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Woo. Let's chill out a bit. 1. I actually do like Facebook, and am very impressed by what they are pulling off. 2. I learned about Ponzi schemes a while back
by rhl 16y ago
Woo. Let's chill out a bit.
1. I actually do like Facebook, and am very impressed by what they are pulling off.
2. I learned about Ponzi schemes a while back in macro theory class, before they were mainstream and irremediably tainted by the vileness of Bernie Madoff. The story of Ponzi himself -- as I remember our macro professor telling it five years ago -- is pretty 'funny', or at least provided welcome distraction between two utility maximization derivations in econ class; he's supposed to have been a 16th century Venitian who ended up in the Venice lagoon once the bankers he was pulling his cash from realized what happened. I didn't think of it as a crime. All this to say that I never implied nor intended to imply that Facebook was committing any sort of fraud, immoral behavior or else.
3. What I mean by this derivative thing is quite simple -- imagine the movie Speed with a bomb that explodes, not when the speed goes under X mph, but when the bus's acceleration goes below X mph/h, forcing the bus to keep on accelerating, driving faster and faster and faster. Eventually you'll hit the physical speed limit of the bus, acceleration will converge to zero, and the bus will explode. That's a very silly metaphor for what I was trying to explain - being that, if indeed FB had to rely on an ever growing in-flow of first time ad buyers to keep the lights up, they are would be in as desperate a situation as was Mr Ponzi in 16th century Venice.
Just to cool everyone's mind -- I really don't think this will happen. The team is least extremely smart to have gotten where they are, and I trust Facebook to eventually find as ridiculously profitable a business model as AdSense, with high probability. As a user I do hope it will respect my privacy, and as an entrepreneur I do hope it will allow some cool new distribution models.
- btilly 16y agoYou have Charles Ponzi's history mostly wrong. See http://en.wikipedia.org/wiki/Charles_Ponzi http://en.wikipedia.org/wiki/Charles_Ponzi for a more accurate version.
- starkfist 16y ago"Mostly??"
- rhl 16y agoYes, it's actually totally wrong. If you read carefully though, I'm not reporting Ponzi's story as it happened, but as I heard it for the first time from an econ professor, which may or may not have been pulling our legs.
- btilly 16y agoThe story claimed Venetian which implies Italian. He was actually born about 70 miles away, but that was still in Italy. And he swindled lots of people. That is why I said "mostly".
- tedunangst 16y agoThere's some oddities in the WP timeline. Nov 1, 1920 goes to jail. Spends 3.5 years in jail. Released and then "almost immediately" indicted by the state. Challenges indictment, it goes to Supreme Court, settled on Mar 27, 1922. How could he spend 3.5 years in jail between those dates when there aren't 3.5 years between those dates?
- jjs 16y agoNow that you've uncovered these irregularities, we can blow this Wikipedia scandal wide open!
- rhl 16y agoHa! I knew something was fishy in that econ class. :) Thanks a lot though. This is far more sinister than I suspected.
- rortian 16y agoI don't know if you are trolling or just extremely happy to be alive, with possible assistance from certain chemicals (not something I condemn in all cases). However, please try to be coherent. >irremediably tainted by the vileness of Bernie Madoff. ???
- starkfist 16y agoI upvoted you because the post you were responding to was truly bananas and I'm not sure why you were getting down voted.
- rhl 16y agoHappy to be alive, no assistance. What don't you find coherent in my post? >irremediably tainted by the vileness of Bernie Madoff. My point here is that, while Ponzi schemes used to be a mostly overlooked white collar crime and a curiosity for the students of economics, they now have come to light in a very public manner and came to personify all the excesses of Wall Street pre-2008.
- yesbabyyes 16y agoIt's difficult to not interpret you as saying that Ponzi schemes are kind of charming, and Bernie Madoff gave them a bad rep. Ponzi schemes are devastating and destroys economies. When Albania was first liberalized after Hoxha, half the population got frauded and the economy folded. The population threw over the government and it became a failed state. Similar events unfolded in Russia and many other former Soviet states, after their economies opened up - although with less devastating consequences. In Haiti, it's estimated that 60% of the GDP was swindled from the people in one of the poorest societies on earth. In the Philippines, there have been a number of Ponzi schemes during the 00s. There is nothing charming or clever about it, at all.
- rhl 16y agoGot it, and yes you're right. Ponzi schemes are devastating, and I see how my post could be misinterpreted. My bad, really. To clear things up regarding Facebook and the original link as well, I should explain that I have a really hard time believing what the original poster says about their ads. It might very well be that a lot of people fail to use them in a meaningful way because they haven't thought through what makes Facebook advertisement unique. I am certain that a sizeable fraction of the ad market can and will exploit them, and especially the infinitely granular targeting. My experience as a user is a bit mixed (lots of crap and/or scam, and thankfully less and less social games silliness as I've downvoted it), but I've seem true gems too (job ads targeting my university + degree + class, pretty neat! -- or a nice ad campaign by Hulu in its early days that targeted a show I had just listed as one of my interests). All in all, the future of FB is pretty bright in my book. Edit: Also, I should point out that I do not think at all that Facebook's business has anything fraudulent, improper or immoral. My original post (second from the top) was just trying to explain why someone who held the post's author's views on FB ads could believe the company was fundamentally instable and depended on perpetual growth for survival. I personally don't agree with this view, and think they'll be just fine -- and apparently I'm not alone: http://techcrunch.com/2010/01/20/facebook-valued-at-14-billion-on-secondmarket/ http://techcrunch.com/2010/01/20/facebook-valued-at-14-billi...