patrick.net

The GOP says

Much of the new programming design, patterns and practices are designed to intrinsically bake much of Social Networking attributes into new technologies and standards. By that I mean, the future will have Facebook or Google like services built into the web architecture. Where there wont have to be a centralized repository of information. But rather, the information will be stored collectively. Whether data resides on the cloud or on a desktop hard drive

Its called CRM, customer resource managmenet.. and its been around for some time since the early 90s. But the idea goes back to the 80s.

chanakya4773 says

LinkedIn is very similar in profession network and i am not seeing them making tons of money.

On the contrary, companies are willing to pay good money for recruitment purposes. Most High-tech Silicon Valley companies pay a bonus of $1.5k to $3k per hire. And they pay up to ten thousand in referral bonus for a V.P.

LinkedIn's position isn't easily usurped. Many people added their work information and very rarely checked the account again. It took a long time to accumulate this many users.

@sface

The problem is people don't leave facebook. They won't do anything. Everyone is trying out advertising on facebook, everyone is trying to create a facebook hook, but no one is getting there. Every large media player is trying to figure out what to do with facebook, and everyone is failing. The best you can do is get people to like your page. Facebook is a massive disappointment.

Something like google was a dead ringer, people put in 5 cent bids when it came out and made money the next day. It was a cash making machine for everyone who tried it.

I haven't heard of any facebook sucess stories yet, and that's with the best and brightest working on strategies. The difference is you could put up an ad on google and make money tomorrow, but the best can't make anything off facebook. views are not all the same and with the internet you can *really* dig into what you're paying for. You can calculate out which hours of the day are giving you the best return on value, from which part of the country, from gender and age preferences. It's possible to dig down and deep and see if you're making money and how to fix it. Facebook allows you to go even further, you can target exact matches, but you'll get nothing.

everything says

Funny, how people will diss you for not being "on facebook"

What loser would do that?

FortWayne says

Do you guys think Facebook is a worthy purchase?

I think it's a giant ponzi scheme. People are going to get fleeced when they realize that Facebook doesn't actually produce anything and its customers can easily go elsewhere and Facebook/Twitter advertising doesn't work. It's all noise.

Have you ever bought anything because you saw it on Facebook or because a friend tweeted about it? Then again, sometimes I underestimate just how stupid the average person is.

tdeloco says

Most High-tech Silicon Valley companies pay a bonus of $1.5k to $3k per hire. And they pay up to ten thousand in referral bonus for a V.P.

you dont need linkedin to do this..workers had networks in the past... the old rollerdex... its been around for a long time. its done to reduce costs and avoid head hunters which charge 4-5x more than referral bonus.

tdeloco says

LinkedIn's position isn't easily usurped. Many people added their work information and very rarely checked the account again. It took a long time to accumulate this many users.

Exactly. I've never even gotten a job lead from LinkedIn despite having a sizable network. Everyone just friends everyone else they don't despise in hopes that if you get a large enough network then the job offers will role in.

The problem is that no one actually has a job offer that they pass along to their own network. If I get a job offer that I'm not interested in, I'll email it to a college, but I won't use LinkedIn to pass it along to my network. Nobody else does either. As such, the network is worthless.

Granted, you'll get spam from recruiters, but that doesn't count.

Facebook is lame and will fall away to nothing. Humanity needs something way cooler and monumental than status updates and relationship status.

GS pump and dump.

Glad my buddies already made a fortune off this and they have plenty left for the IPO. (but I'm not envious - lol) I knew I should have taken that job =/

But yes, I agree. This thing is a turd in the long run.

@Dan

Recruiters are more and more using linked in for finding recruits. You might consider their emails as spam, but they're using your friends network to see what kind of person you are as well. If you post about something you're looking for, you might get a response. Also having managers and others can help as those will jump from one company and years later realize they need X person and while flipping through linkedin remember they worked with you. Almost every company I've worked at, there are groups of people who have been hired due to them knowing someone from X position years ago.

chanakya4773 says

LinkedIn is very similar in profession network and i am not seeing them making tons of money.

