Notice that at the time the article was written he had sold about 37 million shares and had only 5.6 million left. The prices he got were absolute peanuts compared to the current price -- he sold 17 mln shares for $38, and another 20 million for about $20. The current price is $180.
I am not writing this to criticize Peter Thiel, obviously the stock market is very difficult to predict. And, unfortunately, I did not buy FB at $20, so I cannot say I had a better mastery of the market than him. The point I want to make is that is downright silly to make any conclusions about FBs valuation based on this sale.
In stock trading, we say that there are a million reasons to sell and only one to buy. Sales aren't a particularly good signal, since they can be very specific to ones' personal situation.
Well, you think you can't get a better return on your investment elsewhere.
Just going up isn't enough if something less risky goes up faster.
Going down a little can even be a relatively good bet if everything else is absolutely tanking. Losing 1% of your principle is a pretty good deal if the stock market (and the dollar) go down a lot.
I mean the price he sold at IPO was way higher then what he bought in at the seed round as one of the first investors, it is one of the best seed investments ever, given he was already one of the longest shareholders by the time of the IPO it made sense to sell
Hindsight is 20:20. I think the most likely prediction for a social media IPO is similar to TWTR or SNAP where it just keeps dropping and dropping. FB is an outlier in my opinion.
This sounds more like an issue with your ad targetting than with Facebook.
First step: only target users in countries that you care about and (sadly) do not target Indonesia, India, Pakistan or anywhere in Africa as these are mostly where the fake profiles are.
I disagree that any specific advice will help an individual marketer...I think the biggest issue is that the economics of acquisition on social (factoring in internet marketing budgets and customer LTV) doesn't work well for brands that aren't already operating at significant scale. Otherwise, Teespring would be a billion dollar company by now ;)
My guess is that social marketing works ok for brands that have a strong competitive position AND healthy margins.
Healthy margins and product appeal moreso than competitive position.
Teesprings product offering is far too broad to benefit specific targeting which really just leads to low user intent, which leads to huge acquisition costs. No one gets excited for tshirts.
Products outside of these hugely saturated markets do amazingly well if you know what you're doing.
Did you watch the video that the parent shared? From the sounds of it, targeting didn't seem to help at all. The video stated that they seem to think that clickfarmers will like -anything- so that a sudden surge of likes from a specific region on a specific page seems less fishy.
tl;dr on that video: You pay Facebook to promote your page to X number of people. The problem is that paid third-world clickfarms spam likes to everything they can find, not just to things they're paid to like, in order to camouflage themselves. Thus, the majority of likes you get by promoting your page are fake and don't actually represent engaged fans. You're paying for nothing.
Only on Hacker News would we consider making over a billion dollars "absolute peanuts," and criticize Thiel for not being enough of a visionary to wait.
When you're Thiel, having the money liquid is more valuable than waiting. One way to look at is that he could have 5x'd the money had he not touched it. But I'd bet whatever he did with the money since the 2012 IPO (starting companies, investing in companies, etc) had a much better return than 5x.
There's a lot of really weird vicarious worship of the wealthy around here. It's ironic that it's called Hacker News since traditionally hackers came from more of a "fight the man" zeitgeist. At times it borders on sycophancy, like when every single utterance of a VC no matter how banal is analyzed as if it's the words of some venerated guru.
The extreme of this would be the Silicon Valley right and its full and explicit embrace of feudalism and monarchy.
... and no, I'm not criticizing Thiel. The vicarious sycophancy of the HN community is a lot weirder and at times more troubling than the behavior of the actual SV rich.
> But I'd bet whatever he did with the money since the 2012 IPO (starting companies, investing in companies, etc) had a much better return than 5x.
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The top post in this chain says that he sold 17 mln shares for $38 and another 20 million for about $20. The stock is currently trading at $180/share. If he had held on to those shares they would have been worth $6.66B today. According to Forbes his total current net worth is $2.6B.
I certainly won't criticize someone for making a diversification play after having already made such a huge gain (his initial investment was $500k) but in retrospect it very much looks like a mistake.
