Yes, Facebook. Let’s talk about Facebook. Well, we’re only talking about it because it just IPO’d (initial public offering); that is to say, you can now buy and sell shares of the company on NASDAQ (stock market). It was one of the most frenzied and hyped IPOs in the history of ever. In short, I think it’s a terrible company and is way overpriced. Why? Read on…
How about what I think of the service:
– It’s a drain on resources. It is an incredible time sink. I think it’s a vacuum that steals the souls of people who are bored, lazy, or stupid. It creates no physical product. It really doesn’t do anything other than let you connect to old friends, and then you’ll never talk to them again, but are there to give you “status”. To be blunt, I think it’s diminished the collective character and integrity of the world. But maybe I’m being too harsh.
– It offers no unique, proprietary, or creative service that cannot be done by anyone else (just you watch, Google+ or “the next big thing” will eventually kill it; do you remember Myspace?).
– Its website and structure are horrid. I cannot begin to explain how terrible the UI is on the site. As a programmer, it is pure shit. There is clutter everywhere, there are ads, there are links, and pictures, and buttons and doo-dads ALL OVER THE PLACE. From a technical standpoint, it is absolutely atrocious. And the only reason people put up with it is because it’s really the only game in town. Twitter doesn’t compete directly with it. Now Twitter…I love Twitter! Maybe I’ll explain why Twitter is different than Facebook in a later post.
How about what I think of it as a business:
– You know, to make profit…the reason you’d invest in a company? I just don’t know how it makes any money. IT DOESN’T OFFER A PRODUCT! It sells advertising! That’s it!! Farmville?? You really think that is SUSTAINABLE? Does ANYONE actually click on ads and then buy something from them?? Facebook has one of the most pathetic “conversion” rates I’ve ever seen. Everyone knows this. Before the IPO, GM bailed.
– I see no reason to think that this service is somehow compelling enough to create brand loyalty. Do you? What makes this product, this “.com” any more relevant than myspace? What does it have that another company cannot take from them? Patents? No. A unique technology? No. The ability to share photos and text on the internet? It’s called a “messageboard”. Facebook did not invent this. I think the ’90s did. It only got popular because college kids posted stupid pictures of themselves doing stupid things. Which inevitably led to endless pictures of people’s babies and what they had for lunch that day. What a history! Sign me up, I’m willing to make an account and scroll through ads for that!
What does the future hold?
– What are potential future revenue streams for Facebook? Charging users a fee? HAHAHAHA…..here’s a “very informal” poll asking users whether or not they’d pay if Facebook started charging a fee. Can you guess the answer? HELL NO! Broaden this poll to the entire Facebook population and I guarantee you once you charge a fee, the place would be a ghost town.
– Oh, and you know there’s that whole…privacy thing. There are allegations of Facebook snooping on everything you do, and selling it to advertisers. No big deal right? I’m sure there’s no chance of any government passing laws against this. No way would that hurt their “business”…WHICH SELLS ADVERTISING!
– OK, maybe they’ll “re-invent” themselves like Google did. Google was once just a search company. Now they are a company that touches almost every industry in the world. This is the *only* argument you can make for future valuation of this company. Why do I not believe this is going to happen? Keep reading.
They did what??
– The CEO is obviously smart…but he’s a moron when it comes to business. And once you start getting all-powerful it leads to self-destruction. What did Mr. Zuckerberg do right before the IPO (initial public offering)? Well…he bought an app that lets you upload pictures to the internet…FOR ONE BILLION DOLLARS!
Think about that again for a second. ONE BILLION DOLLARS for a company that lets you upload photos to the internet. You really have to think hard about this again. I’m not letting you go until this sinks in. OK, some obvious questions come up:
* Why wouldn’t you just make your own version of this? Are you telling me you couldn’t in-house this for less than a billion dollars? Isn’t that a little concerning that you don’t believe you have the ability to create a service that uploads photos? What does that say about your workforce?
* OK, so you bought it, now why do you think this is worth the investment? Does this have something that no other company could make? How are you going to make $1 billion back from this sale? Oh right…you’re not.
* Finally, Zuck (can I call you Zuck, it almost sounds like Suck), decided on his own that this was a good idea. Consulting no-one. He acted alone in buying the company. This tells you he has absolute authority over every decision and can veto anything he wants. Yeah….that’s great right?
– How about that IPO debacle? You know…the one where Zuckerberg tried desperately to get you to enter his ponzi…err…invest in his company?
When someone goes on a roadshow to convince people that you need to buy shares of the stock, you should be worried.
– OK, we’re hyped. It’s IPO day! This stock is going to shoot through the roof!
Oh, right. It didn’t. Why is that again??
– ONE HUNDRED BILLION DOLLARS! That is not a joke. At pricing the initial public offering at $38 a share, Facebook believes their company is just that damn good. The opening price of the stock had the audacity to suggest that this stock, completely unproven to this point to be able to generate any sustainable growth, is worth let’s say it again, ONE HUNDRED BILLION DOLLARS! For the technical people, that is a profits to earnings (P/E) ratio of 100. LOL.
– Oh, but I’m sure the “insiders” are just as sad as the common investor…right?
Oh, what’s that? All the “big boys” sold at the ONE HUNDRED BILLION DOLLARS valuation? Wow, it’s amazing how that works. You host a road show to hype a company, get the IPO to be balloned out of control, and take a big dump on your shareholders. Pump and dump!
– Oh wait…there’s more? You’re saying people actually knew the valuation was complete crap, but just didn’t tell anybody BUT the “big boys”? I’m shocked.
– There’s MORE??
So not only did you overinflate the valuation, lie to your shareholders, but we couldn’t even get the IPO to start on-time and now there’s a class action lawsuit because people’s orders were filled at prices HIGHER than what they should have been? Wow…I have nothing else to say.
So what’s a true fair value of the company??
There you go ladies and gentlemen.
…Oh wait, there’s one more thing. What was it that Mr. Zuck said earlier…hmm, I can’t remember. Oh, here it is!!
Zuck: Yeah so if you ever need info about anyone at Harvard
Zuck: Just ask.
Zuck: I have over 4,000 emails, pictures, addresses, SNS
[Redacted Friend’s Name]: What? How’d you manage that one?
Zuck: People just submitted it.
Zuck: I don’t know why.
Zuck: They “trust me”
Zuck: Dumb fucks
There you have it! Anyone who chooses to “invest” in this company, be warned.