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Hi Dantheman, you are right. It's not a perfect analogy. There's not really any closer analogy, though. I state this later in the post, if you read through t

by ljlolel 17y ago

Hi Dantheman, you are right. It's not a perfect analogy. There's not really any closer analogy, though. I state this later in the post, if you read through the whole thing (including saying "like a Ponzi scheme"): "Yet, their value and growth continues because they can use that money to grow their user-base more and assert profitability (in this sense it's not quite entirely a ponzi scheme, but there is no closer idea). It's possible that they do not even realize that they are like a Ponzi scheme." Moreover, I recognize that Facebook isn't necessarily doing this on purpose (whereas in a real ponzi scheme a competent accountant has to scheme willfully). Nevertheless, I hope you agree that the positive feedback, the bubble effects, and the deceptive illusion of growth all have analogs to Facebook (if you assume the premise, of course). I think you are right that I should have used "like a" Ponzi scheme throughout the post, but the writing and the point would have lost a lot of its effect in explaining that. The metaphor is better than the simile. My main motivation was to make people think about the reality of Facebooks revenue. It may be less solid than social proof makes it seem.

jfager 17y ago
If you think FB ads suck and provide no return, fine, say so. I mostly agree. But you shouldn't go around accusing people of criminal activity on the grounds that you couldn't come up with a better analogy and your post wouldn't be as effective.
gabrielroth 17y ago
I think you are right that I should have used "like a" Ponzi scheme throughout the post, but the writing and the point would have lost a lot of its effect in explaining that. Yes, describing things in an overheated, sensationalistic way has a more powerful effect than describing them in an accurate way. Congratulations on figuring that out. By the way, referring to a business as a Ponzi scheme is prima facie defamatory. I don't think you have much to worry about, since I doubt Facebook will bother to sue you on the basis of a blog post, but you might write differently if you were more conscious of the fact that you're accusing someone of a crime.
- nailer 17y ago
  I think it's pretty clear to anyone who merely reads the title and has some understanding of what Facebook is that the author isn't saying Facebook is literally a ponzi scheme, any more so than I would if I said 'Lotus Notes is a dinosaur'. Everyone who uses Facebook knows it doesn't solicit, or give, money to/from its audience. There is zero question that Facebook is literally a ponzi scheme any more than it is literally a piece of shit. The amount of comments here who say that the analogy is libel and which attack the author on this without responding to the points made saddens me. I doubt Facebook, even if they didn't like the article, would wish to draw attention to the analogy contained therein.
  - gabrielroth 17y ago
    I use Facebook, and I did in fact assume from the headline that the author was going to argue that it is a Ponzi scheme. It didn't seem like one to me, but one reason I read articles on HN is to be informed or persuaded of things I didn't initially believe. By the way, I never called the author's accusation libelous. I called it defamatory, which it clearly is.
    - nailer 17y ago
      shrug So you know FB doesn't solicit funds or provide them, but you expected proof that FB was literally a ponzi scheme in the article? Libel is written defamation, as opposed to slander which is for transitory statements. I disagree that it's clearly defamation.
      - gabrielroth 17y ago
        So you know FB doesn't solicit funds or provide them Facebook does, in fact, solicit funds -- from advertisers, and from users who want to send virtual gifts to their friends. but you expected proof that FB was literally a ponzi scheme in the article? No, I expected some argument to that effect. Libel is written defamation, as opposed to slander which is for transitory statements. No, defamation is one of the conditions for libel, but there are others: falsity and malicious intent being the most important. I disagree that it's clearly defamation. Allegations of criminal conduct are among the clearest categories of defamation. Shrug indeed.
deleted 17y ago
[deleted]
rortian 17y ago
>(in this sense it's not quite entirely a ponzi scheme, but there is no closer idea) Why not just say, "I'm super ignorant. Sorry about this post." A lot of companies have made statements that in retrospect, and maybe even at the time, can be seen as pure hubris. You could say something cliched like, facebook: web bubble 2.0. Another cliche, facebook management: irrationally exuberant? Or you could reference companies that failed: facebook: the Global Crossing of our social network. There are a great number of ways for a company to fail. Many of them do not involve being a fraudulent investment scheme.
mattmaroon 17y ago
You don't understand Facebook's revenue at all, which is why you think that. App developers spend hundreds of millions per year promoting games. They aren't making the big money from businesses that lose a couple grand and then find out it's unprofitable. They're making their money from Zynga. That's sustainable. Facebook is probably going to make their own payment platform mandatory for apps, and they rake 30%. They could quite easily grow to a couple billion in revenue if nobody new ever advertised there again. Also, local advertising does much better there than most stuff. Better than on Google in some instances.
- rhl 17y ago
  Local is a very interesting avenue for revenue growth. I'm very curious to see how location will play out on Facebook, especially with regards to Foursquare.