Judging decisions based on future knowledge is utterly worthless. "In retrospect, picking the losing lottery numbers was a mistake. In retrospect, picking the winning lottery numbers was brilliant."
It was only a mistake if it was a wrong choice given the information knowable at the time.
This is non-news. The sale was "part of a previously established trading plan" -- VCs set these up all the time to slowly sell off shares in a way that's not disruptive to companies. If you owned 10% of a company and sold all that stock in one swoop, you would crater the stock price and piss off employees. Thiel had already sold over a $1B worth of shares by 2016 and FB stock is up 60%+ this year.
The first sentence of the story notes that fact, but it is still news since Thiel is a board member. Regardless of when the plan was initiated, it's interesting that Thiel owns so little of FB.
Holy Cow! That is Insane. Facebook's market cap is half a trillion. As somebody that knows nothing I cannot believe that it is that high. It is on par with Amazon. Anybody thinks we really are in a bubble?
FB and GOOG have been hoovering up practically all growth in the digital ad space. Those PE ratios are high, but they have been blowing out their earnings quarter after quarter.
FB has 2.07 billion monthly active users, about 1/3 of the world population, with significant user engagement. Their userbase is on par with major world religions and continents.
Google is the same, though their engagement is a lot more fleeting.
Amazon is hoovering up almost all of the retail growth in e-commerce, and is now extending beyond e-commerce. They to an absurd extent, try to match their R&D and capital investment to their revenue and almost operate as a non-profit, so their P/E ratio always looks absurd, but their book value has increased tremendously over the years.
This isn't 1999 where like Tesla, there was no P/E ratio because there were no earnings (profits), and in the life of the company there had never been a single dollar of profit made, and companies were often rated at 50x their revenue numbers!
These are companies that have shown sustained revenue and profit growth. You can call them overvalued, but this is not in my opinion a bubble, and I think its important you understand the difference between now, 1999, and 2007 or you won't recognize the next one when it comes. In 1999 there was an absolute mania over .com stocks. In 2007 we had a credit bubble that was clear in many statistics and being shouted from the rooftops by some that was impossible to sustain and accompanied by speculators flipping houses, phrases like "buy now or be priced out forever," and other nonsense.
Today, while there are some high P/E ratios, they are at least backed up by long periods of sustained growth rates. Of course it can't last forever, and one can only hope that they will gently reduce their growth rates and have a soft landing rather than a hard crash.
True, although the number of active users is only a small component of Facebook's enormous growth.
In past 4 years Facebook have grown their user base by 80%, mostly in lower-income countries. But over the same period revenue has grown 400% and pretax profit 600%.
So Facebook will likely have significant growth long after their user base levels off.
I don’t think the fact that the big 5 are doing well means we’re not in a bubble. Tesla is far from alone in holding a lofty valuation without profits to justify it, and we’re in the middle of an irrational mania over cryptocurrencies.
Nearly all of Silicon Valley post-2001 is either (a) online retailers/ecommerce, or (b) parasites hanging off of the $100+Bn/yr online advertising industry. At the top of that latter food chain sit only a handful of companies -- Google and Facebook being the big ones. So much of everything you see in IT and tech in general, from the IT worker to the graphic design consultant to analytics and "big-data" machine learning startups are living off of money that came from clicks on ads or checkout carts at buy-and-ship retailers.
Facebook "only" took in around $26Bn in advertising revenue last year. But their ads are considered more reliable and higher quality than Google's products, so admit some speculation about growth potential. With a global advertising market (across all mediums) of half a trillion dollars that is quickly moving into digital, is it any surprise that these top dogs have high P/E ratios? Those P/E's are based on anticipated future revenues, shares of a pie that is rapidly expanding in size. Comparing P/E using earnings of this year doesn't give the full picture.
That said, they're certainly not undervalued either, and this analysis does nothing to explain Amazon (WTF is going on there? Surely they don't have $200bn of inventory and warehouse property. Do they?). But 35 P/E is only 3.5x more than the 10x rule of thumb, and the entire market could reasonably grow by that amount. That appears to be what investors are betting on too.