People aren't addicted to Linkeedin.

Dan8267 says

FortWayne says

Do you guys think Facebook is a worthy purchase?

I think it's a giant ponzi scheme. People are going to get fleeced when they realize that Facebook doesn't actually produce anything and its customers can easily go elsewhere and Facebook/Twitter advertising doesn't work. It's all noise.

Have you ever bought anything because you saw it on Facebook or because a friend tweeted about it? Then again, sometimes I underestimate just how stupid the average person is.

I actually have a facebook account. I hardly ever use it, but it's great for finding people when you have lost their email address. I have a few cat pictures on it, but would never put my real picture on it, or do dumb things like tell criminals when I'm away from home, etc. It's fun to see people's pictures that you knew from high school so I can see how old they look and who got fat and/or bald (because I haven't). I still say it's more of a novelty item, as I prefer real email. I certainly wouldn't invest in it. I prefer stocks that pay dividends and or actually make something that people need, like utilities and REITS. If I want to gamble I go to Atlantic City and waste $20 in the slot machines (thought I spend way more on beer and food when in Atlantic City than anything else).

I.E. - I gamble here:

NOT here:

Never had facebook, never will. Seemed to be a copy of MySpace - which got old back in the day.

Just another fad. Give it a few more years and some other/newer form of social networking will take FB off the top of the mountain.

Oh facebook is likely to make a lot of money. They have to figure out how to offer advertisers something useful. People go on there with the intent to post, or read something. They ignore all the ads, and if they do engage with an ad, it's not enough of an engagement for those advertisers to pay big money.

Internet advertising is all about numbers and return. It's very easy to see what works and what doesn't. Put a link here, and 3 hours later you can tell it increased sales by 0.03%. Something like a television ads give just random numbers with figures skewed by all kinds of noise, but internet advertising is very specific. Page views went from this to that. Purchases went from this to that.

The problem is, people simply don't engage, and no large media buyers have figured out what to do with facebook. Everyone is looking for "something" Facebook will have to let advertisers get pretty aggressive. They'll make good money, but nothing as long term as google.

jkennedy says

Oh facebook is likely to make a lot of money. They have to figure out how to offer advertisers something useful.

francophile100 says

Am I still counted as an "active" user? I should not be, but I assume I will be counted as such in their SEC disclosure.

Active users ? Monetization ?

The Nasdaq has 1-2 Billion transactions per day generating some $3-4Billion dollars a year. Yet their P/E is only 12 with Mrkt cap at $4B. They pretty much lock in their customers in the long run and have been around for a long long time.

FB is way overvalued...

jkennedy says

Oh facebook is likely to make a lot of money

I think we can all agree that Facebook will reap in a lot of cash. However, it's important to remember that this does not mean those buying Facebook stock will. Remember during the Dot Com Stock Bubble everybody knew that the Internet was the future and it was going to change everything. Everyone wanted in, and as a result stocks were highly overvalued.

The Internet wasn't a bubble, but the stock valuations of Internet related companies was. I think that Facebook is similarly over-hyped. It's IPO is supposedly going to be way bigger than Google's, and Facebook isn't nearly as important or indispensable as Google.

Lots of times though, the initial drive for stocks runs up the prices so that people buy the stock just to scalp them to other people. The risk is that your left holding the stock when the initial euphoria is over. As I'm not one to gamble, I think I'll just watch this from the sidelines.

Personally, I dont think FB will be over valued if you consider current PE and prospective growth.

They will probably show some real nice numbers going forward, at least the next year or two.

In reality, they're just one step away from becoming obsolete. People don't need them, and as they piss people off trying raise more and more money, people will slowly just walk away. I think the real problem with FB is that it's very likely to fall into irrelevance.

In reality, FB hasn't done anything new in 7 years.

