Open ... and Shut No sooner did Facebook file its S-1 in preparation for an IPO than speculation kicked into high gear on how Facebook could possibly sustain its $75bn to $100bn valuation. After all, despite its hugely impressive revenue and profit numbers, key components of its revenue model – like advertising revenue – are decelerating. So should we expect Facebook to impose a paywall on some or all of its users, as MyLife.com chief executive Jeff Tinsley suggests it could?

Not a chance.





For one thing, every time a user logs into Facebook they're presented with a promise: Facebook is "free and always will be". Presumably "always" includes "post-IPO."

But we don't have to take Facebook's word for it. It's in Facebook's self-interest not to charge users. To encourage users to congregate on its service, Facebook can't afford to scare them away with entrance fees, especially since using Facebook doesn't have obvious monetary value to the users. It's a way to connect with friends, colleagues and other people, and the more they connect, the higher their business value to advertisers wishing to reach them through Facebook.

Tinsley speculates that he "would happily spend a small amount of money each month to get an even more optimized user experience" – perhaps correcting Facebook's "ad overload, slow feature rollouts, and a lack of customizable options". But I've never actually heard anyone complain about ad overload (and as an Adblock Plus user, I've never seen a Facebook ad); if anything, people complain when Facebook changes the layout or swaps out features that they had grown accustomed to.

Perhaps people would pay to have Facebook stay exactly the same forever and ever?

Even if so, they're out of luck. It's simply not in Facebook's DNA to charge users for the service, whatever the other arguments in favour of this move might be. In the letter he wrote to accompany Facebook's S-1, CEO and founder Mark Zuckerberg talks about his aspiration "to build the services that give people the power to share and help them once again transform many of our core institutions and industries".

In other words, as important as money may be, it's not his guiding principle. And if history is any guide, it won't become such. Lest we forget, Zuckerberg will still own Facebook post-IPO, given the controlling shares he'll retain.

The best companies of the past 10 years have been those that have stayed true to their ideals. Companies like Facebook, Amazon, Google, and Red Hat (Twitter, too, though it still has a ways to go to prove out its vision). These are companies that remain a bit aloof from Wall Street, dictating terms to The Street rather than following the herd in bleating out quarterly numbers.

Red Hat has long insisted on a relatively pure message of open source and open standards for enterprise infrastructure software. I've never seen this message waver, in public or private. Could the company sacrifice its ideals a bit to hawk a proprietary product? Sure. But instead we see the company acquiring proprietary code and open sourcing it, as Red Hat recently did with GlusterFS.

Amazon has invested heavily in infrastructure, at perilously low margins, since its inception, much to the chagrin of investors. And yet in so doing Amazon has set the bar to competition in retail so high that it's difficult to see how others can compete. Amazon CEO Jeff Bezos has kept the company's gears set to high growth for a long, long time, and it works. Amazon doesn't have it in its DNA to be a high-margin business, anymore than Apple can be a low-margin business.

And then there's Google, which is at a crossroads.

Google has stayed pretty true to its mantra of organising the world's information. But lately it has been tempted to compromise its role as neutral arbiter of information.

Whenever Google does veer from this ideal, as I'd argue it has with Google+, it doesn't really work. Such products feel as if Google's heart isn't really in them. It's worth watching to see if Google's attempts to corral all user information into one central database, with all the potential for "evil" inherent in such a move, will ultimately sow the seeds of user discontent and abdication of Google's services.

If Google sheds its essential Google DNA, providing neutral guidance to the world's content, it will fail.

Back to Facebook. Zuckerberg's company is all about friction-less sharing, which is inimical to high-friction paywalls and other such schemes. The best place to scout for Facebook's revenue growth is in the social traits that have made it so wildly popular, and so stubbornly resistant to selling out its users for a mess of Wall Street pottage. ®

Facebook post-IPO: Free not fee will make Zuck a buck ? The Register

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The best companies of the past 10 years have been those that have stayed true to their ideals. Companies like Facebook, Amazon, Google, and Red Hat (Twitter, too, though it still has a ways to go to prove out its vision). These are companies that remain a bit aloof from Wall Street, dictating terms to The Street rather than following the herd in bleating out quarterly numbers.

And the VERY best is Apple. Which is opaque, cut-throat, dismissive, controlling, arguably immoral.

FB could "always remain free" as long as the basic service is free. Then they can add on "optional" micro transaction services.

And i'll take "he isn't in it for the money" with a large grain of salt.

Besides its not free to begin with, you contract out a lot of your personal information that FB then turns around and sells.