(If I had to turn this into stock picking advice, I'd note that if the market is predicting the future accurately here, then one can also say that traditional non-digital advertisers aren't going to do well in the years to come [no surprise], and also that general tech will likely see a huge influx of revenue and capital investment as the top dogs trickle down their market share gains. Baring some black swan catastrophe things will likely be good in Silicon Valley for some time to come, even outside of the FANG companies. But you should not take this as investment advice, which I would not be qualified to give, etc. etc.)
ETA: For the record there's a third prominent SV category I forgot to include in the list, which is peer-to-peer services. AKA the sharing economy. AirBnB, Uber/Lyft, Instacart. Part of why these were so exciting in the last two years or so is because it was a gold rush on new markets that hadn't been colonized by tech companies yet. Doesn't really affect this comment in any way though, other than technical accuracy of that sentence.
P/E (price/earnings) is a poor metric because it is biased toward hoarding cash (low P/E) over investing profits in new ventures (high P/E). Better to distinguish "cost of revenue" from "investment" and look at P/"cost of revenue"
It's odd that you think FB is over-priced when Amazon is the one at 292 and FB is in-line with the rest in the range of 10-35. You should be saying "can you believe Amazon is that high, it's on par with Facebook".
It's a propaganda and indoctrination tool. It's the holy grail of mind control that multiple governments attempted to build for decades. It will be worth trillions until most governments ban it (or already had banned it, not sure the current status of it in China and Russia)
Some very strong words.
I don't know if i'd go as far as saying it is the "holy grail", however, I do see your point. For sure it allows propaganda, misinformation, and lies to be disseminated at a very fast pace.
"Continuing Transparency on Russian Activity" https://news.ycombinator.com/item?id=15758852
"It is important that people understand how foreign actors tried to sow division and mistrust using Facebook before and after the 2016 US election."
FB angered the US government by allowing foreign agents to use its tools. So that's only an example of Russians using it on Americans. Now imagine how the US government is using it. You are not going to see it in this "Transparency" report that's for sure.
Yes, Monsanto/agribusinesses/GMO or Pharma/Opioids crisis possibly are using FB to sway public's opinion. It would be great if this FB's transparency tool wouldn't be limited to Russians. I think there is an opportunity for development of some sort of network analysis tools or visualizations similar to how newspapers analyzed Panama papers.
Whatever else you may think of Facebook, it’s incredibly naive or unfair (not sure which) to suggest they’ve been “firing on all cylinders for years now.”
Facebook the user experience has - objectively and measurably (even almost by definition) - taken a severe nose dive since attempting to capitalize on the page views. They’ve spent their time evolving into an advertising behemoth that has upended the advertising market, but very poorly despite all the access they have to metrics and use identifiable data because the user’s best interests and the advertiser’s best interest are almost at polar cross purposes such that it isn’t possible to optimize for one except at the cost of the other.
Facebook ads simply do not convert except to Facebook properties (with the obvious “exceptions that prove the rule” aside); they are measurably worse investments than CPC advertising, probably worse than traditional CPM adverts (fake clicks), and probably better than old-school mass media advertising (billboards, bus stations, tv ads). They make their buck on people that either invest xxx thousand dollars until it becomes measurably obvious to the them or that don’t be know enough to measure.
Facebooks only “social” innovations that are actually forward-looking past the heyday of feeds and in-feed apps (FarmVille and co) for consumers are Instagram and WhatsApp, both of which were bought out when facebook’s own in-house attempts failed to compete.
Look at their revenue growth, their stock performance, their cost of revenue, their profit margins, and their incredible strategic bets like Instagram/WhatsApp as well as their well-executed transition to mobile. What about hiring of COO Sheryl Sandberg at the perfect time, their well-executed competition with SnapChat, their well executed video strategy, multi-app strategy, look at messenger, look at their growth numbers quarter over quarter which are crazy. I mean you'd be incredibly naive to ignore those things and how well they've worked.
Facebook Ads work. They work when you put effort into them and know what exactly what you're doing. Ask any marketing firm. It's a complicated mechanism that has to be learned and experimented with but now Facebook Ads are among the lions share of the advertising market along with Google. They work for many businesses. Just ask Dollar Shave Club. Ask Stitch Fix. Ask Warby Parker. Ask King.