They created a place where you could post quick status updates on the crap you did.
They created a place where you could comment easily on other peoples crap.
They created a place to post photos easily for commenting purposes.
They created a great way of stealing all your contacts and information to create connections between you and your "friends" so you could contact them.
They expanded their server network to handle their traffic (googles orkut failed here).

They did that all basically in year one.

Everything else has been a dud.

jkennedy says

In reality, FB hasn't done anything new in 7 years.

From an end user's point of view. But remember, Facebook makes it money by selling customer data to advertisers. They could have been doing a lot of things related to that and it would never be transparent to the Facebook user.

Facebook's product is not a social networking site. It's product is information about you. The site is just the hook to crowdsource data collection to the masses.

E-man says

Saw this on the news yesterday evening. Facebook going public will create over 1,000 new millionares.
Cool. :)

If I was in the SEC or General Consel for FB, i would be very interested in how confidential info was leaked to the public. CEO/CFO would be panicking today... or is it just journalist hype!

SJMN headline today.

http://www.mercurynews.com/business/ci_19862712

Facebook IPO to spark valley economy

Realtors talk of new boom etc etc...

and here is the hook at the end of the article!

"Timing also plays a role in Facebook's economic impact. Employees are expected to have a 90 to 180 day "lockup" period in which they can't sell their stock after the company starts trading publicly. If Facebook starts trading in mid-2012, it could be 2013 before employees can begin to liquidate their holdings.

.

Most experts agree the economic benefit will filter out gradually, in part because many Facebook employees have already sold some of their shares on the secondary market.

Another limiting factor will be whether those who still hold large amounts of Facebook stock decide to stay in the Bay Area.

Michael Spector, CEO of Vista Wealth Management, said several of his clients who were early Facebook employees have already moved to states like Washington, Florida and Texas to avoid California income tax.

"There is a big wave" of wealth, Spector said. "But I've got to tell you that wave of wealth, most of those people did not build their lives here" and may leave."

Yep! they leave.. like the dot.com bust .. I told you so...

One Word: "Myspace"

The lockup is pretty standard. It allows a good amount of time for the stock to fall before the employees can get out.

I doubt the efficacy of Google/Youtube advertising, when I click on Iron Maiden music videos and get ads for Tampons or the newest album from Mariah Carey.

Why do people keep claiming that facebook sells data to advertisers? They don't. Advertisers never see any data. They pick the demographics that they want to target, and facebook serves up the ads.

Same deal with Google, only with "actions" (search queries) being targeted instead of demographics.

Anyway, facebook isn't really being that overpriced when compared to other stupidly priced companies; they'll be at about 95 P / E, vs. Amazon at 130.

I would say that, in 2 or 3 years, people will get a bit more realistic. By 2015 FB will be earning somewhere in the range of $5B a year, and will be priced at around $100B.

It's pretty much a no brainer to buy it early if you can though. A post IPO bump is just about guaranteed due to stupidity.

Monkeyswing says

Humanity needs something way cooler and monumental than status updates and relationship status.

Patrick.net!

Real discussion, though not real identities.

Kevin says

Anyway, facebook isn't really being that overpriced when compared to other stupidly priced companies; they'll be at about 95 P / E, vs. Amazon at 130.

When we had a real tech boom in the 90s the returns were around 10-15% annually on the S&P with PE at 30. Anything over 50 was considered insane... and so is your 95 today.

The vast majority of IPOs were rationally priced and had to earn any increase in prices based on actually earnings not some pie in the sky story. High PE multiples cause a lot of problems and distractions for companies and employees we all rather not have.

You gotta love America,

The only place in the world that normal joe employee working for a corporation can get rich.

138M ISO @ $1 (or fourty bagger)
380M RSU issued

518M Shares and counting. Based on $40 a share, employees are sitting on 20B in pay.

3K facebook employees translate to 6.67M per head

Yeah, pretty safe bet there will be at least another 1K new milloniares and millionaires will probably be multi millionaires.