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Amazon has invested heavily in infrastructure, at perilously low margins, since its inception, much to the chagrin of investors. And yet in so doing Amazon has set the bar to competition in retail so high that it's difficult to see how others can compete. Amazon CEO Jeff Bezos has kept the company's gears set to high growth for a long, long time, and it works. Amazon doesn't have it in its DNA to be a high-margin business, anymore than Apple can be a low-margin business.

Yeah, this is what Wal-Mart did as it went about conquering the country and destroying local retailers.

I guess monopolys are A-OK as long as long as they stay close to the margins?

OP is a dumb ass or a tool for the industry.

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And the VERY best is Apple. Which is opaque, cut-throat, dismissive, controlling, arguably immoral.

New business model doesn't have to equal moral exemplar.

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Besides its not free to begin with, you contract out a lot of your personal information that FB then turns around and sells.

Well here's an experiment: try cutting out the middle man and phoning Groupon yourself to try and sell them information about your personal browsing habits. I bet they don't offer you very much. A chicken running around the countryside on its own is worth nothing, it's only when you coral a bunch of them onto your farm that you've got a business.

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Yeah, this is what Wal-Mart did as it went about conquering the country and destroying local retailers.

Giving people what they want? Cry me a river.

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I guess monopolys are A-OK as long as long as they stay close to the margins?

Creative destruction, baby.

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Originally Posted by Zichao

New business model doesn't have to equal moral exemplar.

I wasn't the one who wrote the piece trying to push a nu White Knight corporatism paradigm. At least thats my take away from it.

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Well here's an experiment: try cutting out the middle man and phoning Groupon yourself to try and sell them information about your personal browsing habits. I bet they don't offer you very much. A chicken running around the countryside on its own is worth nothing, it's only when you coral a bunch of them onto your farm that you've got a business.

Yeah and this model didn't exist 10 years ago either. It was just credit card companies compiling your purchases. And of course they wouldn't offer 1 person much compared to 10mil or whatever your user base is... and yet its mine, so why shouldn't I be the one to profit from it? Even if its just $5/month. Answer: Because a platform doesn't exist yet for it, but I think this is where we could be headed as more and more people plug in and become tech savvy. All it'll take is an E-Bill of Rights.

And for the corporations it makes sense because they now get to negotiate with much, much weaker parties than a Zuckerburg.

I've noticed a real generational shift in privacy standards towards not having any/much privacy as simply a matter of fact. So who knows, 15-20 years from now we'll all be sellouts to the man.

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Giving people what they want? Cry me a river.

Hardly. But I only used it because of my White Knight impressions. Anyway, its less about Wal-Mart giving people what they want and more about 30+ years of decline in personal wealth for like 80% of the country and not being able to afford anything unless its part of a giant monopoly apparatus that depends on outsourced goods shipped into the country under rigged trade systems.

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Creative destruction, baby.

I enjoy watching people on CNBC, some wanna be economic wonk, or politician quote Karl Marx whilst extolling the virtues of capitalism.

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I wasn't the one who wrote the piece trying to push a nu White Knight corporatism paradigm. At least thats my take away from it.

I didn't see it that way. Old companies get pushed out by new ones that are better adapted to the customers. It's not like this is the first time it's ever happened. It's great for us because we get better stuff cheaper, but it's not the new Messiah or whatever.

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Yeah and this model didn't exist 10 years ago either. It was just credit card companies compiling your purchases. And of course they wouldn't offer 1 person much compared to 10mil or whatever your user base is... and yet its mine, so why shouldn't I be the one to profit from it? Even if its just $5/month. Answer: Because a platform doesn't exist yet for it, but I think this is where we could be headed as more and more people plug in and become tech savvy. All it'll take is an E-Bill of Rights. And for the corporations it makes sense because they now get to negotiate with much, much weaker parties than a Zuckerburg.

And my watercolours should sell for $20000 a go. Maybe one day that'll really happen too. Til then, I just have to suck it up, since that that's how the market works.

If you're thinking of floating that sell-yourself-to-corporate-America idea, I'll design the brochure and the business cards in return for a few shares.

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Hardly. But I only used it because of my White Knight impressions. Anyway, its less about Wal-Mart giving people what they want and more about 30+ years of decline in personal wealth for like 80% of the country and not being able to afford anything unless its part of a giant monopoly apparatus that depends on outsourced goods shipped into the country under rigged trade systems.

And different tastes. Look at what people were eating 30 years ago.

