Facebook sandbagging revenue; 2011 really $12B, not $4B(launch.is)
launch.is
Facebook sandbagging revenue; 2011 really $12B, not $4B
http://launch.is/blog/l016-facebook-sandbagging-2011-revs-really-12b-not-4b.html
please Fisk the analysis below.
9 comments
I found the suggestions spot-on and highly conventional for a typical web property and I suspect that FB is already working on some of those...
But I also found the suggestions to kind of miss the point of FB (and I'm not an avid FBer). FB has found or is trying to find the right balance of engagement and advertising (cue the digerati: privacy! privacy! privacy! cue the interconsumers: meh...). The article kind of suggests that the balance is both obvious and easy to strike, but, having friends in management at FB, I've heard that it's nothing like that easy. It's easy to look around the web, find big properties/segments (e.g. AdSense, YouTube, news) and then paint on an FB layer; it's quite a bit harder to do so at massive scale without pissing off or freaking out the consumer market and other web properties.
But I also found the suggestions to kind of miss the point of FB (and I'm not an avid FBer). FB has found or is trying to find the right balance of engagement and advertising (cue the digerati: privacy! privacy! privacy! cue the interconsumers: meh...). The article kind of suggests that the balance is both obvious and easy to strike, but, having friends in management at FB, I've heard that it's nothing like that easy. It's easy to look around the web, find big properties/segments (e.g. AdSense, YouTube, news) and then paint on an FB layer; it's quite a bit harder to do so at massive scale without pissing off or freaking out the consumer market and other web properties.
This resonates with me. I don't think you could successfully put banner video ads on Facebook's main page without a serious backlash.
It makes sense -- on facebook, the user is providing the content. Facebook just organizes and connects it. With most other sites, they are producing content. People will sell their attention to access content produced professionally. I don't think they'll do that for content that is user generated (and so clearly user generated).
It makes sense -- on facebook, the user is providing the content. Facebook just organizes and connects it. With most other sites, they are producing content. People will sell their attention to access content produced professionally. I don't think they'll do that for content that is user generated (and so clearly user generated).
What a load of crap....
They don't earn as much as they do because they don't spam every possible place with additional advertising and not competing directly with groupon, youtube, foursquare and google, duh!
Just to 'replicate' a basic functionality of the sites above it would take them lots of time and effort and really not guaranteed to become anything interesting.
And adding way more adds? Really? Well, I suppose they could get away with it for a while, but I'm sure it would kill lots of other important metrics, like user engagement etc. Which I suppose are not less critical for FB then just the bottom line.
Just to 'replicate' a basic functionality of the sites above it would take them lots of time and effort and really not guaranteed to become anything interesting.
And adding way more adds? Really? Well, I suppose they could get away with it for a while, but I'm sure it would kill lots of other important metrics, like user engagement etc. Which I suppose are not less critical for FB then just the bottom line.
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Not monetizing to their potential? Sure, I'll buy that.
Underplaying it to the tune of $8B+ per year? Yeah, no sale.
If FB was really making that much money, why would they still be raising venture rounds (eg the Goldman investment)? If it was so the founder and early investors could take money off the table, why would they be undervaluing the sale? It would either be not smart for the founders or arguably misrepresentation to the investors.
I maintain my view that FB is still in the hype phase. Pricing will come back to earth at some point, which isn't to say it's not an $XX billion company but the $2B+ they've raised does raise questions about their actual and potential revenue.
Remember that Google raised $20-25M and that was it, as just one data point (but a common point of comparison).
Underplaying it to the tune of $8B+ per year? Yeah, no sale.
If FB was really making that much money, why would they still be raising venture rounds (eg the Goldman investment)? If it was so the founder and early investors could take money off the table, why would they be undervaluing the sale? It would either be not smart for the founders or arguably misrepresentation to the investors.
I maintain my view that FB is still in the hype phase. Pricing will come back to earth at some point, which isn't to say it's not an $XX billion company but the $2B+ they've raised does raise questions about their actual and potential revenue.
Remember that Google raised $20-25M and that was it, as just one data point (but a common point of comparison).
I think most of the $2B (1.5B in fact) is a "liquidity" opportunity for employees with significant amount of stock. In that light, Goldman's clients are getting a good deal (and obviously Goldman) and so are the employees selling the stock.
Now, you may wonder why someone would sell a stock they are highly confident will appreciate? When you have $60m, but all of that tied in Facebook stock, you would rather forgo the opportunity to gain another $10m in order to sell a quarter ($15m) now, just so you have some cash to buy a house, a nice car, or whatever you want. At that level of wealth, the incremental benefits of additional money is greatly outweighed by the benefits to diversification and liquidity.
I know that if I had $60m in Facebook stock, even if I believe each share are likely to be worth $40 in two years, I'd be willing to sell a quarter for $25 apiece just so I have a ton of cash at the moment.
So while it's true that it's strange that Facebook is selling so many shares to Goldman, it's less strange if you consider that FB is staying private much longer than Google, and thus has many employees whose wealth is still largely tied to a private, non-liquid stock.
Now, you may wonder why someone would sell a stock they are highly confident will appreciate? When you have $60m, but all of that tied in Facebook stock, you would rather forgo the opportunity to gain another $10m in order to sell a quarter ($15m) now, just so you have some cash to buy a house, a nice car, or whatever you want. At that level of wealth, the incremental benefits of additional money is greatly outweighed by the benefits to diversification and liquidity.
I know that if I had $60m in Facebook stock, even if I believe each share are likely to be worth $40 in two years, I'd be willing to sell a quarter for $25 apiece just so I have a ton of cash at the moment.
So while it's true that it's strange that Facebook is selling so many shares to Goldman, it's less strange if you consider that FB is staying private much longer than Google, and thus has many employees whose wealth is still largely tied to a private, non-liquid stock.
Wouldn't it leak out if Zuck was still raising rounds to take money off the table?
While I agree that it's still in the hype phase, I could easily see FB hitting a market cap on the seconday market of $100B pre-IPO.
And with regards to raising way more than Google, FB is doing much more at this point in its lifecycle than Google was. FB is launching many more products that are more capital intensive than Google was back in the early 2000s.
While I agree that it's still in the hype phase, I could easily see FB hitting a market cap on the seconday market of $100B pre-IPO.
And with regards to raising way more than Google, FB is doing much more at this point in its lifecycle than Google was. FB is launching many more products that are more capital intensive than Google was back in the early 2000s.
I think you have been trolled.
how can they be sandbagging if they have never published revenues
Sounds like Launch wants FB to end the party at 11.
fbvideo.com? really?