At the Social Graphing conference on Tuesday our industry went in full-blown madness. A panel filled with Facebook fans (and some investors) got so worked up they claimed--among other things--that:a) Facebook was worth $100 billion dollarsb) Facebook would crush Googlec) Facebook would crush MySpaced) Facebook application platform is as important an innovation as the graphical user interfacee) The top Facebook applications were worth $500MNo, I'm not making any of that up. Those were the claims, and as Mike Arrington of TechCrunch correctly pointed out, this is the kind of madness that got us in trouble the last time around (i.e. 1999). Now, to be sure, Facebook is a great product. In fact Facebook is the best social networking product ever made in my estimation. It has the best design, best UI, and best platform. Their team has done the best job to date--better than MySpace in fact. That's just an objective fact, and I don't think anyone in the industry could disagree with that. They have done something very clever by opening up their application platform. At best, opening up their platform will be the creation of a new ecosystem for developers to leverage Facebook's social graph. At worst, Facebook's open application platform will be a way for Facebook to boost their traffic numbers and get a free R&D lab in the form of naive developers who will see their hard work incorporated into Facebook's default feature set over time. The truth is probably somewhere in the middle.However, back to the ABSURD claims on this panel and my thoughts on them (and yes, I realize I'm shooting two-week old dead fish in a barrel filled with six inches of water):1. Facebook worth $100B.First, a growing company with ~$100M in revenue this year might be worth 10-20x top line revenue in a hot market like this, or $1-2B. A company with $25M in profits (if Facebook has that) would be worth 50-100x that in a red-hot market, or $2.5-$5B. Those number are the number we heard folks were willing to pay over the last two years (i.e. Yahoo). So, to say Facebook is worth $100B is to say that Facebook is worth... wait for it.... 1,000x top-line revenue. In other words if Google makes $14B this year in top line they would be worth--according to the 1,000x revenue metric--$14 trillion (I've check my math 10x... I think that's the number). I think you get the point... here's a graph:Facebook had 30M uniques in September. Let's take a look at the value of each of these are the various valuation metrics. I think you get the point... Facebook users at the top end of this market would exceed the value of even cable subscribers who are paying a fortune to monopolistic companies with absurd margins. 2. Facebook will crush Google.Yes, Facebook with no experience in the search business or pay-per-click advertising business will come in and crush Google despite the fact that MSN, Ask, and Yahoo have not been able to even *keep up* with Google. Facebook, with no experience in search, will just leap frog everyone with tens of thousands of brains working on the search problem. They will also do this while crushing MySpace. Sure they will. They will also move into autos since young people buy autos and they have young people eyeballs and attention. Look for a Facebook airline and cable channel soon as well. This is bubble talk at its best... oh wait, two more points to go!3. Facebook will crush MySpace.Facebook traffic is down 10% from August to September (33M uniques dropped to 30M uniques according to Comscore). MySpace was flat during that period with 68M uniques each month, or double Facebook's traffic. WhileFacebook is clearly a better product and a better platform, doubling your uniques is NOT an easy task. Additionally, people were speculalting that Facebook would have a major boost in September when people came back, but in fact it was the opposite (at least according to Comscore). I've heard some inside information on focus groups that were done by a VERY credible source outside of Facebook that found that students coming back found the applications to be annoying--the equivalent of spam. We in the technology industry have a bias towards bells and whistles, but the truth is the public may not in fact like all these new applications. These applications might be a LIABILITY to Facebook. I know that's hard for some folks to swallow, but it is a possibility. Clearly some applications have great value (top friends, photo slide shows, and casual games), but many are just annoying and stupid (Zombie, food fights, etc). Facebook's challenge will be to throttle the bad and feature the good. This of course dovetails with the "should you trust Facebook with your business" discussion. In order for Facebook to catch up to MySpace--and they have a long way to go--they are going to have to control applications. So, if your application is good for you, but looked at as bad for Facebook guess who wins? Facebook of course. Additionally, MySpace is going to announce some big changes in their partnerships with 3rd party applications developers