Which brings up another question, How the hell does employee sitting on 20B in pay yet claims an operating profit. US GAAP accounting is idiotic.

http://www.sec.gov/Archives/edgar/data/1326801/000119312512034517/d287954ds1.htm

Kevin says

Why do people keep claiming that facebook sells data to advertisers? They don't. Advertisers never see any data. They pick the demographics that they want to target, and facebook serves up the ads.

Perhaps you are right. I can certainly see the motive for Facebook keeping the information it collects proprietary. It would allow them to monopolize the industry the way the MLS allows the NAR to monopolize real estate.

However, there are many reports alleging that Facebook does sell some data. I wouldn't be surprised if they disclosed some information to third parties at part of deals.

In either case, I think it's the collection of personal information by Facebook that's scary. Even if you try to use Facebook anonymously, by not including your real name, various software components will attempt to identify you. For example, if you ever use a mobile app to connect to Facebook, you can pretty much assume that the app will disclose your actual phone number, which can be used to identify you.

@Dan

The problem is, advertisers get masses of information, they target it exactly to their demographics, for a very cheap price I must add, and the users ignore them. The users are there to update their status, post a picture, or read about other status updates. They're not interested in doing anything else, or any other interactions. Advertisers are trying to figure out what to do with this cheap advertising, but they can't even get any actions out of these users. It's better for them to spend the money on google, where they get actual results. There are *a lot* of players trying to make something work on facebook, and they're all struggling to find something.

But then how is it that Facebook has a 40% profit margin and billions in cash? They must be doing something right with advertising.

SFace says

138M ISO @ $1 (or fourty bagger)
380M RSU issued
518M Shares and counting. Based on $40 a share, employees are sitting on 20B in pay.
3K facebook employees translate to 6.67M per head.

There is NO WAY to translate per person what the ISO or RSU option are. There are only a few people who know the actual numbers.

If MZ took any suggestions/mentoring from Steve Jobs, it would be not to give out lots of options to employees. Too much $$$ changes people and frankly like I said.. they leave and you need to find replacements. We are not talking 1-5 people by more like near 70% turn over in a very short period of time.

What would you do if you were Mort (CEO)... put your thinking hat on and zip up, stop wanking off over the keyboard...

thomas.wong1986 says

What would you do if you were Mort (CEO)... put your thinking hat on and zip up, stop wanking off over the keyboard...

All Mort has to do is look across the street at Google becuase they went down that road 7 years ago. Google 2012 has more brainpower and profits than Google 2005.

SFace says

All Mort has to do is look across the street at Google becuase they went down that road 7 years ago. Google 2012 has more brainpower and profits than Google 2005.

And prices of RE even today are falling. You cannot compare what happened with 1-2 comapnies like google or facebook to what happened back in 1998-2000 plus all the regulations that changed granting stock options.

thomas.wong1986 says

You cannot compare what happened with 1-2 comapnies like google or facebook to what happened back in 1998-2000 plus all the regulations that changed granting stock options.

Sure we can. The people who cashed out in 1998-2000 ARE STILL THERE.

All this AAPL, GOOG, FB, Zynga BS is just added demand, demand from a market that stopped making new lots about 40 years ago.

The price level in Los Altos has been flat for 7 years running. I think demand is still insane-- I have a dotcom millionaire friend priced out of the area.

05/30/2011 Pending sale $1,700,000
05/06/2011 Listed for sale

08/28/2011 Listing removed $1,449,000
08/20/2011 Listed for sale

12/09/2011 Sold $2,020,000
08/30/2011 Listed for sale

09/20/2011 Pending sale $1,598,000
09/06/2011 Listed for sale

05/01/2011 Listing removed $2,300,000
04/14/2011 Listed for sale

03/29/2011 Listing removed $2,298,000
02/26/2011 Listed for sale

This is just recent sales on a random block of Los Altos that I'm familiar with.

Bellingham Bill says

AAPL

Apple grants a dinky amount. Jobs was not a generous person. You forget how much he saw money/wealth as evil.

