding (and IPOing) of companies with little more than userbases and unproven (or occasionally nonsensical) business models. Facebook is not that, exactly. It's more userbase than business, but that doesn't necessarily have to be the case. Unfortunately, it was funded (excessively) in Dotcom Bubble fashion, and forced to IPO in Dotcom Bubble mode: grow insanely fast, worry about profitability later.
That it happened to benefit, temporarily, from a misguided advertising bubble is material, but also somewhat incidental.