Facebook Ads also don't work if all you're doing is throwing $10k into them with a bunch of random targeting. In fact, no advertising works if you don't know what you're doing and if you're not tracking everything to a T. That's not Facebook's fault - their engine is completely self-serve. As are AdWords from Google. You can blow $100k on AdWords and get no results just as easily as you can blow it on Facebook and get no results.
I made no value judgement on their innovations. I've learned better than to do that on HN where people become so hostile if you even suggest that Facebook might be useful in some ways. I only made a value judgement on their business which is sound and growing rapidly.
Well said. For years now, I hear people say Facebook is not useful for "me" and I dont even disagree. But how typical are the "me"s among the billions of facebook users?
Furthermore, in many third world countries, the only internet they know and will ever see is facebook properties via internet.org.
I see the facebook logo on almost all retailers in my patch of the world. Retailers no longer advertise their websites or phone numbers. See us on facebook, they all say. This doesnt just happen without a lot of people brilliantly working hard and smart.
Actually, Facebook shopping ads (from Amazon, Banggood, and the like) and news ads are pretty much the only ads I click. Mostly because, unlike Google ads, when I am browsing Facebook I am not really looking for anything in particular. Facebook ads are like TV ads in that respect.
HA! that is...oh wait you are SERIOUS!)*&^%$# it is cat pictures. That cap is way too high, they only reason it is successful is that people are sheep. Once they figure out how soylent green is made and the FCC chair ignites the internet apocalypse and people will suddenly have to PAY for that "service" Zuck will turn into Bill Gates. And I think we will all be better off.
Actually Facebook is not "cat pictures." It's a very efficient advertising engine the same way Google is. Similarly to Google (whose revenue is dominated by search ads), Facebook has feeds straight to consumers as well as valuable information about what the consumers are interested in. That's what makes money. Instagram, News Feed, Facebook News --> these are Facebook's Google Search & YouTube.
When you look at the numbers you'll see that they're actually similar companies who've monopolized segments of the digital advertising space. If you're going to complain about Facebook's market cap then you should also complain about Google.
Facebook's even got "other bets" -- Oculus, Workplace, WhatsApp, etc.
Advertising that you as the product have to opt into! Google is at least providing a service/product they give you a shiny something while they siphon your data. I think FB is pretty straight forward they take ALL of your information that you are willing to give up and they sell it. repeatedly. without conscience. for the money. If people stopped sharing or looking where would FB be? That is my problem with cap. They can buy other companies but none of them have anything productive to offer either but I bet they sell that info too.
Nuanced and HN pretty much mutually exclusive. Additionally, on low-quality, given the level of discourse with in the US in general this is PBS level here! HN is pretty much 20-ish people whom think that you can have an actual discussion on the internet, and those over 30 who have enough experiential data to realize that will not happen. So where would you be on position Facebook's market cap and contribution to humanity has a whole are both overly valued but that within the vaccum of Silicon Valley there is more of a drive to be successful (make them dolla billz y'all) than advance mankind as a whole. And I will even conceded that Palantir would be the most vexing for me. In that it has enabled some rather spectacular work at the Nation-State level in making data accessible and malleable, but is the reason why the freedom of data movement is most at risk.
I think it’s unlikely that Future Zuckerberg is going to behave with anywhere near the benevolence of post-Microsoft Bill Gates. How he tried to pull one over on the public with his “foundation” already demonstrated that quite clearly.
Facebook was one of the main tools that allowed trump to win. That is some value right there. How much money would a government or a company spend to control people? That is kind of what facebook is allowing people to do.
Surely both radio and TV have been used for the same purpose. I think the Internet, and in particular Facebook, is very different for at least a couple of big reasons.
1. Much more precise user targeting
2. Direct feedback on effectiveness (did the user click-through or even just linger looking at the content?)
TV and radio seem like very crude tools in comparison.
Yes it is company that is larger, more influential, and more relevant than the entire industries of TV or Radio and even print/online journalism at large.
The implications and consequences of the consolidation of this power and influence into one company is a different discussion entirely (and an important one).