2009 234,000
2010 34,000
2011 1,000

Hardly much to talk about see page 68
http://investor.apple.com/secfiling.cfm?filingID=1193125-11-282113&CIK=320193

Google's ISO were exhausted long ago now and new employees only get RSO. So forget that..hasnt stopped prices from falling.

compare anyone you listed to Ariba in 1999 ... wake me up when it spits 2x pre public and shots over 800 a share and splits ... and back up over 800..

http://www.google.com/finance?q=NASDAQ%3Aarba#

Ariba employees ? long long gone! far far away from the Bay Area.

Zynga ? $12/share.. are you expecting it to fly to over $800/share ?

thomas.wong1986 says

Apple grants a dinky amount. Jobs was not a generous person. You forget how much he saw money/wealth as evil.
2009 234,000
2010 34,000
2011 1,000
Hardly much to talk about see page 68

Dinky, heck no

That is ISO, Silicon Valley transitioned to RSU long time ago especially as companies flip from loss to income.

2008 = 7.8M @$111 = 865M
2009 = 6.2M @$214 = 1.3B
2010 = 6.7M @ $312 = 2.1B

Based on today's market value of $450 those 20.7M shares granted the last three years are worth 9.3B, there's plenty of new millionaires on the Apple pipeline as well. Of course, RSU's are not as lucrative as ISO's when the stock appreciated like it did.

It doesn't seem much compared to Facebook only because Facebook became a forty bagger while Apple was about 5 or six the last four years. Apple will never become a forty bagger anymore so stock option while lucrative will not get you rich. RSU's are guaranteed payout with appreciation upside.

What you think is dinky is mere transition of the Corporation's compensation structure. An estimated 100B are already excercised.

Facebook has a viable business model. Sure, it may eventually go the way of a dodo bird like Kodak, but it's stupid to argue that advertisers haven't benefited from Facebook. Advertising is a numbers game of getting people expose to the message, if enough people see it eventually you'll have an increase in your average business.

That is after all how barbie became popular in America. For the record, I have advertised on Facebook and Google. If you are reading this...join my peition.

www.facebook.com/1337cats

thomas.wong1986 says

Kevin says

Anyway, facebook isn't really being that overpriced when compared to other stupidly priced companies; they'll be at about 95 P / E, vs. Amazon at 130.

When we had a real tech boom in the 90s the returns were around 10-15% annually on the S&P with PE at 30. Anything over 50 was considered insane... and so is your 95 today.

The vast majority of IPOs were rationally priced and had to earn any increase in prices based on actually earnings not some pie in the sky story. High PE multiples cause a lot of problems and distractions for companies and employees we all rather not have.

95 *is* insane, just like the 90+ that you saw in 2000, and the 130 amazon is enjoying.

Just because it's priced stupidly doesn't mean that people who have the stock right now won't get rich off of it.

Kevin says

95 *is* insane, just like the 90+ that you saw in 2000, and the 130 amazon is enjoying.
Just because it's priced stupidly doesn't mean that people who have the stock right now won't get rich off of it.

You may have just lost your moral compass...

So your perfectly ok with investors lossing their shirt so a few FB employees and realtors benefit..And somehow FB employees will feel they earned it based on hype.

What happens when real tech companies, the bread and butter of Silicon Valley need to go the capital markets. If investors get burned badly with FB, they aint coming back here again. They lost confidence in "real" technology industries.

Warren Buffet understood all this.. thats why he called it "Wealth Transfer on massive scale"... and not wealth creation which is what we had decades before.

Advertisers look at what they get for their advertising. No longer will people simply toss money at an ad because someone says they'll make money. They want proof and the proof is in the numbers. With internet advertising you can see who is coming, who they're referring, what they're doing, how much time they're spending and if they're buying (or making you money in any way). Facebook is failing here, it's like groupon, people are realizing it's very hard to get those users to do anything once they've paid for them.

Not touching this with a 10-foot pole.

I *understand* that there are millions of adolescents of all ages, who want to attention whore their every movement.

However I just don't see it as productive nor trivially monetized.