very soon (yes, again, I have inside info). My gut tells me that MySpace will allow folks to run advertising on MySpace pages if they are approved (this I don't have inside information on). If MySpace does this then application developers should flock to MySpace's 2x user base over Facebook the same way developers flock to Windows of Mac. MySpace has stagnated over the past year or so in terms of product, and their focus on community over platform is a long-term issue. However, counting out an incumbent with 2x the traffic is a dangerous call to make. 4. Facebook is more important than the GUI. Facebook has connected their social network with a semi-open platform. This is neat, but it will NOT have anywhere near the impact of the Graphical user interface. Windows and the Mac made computing--the very idea of having a computer--mainstream. How can we compare the mainstreaming of computing to an application development platform that is not very powerful (by design) and not very open (by design) to the GUI?!?! That's just absurd. If you're going to make that claim then you can make the claim that the mainstreaming of the Internet is as important as Facebook applications (i.e. if the GUI is equal to the Internet, and the GUI equal to Facebook then Facebook is equal to the Internet... I don't think so). 5. Top Facebook Applications are worth $500M.I don't even know how to start addressing this one... I mean, this is straight up MLM thinking: If Facebook is worth $50-100B than the top applications are worth 1% of that. Sure... and the top users on the top Facebook applications are worth 1% of that, or $5M each! Also, the fans of those top users are worth 1% of that, or $50,000 each!All this being said Facebook is an AMAZING product. It is a better product offering than MySpace today, and it is obviously the best social networking system and management team in the business. If anything, the amazing team they have is the real value. Will Facebook be one of the ten most important internet brands over the next ten years? I think that's clear, but remember PointCast, Netscape, AltaVista, GNN, Lycos, Excite, and Geocities were also in the 10 most important companies in the Internet space for many years--and they went away. NOTHING is a sure bet in this industry. In fact, social network is NOT a huge business today. MySpace with 2x the user base is still figuring out how to make money. Social networking might be the message board, chat room, and IM of Web 2.0: lots of traffic, little revenue. As an industry we should NOT make absurd claims about companies as it does a disservice to the entire industry and the company itself. Facebook is really worth 2-5B right now, and maybe 5-10B if someone is desperate to make a move (i.e. Microsoft in terms of advertising), but let's not make ourselves look silly as an industry to say Facebook wins everything before they have. Facebook worth a $100B might be the AOL/TW merger of Bubble 2.0 in terms of a milestone for the industry. In fact, that gives me an idea... why doesn't Facebook just buy TimeWarner and settle this whole thing. :-) Sanity check request: Kara Swisher, Fred Wilson, Mike Arrington, Robert Scoble, Jeremy Liew, Don Dodge, and Henry Blodget... can I get a check on my math and thinking above?Permalink | Email this | Linking Blogs | Comments
More great How To articles from our team.... like how to carve a pumpkin today. If you're interested in writing how to articles like these be sure to ping us!Permalink | Email this | Linking Blogs | Comments
Today I spent the day at the "Graphing Social Patterns" conference in San Jose. The conference has a fancy name, but truth be told the event is centered around Facebook and Facebook applications.Background: For those of you who don't know, Facebook is a social networking site like MySpace or Friendster. Facebook announced a very powerful program four months ago to allow 3rd party developers to create applications inside of Facebook. These applications let you do things like play poker or share photos. On a business level this developer program allows Facebook to:1. get free developer labor 2. generates tools for their platform and users3. get free research into which features their users wantsIn order to get these developers on board there has to be some payback. To date payback comes in the form of climbing the rankings of the most installed applications, and maybe some promotion for your brand. No one is really making money off Faceback applications with the possible exception of a cottage industry in selling--wait for it--Facebook application installs. That's right, the people with the most applications installed are selling application installs to the have nots. Additionally, Facebook doesn't give developers the ability to pull down the user information associated with their users. So, if you get 1M users for your chess game you don't really "own" those users--Facebook does. This is a big point of contention obviously. Facebook says they are going to continue to evolve the platform and open it up as much