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Facebook to File for IPO Next Week

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Re: Facebook to File for IPO Next Week

#121

Post by jacques_chester »

6ren wrote: post #117
RuggeroAltair wrote: post #28

Well, honestly I think that buying Facebook shares right now is a high risk move. While it is possible maybe to forecast some ups and downs in the immediate following days, if the evaluation actually goes to 100 billions it'd look scary to me. I'm not saying that Facebook is dying or that it's gonna die anytime soon, but I am not able to foresee any significant growth. The article compared, with sort of negative term…

Google's market cap is 188B, and they are changing everything to compete with Facebook. Google is based on information that people want. Facebook is based on the social interactions of people themselves. That's one giant leap closer to where the money comes from (people). As for what need Facebook meets... it's communication (and communing): people connecting with people. This is the basis of many technological innov…

> That's one giant leap closer to where the money comes from (people).

Actually, the money comes from advertisers.

Eyeball-hours are a fixed-sum game at any point in time (the sum grows over time). Eyeball-hours spent on Facebook are eyeball-hours not spent elsewhere looking at Google searches, Google products or Google-mediated advertising.

Re: Facebook to File for IPO Next Week

#123

Post by 6ren »

jacques_chester wrote: post #121
6ren wrote: post #117

Earlier quoted context omitted.

Google's market cap is 188B, and they are changing everything to compete with Facebook. Google is based on information that people want. Facebook is based on the social interactions of people themselves. That's one giant leap closer to where the money comes from (people). As for what need Facebook meets... it's communication (and communing): people connecting with people. This is the basis of many technological innov…

> That's one giant leap closer to where the money comes from (people). Actually, the money comes from advertisers . Eyeball-hours are a fixed-sum game at any point in time (the sum grows over time). Eyeball-hours spent on Facebook are eyeball-hours not spent elsewhere looking at Google searches, Google products or Google-mediated advertising.

The value of one eyeball-hour is not fixed. The more targeted the advertising, the more effective and therefore valuable it is. In fact, for sufficiently well-targeted advertising, it doesn't need anything - as when you seek a product. Overture/goto made money like this (google used its ideas for adwords).

Consider advertising on TV and print media: you try to hit your demographic and hope for the best. Next is direct marketing: you can measure your success based on response rates. Then, internet advertising (eg google) accelerated this feedback to be instant.

But it's still hard to know what people want or need to buy right now - ideally, it would go far beyond your demographic (a huge set of which you are a member), beyond an ultra-fine-grained demographic (a tiny subset), beyond what you want right now, to anticipating your need so exactly that you don't have to ask. Like consultative selling (or perhaps a PA/butler), it stops being advertising and starts being a service in itself.

Google has a lot of information, and can do some of this really well; but Facebook is much closer to the user, and so has much more and better information about them, so they are better-placed to do this.

Google has the long-term goal of anticipating the information you want; and they are doing well (e.g. search suggest). But it's primarily aggregate prediction, not personalized. They can (and do) personalize it somewhat, but just aren't as well-placed as facebook, because they aren't as close to the user (people).

People are ultimately where the money comes from. That's how advertisers get it.

Re: Facebook to File for IPO Next Week

#124

Post by tim_h »

tim_h wrote: post #96
lpolovets wrote: post #86

Earlier quoted context omitted.

What's interesting is that even the most aggressive ratio among these companies, the 16.2X, would value Facebook at approximately $60 billion. And yet, the company is expected to offers shares at a valuation of $75-$100 billion.

The reported $3.8 billion in FB revenue is not an official number. It came from a CNBC reporter who cited undisclosed sources. Official revenue would have to be about $6 billion for FB to have the 16x ratio.

Why the downvotes? The parent poster used $3.8 billion to come up with the $60 billion estimate (3.8 * 16.2 is approx 60). Isn't it true that we don't officially know what Facebook's revenue is? I was merely trying to point out that 3.8 may not be an accurate number. Then I went on to say approx how much revenue Facebook would need in order to have a 16x ratio given the current estimated valuation of $100 billion.

Re: Facebook to File for IPO Next Week

#125

Post by jacques_chester »

6ren wrote: post #123
jacques_chester wrote: post #121

Earlier quoted context omitted.

> That's one giant leap closer to where the money comes from (people). Actually, the money comes from advertisers . Eyeball-hours are a fixed-sum game at any point in time (the sum grows over time). Eyeball-hours spent on Facebook are eyeball-hours not spent elsewhere looking at Google searches, Google products or Google-mediated advertising.