American people allowed Trump to win. Its a democracy and there is no government media control, so American people had access to all the information they wanted and they made an active choice.
What? But when social media companies help the other guy win (Obama for an example), it's not a problem? Your president is a fool but by the look of it, you deserve exactly that kind of leader.
No do not think a bubble. Those are also not forward P/Es. Google and Facebook all have incredible growth and justify the prices. Amazon a bit expensive but incredible opportunity and growth.
What does Amazon do? Sell stuff and logistics in a handful of countries. Facebook meanwhile has a very sizeable user base giveing them a lot of attention in a lot of countries, so much so they (allegedly) influenced multiple elections.
I haven’t studied FB much, but do they have a strategy for continued growth? They don’t seem to be expanding into new growth areas as much as Goog or Amazon?
soon they will saturate world population. Their monthly active user count might even be close to the maximum they can attain even...presumably a lot of the people in developed countries who aren't using facebook now are probably doing it for good reasons and so probably won't add to facebook's MAU count.
Facebook has been slow to realize that ads that they show are effectively messages from Facebook. Which is why they are culpable in so much gunk, they don't screen ads well enough and they let absolute nonsense rule the feeds. It's really a poor case of selling out to attractive bids. Now that they started camouflaging ads as regular posts from your friends, it's even worse. Now they exert influence and pretend they don't.
They don't, but if any of your friends has "liked" the advertiser's page, Facebook shows "Joe Smith likes Advertiser" above the ad. It's small print and cannot really be confused with a friend's post, but it does pretty much include your friends' names as part of ads.
"John Smith likes Wall Street Journal" with the headline and picture from a recent article.
It appears in your news feed like John Smith recently liked Wall Street Journal, or that article.
In reality they probably clicked the like button years ago, and Facebook just continuously recycles that in your news feed, in a way that appears recent.
Above the sponsored post from some company it'll say that your friends A, B, and C like that company (and I've heard that the definition of "like" is questionable, they don't have to have ever actually clicked the like button for that brand).
But they do slip ads into your newsfeed with a "Bob likes Soylent" header at the top. It's deliberately similar to how they display "Bob shared Soylent's post" or "Bob commented on this."
Bob liked Soylent a year ago and has had no recent interaction with it that would merit showing up in the newsfeed. That particular one is funny because Bob swore off Soylent after a few months and just didn't bother to unlike their page.
That could actually be a negative for the advertiser, and positive for consumers.. hey Bob, I noticed on Facebook that you "liked" soylent- I am thinking abut trying it too! Do you have any thoughts? Bob: Umm, don't, Soylent is terrible! Thanks for letting me know, I will unlike them!"
Of course, not everyone will actually ask Bob for his opinion, but if I really cared about the fact that Bob liked something, and that was a factor in my purchasing decision, I would probably ask him about it, myself.
In that case I don't mind it anyway because I like food and I'm not interested in their product. Makes the ads are easy for me to mentally skip over.
As a whole, it really dilutes the news feed because half of it is actual "news" from friends (when they recently posted, liked, or shared something) and half is advertisements disguised as posts with my friends' endorsements written at the top because they liked NYT or KFC's page five years ago.
Ads appear on your feed among post from your friends with a similar format. They are marked as ads, but they are easily confused with regular posts. I find this very annoying and this is one of the main reasons why I don't use facebook anymore.
Peter is a smart guy, and this does suggest Facebook is not worth holding long term. Sean Parker's comments a few days ago were not positive either. Anecdata-wise, things are not looking too rosy; many of my more intellectual and interesting friends have abandoned the platform, barring the occasional message (e.g. if they lost their phone and had to change numbers) - the less interesting people I know (not friends, but acquaintances) seem to be fully immersed in Facebook still. Not sure Facebook can even hold the attention of those people much longer, as the platform is simply feels noisy, boring and out of date!
My take is that Thiel has realized most of the gains he expects to get from Facebook and has much better opportunities for capital gains available to him.
Which says pretty much nothing about Facebook's continuing health.
A very interesting pattern of votes on this comment of mine - first swinging up to +15, now back down at 2! Don't think I've ever attracted such a divided response!