as users want. They say give them time it's only been four months and their concerned about opening it wide because they want to protect users. When I hear "protect users" in these open standards discussions I immediately think about AOL's instant messenger client which never opened up and the Apple iPhone. Both of those companies say they are protecting users by keeping their platforms closed, and that is true to a point. Apple's products work better in terms of stability because they are closed, and spam issues are somewhat minimized by AOL not opening up their instant messenger AIM. However, the truth is that folks who are in the lead don't open up. Why should they? It's typically a HORRIBLE business decision to open up too much when you're winning. Opening up creates competition, it educates your competitors on how your business works, and it allows folks to easily switch. "Switching cost" in terms of AIM comes in the form that if you move to Yahoo IM or Skype you have to get all your friends to move over. That's why over a decade later AIM is still a powerhouse. So, the question for application developers is should they trust Facebook to open up their platform? It's important to note that at no point today did Facebook say they would open up--they simply said they are going to evolve the platform, that it's early, and that they will do what the users want. Are those statements a major red flag? Feels like it. If someone wants to open up wouldn't they just say "our intention is to open up slowly over time." Maybe they would say "we're going to get there, we just have to put safeguards in place." However, Facebook didn't say anything close to that today. This again, reminds me of AOL which when faced with the request to support Jabber, the open source standard for IM, kept saying they would look into it. However, they are still a closed system. Here's the bottom line: Facebook will open up as much as they need to in order to win. The reason Facebook opened up their platform to being with was to compete with MySpace, which had blocked people from developing on their platform (and running ads for it). If Facebook finds that they can make a "half open" system and get to where they need, well, they will probably do that. If MySpace opens up--as folks expect them to--and catches up with Facebooks Application development program? Well, Facebook will probably open up even more. In other words, this is a business decision not an emotional one for Facebook. As it should be. If Facebook were to be 100% open a competitor could come along and suck out all the value they've created. It would be really dangerous for Facebook to do this, and irresponsible withregard to their contract with investors. If Facebook becomes a public company you can be sure that they will make there decision on how open to be based on one test: what's in the best interest of their shareholders. In fact, they have a legal obligation to do so. Now, sometimes the interests of users and business are aligned, but not always. In fact, we all know that business nirvana is a monopoly -1 (i.e. a monopoly that doesn't look like one).Microsoft has had a "monopoly -1" for decades. As a result they were able to crush Lotus 1-2-3 and WordPerfect and replace those "open platform" applications with their own. Apple was going to change everything and release us from oppression (remember the 1984 commercial?), but they went on to lock down the iPhone to the level of absurdity (i.e. bricking people's iPhone).So, should you trust Facebook with your business? Should build your entire business inside of Facebook--or even around Facebook?Answer: You should trust no one with your business success. You should build your business around the most open platform in the world: the open Internet. Does this mean Facebook is evil? No, not at all. Facebook has opened up 100x more than MySpace and Friendster, so in truth they are the leading example of openness right now. It does mean, however, that anyone who builds their entire business on top of a closed or semi-closed system is a fool. Leveraging Facebook to get users for your website? Great! Use Facebook to market you website? Sure, go for it!If you look at history the companies that built on closed--or semi open--platforms have gotten their asses kicked. Build for the open web first, and use these systems as icing on your cake.Permalink | Email this | Linking Blogs | Comments
Since the "official" Web 3.0 definition was given down from the mountain--and accepted by 100% of the voting public--we've seen a bunch of Web 3.0 companies emerge. The latest is Veropedia which is using experts--aka "gifted people"--to verify the information in Wikipedia articles. It's a great idea, and we'll be watching it from the "official Web 3.0" organizing committee here at the InterWeb Verified Authority Counsel. If it works we'll be certifying them Web 3.0 compliant. ;-)Permalink | Email this | Linking Blogs | Comments