The value of one eyeball-hour is not fixed. The more targeted the advertising, the more effective and therefore valuable it is. In fact, for sufficiently well-targeted advertising, it doesn't need anything - as when you seek a product. Overture/goto made money like this (google used its ideas for adwords). Consider advertising on TV and print media: you try to hit your demographic and hope for the best. Next is direc…

You're right, I agree.

But I didn't say that eyeball-hours have a fixed value. I said that there is a fixed supply (at a point in time).

It is necessary to get the eyeball-hours in the first place. That Facebook may be able to wring more out of them than Google is important; but from Google's POV the attrition of its eyeball-hour supply is more important.

Re: Facebook to File for IPO Next Week

#127

Post by philwelch »

cydonian_monk wrote: post #83
philwelch wrote: post #34

Earlier quoted context omitted.

What on earth would Apple do with Facebook? Apple, by virtue of actually making things people want to buy, has massive profit margins compared to Facebook, and can more usefully spend their horde of cash on, say, cornering the market on NAND flash.

To retro-paraphrase your question: "What on Earth would Apple do with NeXT?" Sometimes it's not about the product, but the people. Maybe the current Apple board /really/ wants Zuck to run the show. Best way to do that is to buy FB. I agree with you, though. Apple buying FB would be a not-so-small mistake.

In 1997, Apple desperately needed an operating system, which is why they bought NeXT. Having Steve Jobs as CEO wasn't actually what either party had planned on.

Re: Facebook to File for IPO Next Week

#128

Post by 6ren »

jacques_chester wrote: post #125
6ren wrote: post #123

Earlier quoted context omitted.

The value of one eyeball-hour is not fixed. The more targeted the advertising, the more effective and therefore valuable it is. In fact, for sufficiently well-targeted advertising, it doesn't need anything - as when you seek a product. Overture/goto made money like this (google used its ideas for adwords). Consider advertising on TV and print media: you try to hit your demographic and hope for the best. Next is direc…

You're right, I agree. But I didn't say that eyeball-hours have a fixed value. I said that there is a fixed supply (at a point in time). It is necessary to get the eyeball-hours in the first place. That Facebook may be able to wring more out of them than Google is important; but from Google's POV the attrition of its eyeball-hour supply is more important.

Eyeballs aren't necessary, if you accept that automated consultative selling is possible (unproven so far!). The model stops being advertisement-riding-on-content, and instead is a message sent directly to you (or that you request).

Well, I guess it must be somewhat possible, because overture/goto did it... (they aren't around any more because Yahoo acquired them, and their technique was adopted by Google - but no one else has done it, so maybe it's not workable any more. Perhaps because Google does it (i.e. it's a feature of Google search - just turn off adblock and ignore the search results - and Google has better access to users (eyeballs), so advertisers would prefer it.))

What I'm saying is that it doesn't really need eyeballs, but what eyeballs bring: access to you. There are other ways to gain that access (that aren't as good so far). It does need to know you intimately, so content probably helps (is crucial?). And you need to trust it. (Which you would do, if it turned out really to be fantastically helpful.) It also needs fantastic AI to predict your needs before you do...

My understanding is that getting info about users was the business model behind (the failed) Color. Maybe, in theory, content/eyeballs aren't strictly necessary for automated-consultative-selling, but perhaps it's the only effective way to get the information to model them, and to get access to them, in practice, at the moment.

This could change.

EDIT by coincidence, the frontpage has an example of non-content access to users: Curebit http://techcrunch.com/2012/01/27/yc-alum-curebit-raises-1-2-...

BTW: I agree eyeball-hours are a fixed-sum game. I wasn't contradicting that, but the assumption behind it.

Re: Facebook to File for IPO Next Week

#129

Post by hackinthebochs »

pepdek wrote: post #102
aurelianito wrote: post #94

Earlier quoted context omitted.

Facebook does provide Bing searches integrated into the platform.

I've never been thought; Oh I need to look up something... Let me Facebook it so they can Bing it for me.

But for people who are already on facebook its natural to just use the search box that's 5 inches away. For better or worse, facebook is the new homepage of the internet for a lot of people. There are endless ways they can monetize this.

Re: Facebook to File for IPO Next Week

#130

Post by davej »

lbotos wrote: post #116
jlarocco wrote: post #109

Earlier quoted context omitted.

That's odd. I can read the entire WSJ article, and I'm not a subscriber either. However, if I click links to other articles about half the time I only get the first paragraph.

As far as I remember the WSJ does some referrer magic that if you have the right referrer it will let you read the whole article. Otherwise you are greeted with a subscribe link. This has been my experience in the past.

Yeah, usually if you google the article's title and enter the site through a search engine then you can read the full article.
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