Even if he were confident that Facebook has a good chance of growing, say, 10% YoY for the next 20 years, with those smarts and his access he can put the money to work on the next facebook, or even less successful companies that will likely beat that 10% in aggregate.
My experience (I am not the OP) is that the facebook leavers are abandoning social media platforms altogether rather than simply moving to a different one.
Yes, if you're being pedantic about it, but they did not go from one Facebook-like platform to another. I think people just don't see much value in Facebook-esque platforms like before, because they recognise them as places filled with all sorts of irrelevant junk that can usurp copious amounts of valuable time.
That's true but to an extent that a social networking platform derives most of its utility from having people present on it, it being a non-FB-like platform may only be a matter of time. It could become more FB-like (if that was deemed necessary) or it could be bought by FB or FB-like companies.
Most of my friends moved to more one-on-one private forms of communication, such as skype, kik, regular text message (iphone imessage lets you create groups).
I also noticed majority of my friends (even some PhD etc) are pretty embarrassed about their postings from few years ago how they pretty much throw up on their facebook wall daily about even silliest stuff. They cyber-grew-up and now would not do that kind of stuff again.
As of Thiel's sell, even FB on their recent call warned stockholders that recent successes will be hard to duplicate. As more move into mobile use and there is less space for ads than on your desktop, the only option FB has is to stuck more ads between your feed, lowering the quality of experience altogether.
When your user base is 1/5th of the total world population your potential to 100x your growth is probably fairly limited... at least in terms of number of users.
Has anyone else noticed the shift in their use of Facebook? I'm starting to use it more and more for selling and buying things hyper local than craigslist. I've had so much better luck selling people who don't show up and try to haggle you down further with facebook than craigslist. It's become my one stop shop to offload junk I don't need, vs use it as a social network.
I've been mostly using it for their oauth because I don't feel like making a million accounts for every website I go on. I've been using it less and less now that I've installed a password manager and registering is essentially 0 cost.
Yes, we tend to sell things on Facebook than on Kijiji nowdays. At least try to sell on FB first. It's safer because you already validated the person's profile instead of weirdos calling you from Kijiji/Craigslist.
"Oh, you're selling an old kitchen cabinet? Sounds like you're doing pretty well to be able to afford a kitchen remodel. Must be nice."
"Wait, you don't have time to come to my kid's birthday party, but you're out skiing so much that you had to upgrade your skiing gloves?"
I'm not saying it's right or makes sense, but there are a lot of contextual layers and subtle subtext inherent in other people's relationships that may not affect your own.
I don't like spamming people that aren't specifically looking to buy something. How much or how little I spend on something feels a little private. There are lots of things I wouldn't care about as much.
I have recently begun a campaign to unfollow everyone on my Facebook feed to reclaim my attention. Removing the addiction to seeing what I've missed in my news feed has given me back an hour a day.
It was apparently part of a pre-existing plan, but to your point Facebook is way ahead on taking advantage of whatever we are calling the opposite of net-neutrality. Their zero-rating deals with mobile operators in India are a prime example, as is the whole internet.org project.
It will be interesting remember that BGP "error" that Google caused Japan to drop off the internet things will really get fun!!! I can't wait for the offensive corporate tactics that will come into play to counter those deals.
They were just waiting until they needed it. They didn't fail they were just playing a different game. Now there is money to be made in sniffing all that additional traffic. Plus the last administration was on their side and that seems to have changed.
I have zero confidence in tech companies deploying broadband or last mile internet infrastructure, but I do have faith in municipal broadband taking off in communities with activists supporting it. You don't need FANG deep pockets when you can issue your own muni bonds to fund the network deployment.
I'm not against home made networks (see: your Detroit youtube video), but you need more formality (ownership entities, local gov partnership/sponsorship) to ensure a high level of service, community buy in, and financing.
Google is already an investor in SpaceX's cluster sat network, very low orbit so much better latency as well as mesh interconnects avoiding groundstations for forwarding information.
I have a feeling that something scandalous is going to drop about Peter Thiel in the near future. This news comes on the heels of YC cutting ties with him [0].
As far as I'm aware, YC didn't cut ties with him. Rather, YC restructured their advisor program and he was offered a role in the new structure, which many other advisors did, but he declined for whatever reason.