When we have a match for a person's need in the Mahalo database it's pure magic... we're only four months into Mahalo's alpha/beta and we're getting stories like this every day:So I asked Maholo for hotels in Paris and got this page: easy to use, straight-forward with a reasonable number of choices. In the "Moderate Hotels" category I found one that was in the right location: the Hotel Langlois - it looks nice, has a great rating on TripAdvisor. It even got free Wifi! I booked my room and was all set in less than 10 minutes. Wow!!Not sure how well Maholo works for other things. The idea of human powered search seems compelling, but keeping up with the Web is quite a task and I am not sure if humans are really up to it. Anyway, in this case Mahalo worked definitely as advertised. So, mahalo for the help, Mahalo! ;-)So, the only issue for our business is really how wide we can go (deep isn't an issue obviously since 99% of folks don't need more than 10-20 good links and our pages have 40-50 good links on average). Getting wide is our big challenge... and we're figuring it out every day. Have you got a Mahalo match story? Let me know and let us know how we can do more to save you time.Permalink | Email this | Linking Blogs | Comments
Blade Runner: The Final Cut was STUNNING last night. I've seen Blade Runner dozens of times on DVD/VHS, but nothing prepared me for the greatness that was The Final Cut. The film looks like it was made in 2007. The images were so stunning that it would seriously win an Oscar for best effects in 2008. The detail level of the images in the background was so great that I found myself drifting off of the characters and into the the details of the buildings, cars, and alleyways. If you only see one film this year go see Blade Runner on a digital projector.... right now it's only playing in LA and NYC, however to my friends in San Francisco I can tell you it is EASILY worth making the trip to the Landmark Theater (respek to Cubes for building this place) in Los Angeles where they are showing it ona SICK 4k projector. The guy who produced Blade Runner was there with an original jacket, as was the producer. Permalink | Email this | Linking Blogs | Comments
The team at Mahalo is going to see Blade Runner: The Final Cut tonight. Blade Runner is one of my five favorite films of all time. I'm soooo excited! Permalink | Email this | Linking Blogs | Comments
From a recent interview... How do you see technological advances changing the workplace in the coming years?I don't know. That's the kind of question I think one only embarrasses oneself by trying to answer. But I know that the next problem we need to solve is, we have given people virtually unlimited access to data, to information; the next question is, can we give them better tools for making sense of that information?Google in a sense is a symbol of the solution to an old problem. We don't need more Googles; what we need is a way to prioritize and analyze and make sense of the information we have at our fingertips. And maybe those kinds of solutions aren't technological at all. I'm quite prepared for the possibility that the next revolution is not going to come from a machine; it's going to come from creating a more thoughtful work force and giving people the opportunity to be thoughtful.Permalink | Email this | Linking Blogs | Comments
I stayed out of the debate over Mahmoud Ahmadinejad's speech at Columbia last week since, as anyone who reads this blog knows, I don't like to mix it up with folks. I like to state my humble beliefs, meditate on the feedback I'm given, and use it to grow as a human being. Politics? I find it a wasted, shallow effort--debate class for adults. I'd rather try and change the world on a very small scale than talk about changing it on a big scale. However, that's just me... I'm from the "every grain of sand" school. Anyway, back to Mahmoud. When you give a person a lot of room to express themselves they typically do. In Mahmoud's case his disdain for homosexuals came out in statements that were so incongruous with basic human thinking--let along that of a world leader--that everyone was aware of the creature's true nature. There was nothing to debate.Saturday Night Live brilliantly pointed out what was clear in an instant: Mahmoud is really a closeted homosexual suffering under the tyranny of the regime he serves (not unlike our own Senator Larry Craig). [ Both men I'm sure claim their innocent. Denial ain't just a river in Egypt honey. ]In the Saturday Night Live skit "Iran So Far"--a skit that will be shown in history class 50 or 100 years from now--they show Mahmoud how happy his life could be if he just accepted who he was. The final lines of the song read:I know you say there's no gays in Iranbut you're in New York now babyit's time to stop hiding,and start livingSay what you will about the state of democracy in our country, what with wiretaps and secret prisons, but at least we have the ability to deftly take apart despots while dressing them in S&M gear and sultry evening wear. Now if only an SNL skit could get us off fossil fuel. Permalink | Email this | Linking Blogs | Comments