by ljlolel 17y ago

jfager 17y ago

If you think FB ads suck and provide no return, fine, say so. I mostly agree. But you shouldn't go around accusing people of criminal activity on the grounds that you couldn't come up with a better analogy and your post wouldn't be as effective.

gabrielroth 17y ago

I think you are right that I should have used "like a" Ponzi scheme throughout the post, but the writing and the point would have lost a lot of its effect in explaining that. Yes, describing things in an overheated, sensationalistic way has a more powerful effect than describing them in an accurate way. Congratulations on figuring that out. By the way, referring to a business as a Ponzi scheme is prima facie defamatory. I don't think you have much to worry about, since I doubt Facebook will bother to sue you on the basis of a blog post, but you might write differently if you were more conscious of the fact that you're accusing someone of a crime.

nailer 17y ago
I think it's pretty clear to anyone who merely reads the title and has some understanding of what Facebook is that the author isn't saying Facebook is literally a ponzi scheme, any more so than I would if I said 'Lotus Notes is a dinosaur'. Everyone who uses Facebook knows it doesn't solicit, or give, money to/from its audience. There is zero question that Facebook is literally a ponzi scheme any more than it is literally a piece of shit. The amount of comments here who say that the analogy is libel and which attack the author on this without responding to the points made saddens me. I doubt Facebook, even if they didn't like the article, would wish to draw attention to the analogy contained therein.
- gabrielroth 17y ago
  I use Facebook, and I did in fact assume from the headline that the author was going to argue that it is a Ponzi scheme. It didn't seem like one to me, but one reason I read articles on HN is to be informed or persuaded of things I didn't initially believe. By the way, I never called the author's accusation libelous. I called it defamatory, which it clearly is.
  - nailer 17y ago
    shrug So you know FB doesn't solicit funds or provide them, but you expected proof that FB was literally a ponzi scheme in the article? Libel is written defamation, as opposed to slander which is for transitory statements. I disagree that it's clearly defamation.
    - gabrielroth 17y ago
      So you know FB doesn't solicit funds or provide them Facebook does, in fact, solicit funds -- from advertisers, and from users who want to send virtual gifts to their friends. but you expected proof that FB was literally a ponzi scheme in the article? No, I expected some argument to that effect. Libel is written defamation, as opposed to slander which is for transitory statements. No, defamation is one of the conditions for libel, but there are others: falsity and malicious intent being the most important. I disagree that it's clearly defamation. Allegations of criminal conduct are among the clearest categories of defamation. Shrug indeed.

deleted 17y ago

[deleted]

rortian 17y ago

>(in this sense it's not quite entirely a ponzi scheme, but there is no closer idea) Why not just say, "I'm super ignorant. Sorry about this post." A lot of companies have made statements that in retrospect, and maybe even at the time, can be seen as pure hubris. You could say something cliched like, facebook: web bubble 2.0. Another cliche, facebook management: irrationally exuberant? Or you could reference companies that failed: facebook: the Global Crossing of our social network. There are a great number of ways for a company to fail. Many of them do not involve being a fraudulent investment scheme.

mattmaroon 17y ago

You don't understand Facebook's revenue at all, which is why you think that. App developers spend hundreds of millions per year promoting games. They aren't making the big money from businesses that lose a couple grand and then find out it's unprofitable. They're making their money from Zynga. That's sustainable. Facebook is probably going to make their own payment platform mandatory for apps, and they rake 30%. They could quite easily grow to a couple billion in revenue if nobody new ever advertised there again. Also, local advertising does much better there than most stuff. Better than on Google in some instances.

rhl 17y ago
Local is a very interesting avenue for revenue growth. I'm very curious to see how location will play out on Facebook, especially with regards to Foursquare.