You can have high quality stuff on a low budget if that's what you really want - you just need to change your patterns of a consumption. It's a choice between meat at weekends only or reprocessed meat-flavoured protein-like substance seven nights a week. Anywhere above third world style poverty, if people buy cheap crap, it's because cheap crap is what they genuinely want.

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Also Groupon is dogshit, its a fucking scam. I don't know where they find these dipshits to piss away their money into that rat hole. It wont be around in 2 years. Enron all over again.

Heres a snip from an article about one of the laugh out loud problems with Groupon.

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A quick few words on another controversial element of Groupon's S-1 filing: Consolidated Segment Operating Income (CSOI), which is an adjusted measure of cashflow. Groupon created CSOI to show, essentially, how much money it could be making if it stopped spending tons of money on expanding right now. CSOI, according to the S-1 statement... Doesn't count the cash to acquire new subscribers Doesn't count employee stock-based compensation Doesn't count interest on debt Doesn't count changes in foreign exchange movements Doesn't count tax payments Doesn't reflect changes in working capital CSOI is a nifty tool -- it tells you how profitable your business could be if you didn't have to spend a lot of money on the nagging expenses of running a business. I'd love to create a cashflow statement that takes out pesky costs of doing Internet business such as subscriber acquisition, taxes, and equity compensation. That would make any business look a lot better. Sure, I understand, Groupon will "make it up in volume." Groupon's building the great Internet-coupon franchise in the sky. But I don't want any part of it, especially at the insane valuation at which it will be floated. Groupon will have between $1 billion and $2 billion in revenues in 2011. It will also have massive losses. And it's being valued at more than $10 billion, probably more than 10 times revenue, depending on the valuation it achieves today. Fuhgetaboutit.

http://www.investoruprising.com/auth...&doc_id=235380

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But I don't want any part of it

Good job that bitching about successful companies on the internet has next to no overheads, R. Scott, otherwise you'd be in an even flimsier position than them.

Like the OP says, Amazon never looked like a great prospect for shareholders either. If you think that means it's a terrible company, then excuse me if I go right ahead and ignore your prognostics.

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Originally Posted by Zichao

I didn't see it that way. Old companies get pushed out by new ones that are better adapted to the customers. It's not like this is the first time it's ever happened. It's great for us because we get better stuff cheaper, but it's not the new Messiah or whatever.

"Google has stayed pretty true to its mantra of organising the world's information. But lately it has been tempted to compromise its role as neutral arbiter of information."

Except for that year in China... lets just forgot about that. This writer has such a moral hard-on for these tech companies. He used words like Evil for chirstsake, he casts the pursuit of money as disdainful "the bleating herds chasing stock numbers" and all that. Thats right, my new man crush Zukerburg is going to tell those Wall Street boys how things are going to be from now on! He's not a cog in their system, he's fucking running it!

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And my watercolours should sell for $20000 a go. Maybe one day that'll really happen too. Til then, I just have to suck it up, since that that's how the market works.

Pretty sure there is a street corner where you live that you can go to and try your luck. Right now there is no soapbox for people to stand on to advertise their personal info for sale.

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If you're thinking of floating that sell-yourself-to-corporate-America idea, I'll design the brochure and the business cards in return for a few shares.

I'll keep you on my short list.

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And different tastes. Look at what people were eating 30 years ago. You can have high quality stuff on a low budget if that's what you really want - you just need to change your patterns of a consumption. It's a choice between meat at weekends only or reprocessed meat-flavoured protein-like substance seven nights a week. Anywhere above third world style poverty, if people buy cheap crap, it's because cheap crap is what they genuinely want.

Or because the places that sold good, raw food, have been run out of town in the name of 1 stop shopping.

But the real villain, as always are the feminists, who drove mothers out of the kitchen where they used to spend hours preparing delicious, nutritious meals for their loving families. Their families who are now slaves to microwaves and other fast foods.

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Righteousness will always be the trap at the gates of hell

Originally Posted by Zichao

Good job that bitching about successful companies on the internet has next to no overheads, R. Scott, otherwise you'd be in an even flimsier position than them. Like the OP says, Amazon never looked like a great prospect for shareholders either. If you think that means it's a terrible company, then excuse me if I go right ahead and ignore your prognostics.

You're completely missing the point. People criticized Amazon for its business model (and to be fair there were a few times it looked like they would go under) this guy is bitching about Groupon for its book keeping and the fact that its bullshit IPO offering was/is the only thing thats keeping them afloat right now.

Although its business model is highly suspect too, in the sense that it is unsustainable and ultimately destructive to the companies that use it or exist in markets where it is used.

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