Of course if you were YC trying to save face for everyone involved that's also exactly what you would do.. but I think it is ill-advised to jump to conclusions before the facts are in. It might be just what it is claimed to be: a choice by Pieter Thiel not to participate further for whatever reasons he might have. Certainly YC of today is not the same as the YC he originally involved himself with.
One scenario would be if he's about to be removed from the Facebook board (politely or otherwise). So he's beginning to clear his remaining investment ties to the company. Given his increasingly outside position in Silicon Valley, he may be looking at liquidating his ties to the area in general.
I don't think this has to do with politics (or Presidential Candidates). It's too big of a business decision.
I don't know enough, but I am curious if someone who has spent the time and effort researching this...Is Facebook's future limited? Is there a new challenger?
Thiel continues to swim against the current and win. Is the writing on the wall?
I recently bought Facebook shares at $1.79 each, so my view is the polar opposite of Peter Thiel. Here's my estimate of what will happen to the components of Facebook revenue over next 10 years:
1. Number of Facebook users * average user income grows 50%
(keep in mind that new Facebook users are mostly in developing countries)
2. Amount of time on internet spent by average user grows 100%
3. Number of ads served to an average user per hour of internet time grows 30%
4. Effectiveness of an average Facebook ad grows 160% (ie. 10% per year)
Now 1.5 * 2 * 1.3 * 2.6 = 10.14, so I'm guessing Facebook's revenue will grow tenfold in a decade. Their profit will likely grow even faster because expenses will grow more slowly than revenue.
For example, consider how much "Number of Facebook users * average user income" will grow over the next 10 years. Over the past 40 years world GDP per capita has risen about 4.5% per year [1]. A portion of this growth was due to China's economic boom so outside of China we might expect GDP per capita to grow a little less over the next decade - let's say 3.5% per year ie. 41% in total. But world population is growing and Facebook's penetration is growing on top of that (albeit mostly into poorer countries) so it's reasonable to push that estimate from 41% to 50% or 60%.
Regarding "Effectiveness of an average Facebook ad" here's my experience: In April 2017, Apple released a new Macbook Pro. It looked great - fast, sleek, beautiful. So I visited the Apple website, clicked 'Buy Now' and chose my configuration options. But when I got to the credit card payment screen I had second thoughts - it's very expensive and my old computer was still working fine. Plus I wasn't really sure if I wanted the one with the Touch Bar or regular keys. So I decided to think about it a bit more. And for the next 6 months I was undecided - occasionally going back to Apple's website to drool over the specs - until I finally bought it a few weeks ago. Within those 6 months I didn't see a single Facebook ad for a Macbook. So there is still some low hanging fruit for Facebook to pluck.
Could this be the begining of the end for Facebook? Is 2017 for Facebook what 2009 was for BlackBerry and Nokia (when they were still getting record profits and revenues - they were already toast, they just didn't know it yet)?
The significant drop in engagement may also be why Facebook is dumping the media sites from the news (ha!) feed like a hot potato. Although that was a very Facebook thing to do, it still seemed a little desperate and like it was happening sooner than expected.
French news today said time spend on (or maybe visit count, don't remember) FB dropped by 43%. I wouldn't give much value to the digits, but it seems it's not attractive anymore at the least.
I don't think there are any sites that come anywhere near Facebook's niche - other sites allow either insubstantial contact or larger public presence or hyper-local contact or etc. Obviously, social networking been defined by companies mostly not aiming to replace Facebook since Google's G+ debacle.
The chart you link to shows Facebook declining from ~30 mins of usage to ~20 mins. Snapchat increased from 3 to 4. So it's getting closer but it seems unlikely to catch-up.
If anything, all this seems more less engagement in social media. Maybe people somehow are doing more "in real life" or maybe people are just generally less engaged with each other.
Depends on if there is an AdTech bubble or not. I’m starting to lean yes . The only way forward for Facebook is to start eating at TV advertisements . If they can’t do that I don’t see where their growth will come from.
My friends aren't creating event invites on facebook, they're sharing events created by the hosts. I think what you're saying is, "When the bands and bars holding beer events follow my friends off facebook..."
My friends sometimes make events show on my FB either by sharing or just by signing up. But most of the time the event is textually mentioned in a post ("hey Combichrist are coming" or whatever), not via an actual FB event. As some of my social groups have moved to Whatsapp (or Slack, etc), that's where this type of action is moving too. I'm on the older side of the spectrum so that probably has some effect.
Depends where you live, but if you're in the UK then check out REVL (https://revl.world).
They have a very wide and deep listing of events from small local events (think your local pub) to large nationwide events (such as gigs, festivals). The website is good but the app offers a much more comprehensive experience.
I will look into it, but I would bet that zero of the local bands I regularly go see are putting their gigs on Nextdoor. I wonder if they scrape events from facebook or elsewhere.
It's probably no good for your use case, I live in a boring suburban neighborhood and most of the news is about stuff happening on my block and across the street where downtown is in my small town. Where do the bands otherwise advertise? It seems like this is a missed (but small market) opportunity.
The problem (and advantage of) Nextdoor is that it is hyper-local. It's great for anyone in an HOA or apartment complex or whatever. It really fills a niche there.
However I wish there was more to fill the spectrum between Nextdoor, which is really just a communication tool for people that live within shouting distance of each other (there's a standup routine in there somewhere..) and Facebook, which trends too far towards the national and global.
I wish I could close my facebook account, but it's essential for asynchronously keeping in contact with friends living around the globe now (I grew up in Silicon Valley, so my friend set in particular is rather global since everyone not in tech or other high paying professional jobs have been forced out of the housing market and moved elsewhere). What about at the level of my city, county, state & region? I really wish there were more local options.
I also wish there were better tools for building social networks around specific hobbies, industries, or interests. Where are the clubs of social networks? This requires more than just a "page" with a wall and like button. The anonymous and cancerous Reddit certainly isn't the answer either.
> Is 2017 for Facebook what 2009 was for BlackBerry and Nokia (when they were still getting record profits and revenues - they were already toast, they just didn't know it yet)?
The only way the comparison works is if 2009's Blackberry or Nokia owned Apple and the Android OS platform.
Not only does facebook own the facebook social media platform, they own Instagram and WhatsApp, two of the world's largest and fastest growing tech platforms.
Not to mention if Blackberry had Facebook's ungodly 50% operating margin making it arguably the most profitable large company in the world.
In 2009, blackberry was losing money and losing marketshare. 2017 Facebook is growing in all their platforms - facebook, instagram and whatsapp.
Net neutrality is likely to help Facebook more than it hurts them, because they can pay for access, which startups probably cannot. All the social companies FB bought (plus the one they couldn't, SnapChat), would have had a much harder time of it if they needed to pay a per-subscriber fee.
This assumes that Facebook could afford to pay that cost, as ISPs know that Facebook is highly valuated, and that Facebook is willing to pay that cost, knowing that an ISP without access to Facebook is currently useless to the majority of their users.
You think people have a choice? There are many areas where consumers have to choose between one crappy ISP and other
even crappier options (like satellite).
I think the vast majority does have a choice. I know about the places you are describing and they all have one common feature — not many people live there.
Because it's cheaper than out-innovating your competitors.
But I'm pretty sure FB still supports NN anyway, since a lot of the value to users of Facebook are the articles their friends link to, and that gets hurt if some links are more expensive for some people to click on.
The telecoms' relationship with Facebook with likely be more a symbiotic mob relationship. "You pay us protection money, and we rough up anyone who tries to get in your turf."
https://www.hollywoodreporter.com/news/peter-thiel-facebook-...
Notice that at the time the article was written he had sold about 37 million shares and had only 5.6 million left. The prices he got were absolute peanuts compared to the current price -- he sold 17 mln shares for $38, and another 20 million for about $20. The current price is $180.
I am not writing this to criticize Peter Thiel, obviously the stock market is very difficult to predict. And, unfortunately, I did not buy FB at $20, so I cannot say I had a better mastery of the market than him. The point I want to make is that is downright silly to make any conclusions about FBs valuation based on this sale.