5 ms·

As a consultant to the dot-com industry around the turn of the century, I traveled a lot. I took a lot of long cab rides from airports to downtowns. I talked

by fnid2 16y ago

As a consultant to the dot-com industry around the turn of the century, I traveled a lot. I took a lot of long cab rides from airports to downtowns. I talked to lots of cabbies. At some point, I knew the end was near. I knew the end was near when cabbies started asking me if it was a good idea to invest in some particular technology stock or another. Why are cabbies investing in Juniper Networks? Recently, I started another side business. One of my cousins who knows almost nothing about technology came to me and said, "Let me tell you something. I know how you can get your business started and I want to tell you about it." At this point, I was already skeptical, but she continued... "There's this thing on the internet called Facebook and millions of people use it and you can make millions of dollars there..." Oh no, I thought. But I knew the end was near for facebook. I've known for quite some time. Years in fact. I can't explain to them why I don't join facebook anymore than I could explain to those cabbies why they shouldn't put their money in to Juniper Networks or pets.com. Decisions like that can't be rationalized to those who see a bright future in their bets. But history tells us a lot and history moves very fast on the internet. Facebook is not sticky. Share prices are not sticky. Users can leave and investors can sell -- and they do. And they will. Facebook will fall far and it could, and I suspect is falling fast.

jasonlbaptiste 16y ago
Facebook is not sticky? hundreds of millions of people logging in every day and consuming the site for a high number of pageviews redefines sticky.
- jacquesm 16y ago
  I think whether it is sticky or not is not the right item to focus on (though it obviously is). The question of whether or not they have serious user churn is the interesting one.
  - fnid2 16y ago
    I don't believe it is and here's why. It's easy to link to your facebook profile. If you create an orkut profile, you can add a link to your facebook profile there and simply stop using facebook. Eventually, it'll get too costly to maintain the infrastructure to support facebook or the customers -- that is, the advertisers -- will think another ad network is hotter and people will forget about facebook. You could say, "But all my messages are in there. All my photos and my farm..." But I'm a techie and I have had computer hard drives fail and take my life with them. Within a week, I forgot all about it. Sure, I wish I had that awesome paper I wrote for some class or another or the code for some program I wrote in high school that drew pretty pictures with mathematical formulas, but I'm okay with out it and life goes on. And life will go on without facebook. Life goes on without myspace and linked in and friendster and...
m0th87 16y ago
My technically inept family members have been using Google for years. But I don't see their shares tumbling.
- jacquesm 16y ago
  I'm sorry, I don't see your point. Could you elaborate?
  - deleted 16y ago
    [deleted]
  - m0th87 16y ago
    I think it's a false dichotomy to compare the tech bubble with facebook. The former was an economic phenomenon that was dependent on the continued supply of new money from increasingly clueless investors (essentially a pyramid scheme, like all bubbles). The latter is a business with a ton of users and a disturbing amount of information on those users. They have several options for further monetization that don't necessitate unsustainable growth. I do hope facebook fails because of its stance on privacy, among other issues. But I don't think its situation is at all comparable to that of the tech bubble.
  - deleted 16y ago
    [deleted]
- ananthrk 16y ago
  I don't think he is referring to facebook aboption as an indicator here, rather the fact that someone clueless said that there are so many people using it and millions can be made
kristiandupont 16y ago
You've known for years that the end is near for Facebook and yet facebook has been and is growing insanely. I am tempted to repeat jacquesm's comment about all os us dying above..
- fnid2 16y ago
  No, now... You're putting words into my mouth. I have known for years that people would complain about facebook's privacy violations and their pressure to make money would cause a user revolt. I've also said they will change their privacy policies to the worst interest of their users. Don't discount the validity of that prediction simply because I did not put a time stamp on it. Many people have said, and probably will say soon, that facebook will always be around and always be part of our lives and as integral to it as television. Those predictions are bad predictions, yet people argue them. I did put some date based predictions in another comment above, what is your prediction?
  - kristiandupont 16y ago
    I have not seen anyone predict that Facebook will last forever. I personally wouldn't say that about any company. I myself predicted that apps would be the demise of fb. I received so many invites that I couldn't keep up - and it was accelerating. But they solved that problem by taking apps off of peoples primary pages. App developers complained and some probably missed showing what kind of ninja they were, but looking at it now, it looks like they made the right decision. I wouldn't be surprised if they manage to fix current problems as well.
patrickgzill 16y ago
It will fall, no doubt about that, however you are early on the curve and thus are underestimating the amount of time it will take to first hit its apogee and then decline.
julio_the_squid 16y ago
That's funny, I often think of a similar maxim in the book "Groucho and Me" by Groucho Marx. Essentially, he said that in 1928-29, he knew it was time to get out of a certain stock once his taxi driver started talking about it. It's a great book, you can find most of the text here : http://books.google.com/books?id=tFsnGr2SQJ0C&printsec=frontcover http://books.google.com/books?id=tFsnGr2SQJ0C&printsec=f... though I can't find the section about the cab driver. The whole part about the 1929 stock crash is great.
philk 16y ago
Recently, I started another side business. One of my cousins who knows almost nothing about technology came to me and said, "Let me tell you something. I know how you can get your business started and I want to tell you about it." At this point, I was already skeptical, but she continued... "There's this thing on the internet called Facebook and millions of people use it and you can make millions of dollars there..." Oh no, I thought. Another negative indicator for FB: I've also had some of my more tech-savvy friends tell me "I don't really use Facebook much anymore, I've switched over to Twitter". I'd suggest that "losing early adopters" might be an even better indicator of decay than having random laypersons tell you about a company.
mjfern 16y ago
I don't think this analogy works, given the significant differences between investing and product adoption. Just because a product has become mainstream doesn't indicate that the "end is near." In fact, I would argue the contrary, particular in this case. There are significant network effects in social networking. As the number of Facebook users increases, the value of Facebook to existing users (those already on the network) increases. Now, not only can I use Facebook to communicate with my college and grad-school friends, but I can use Facebook to stay in touch with my extended family, more distant friends, acquaintances, etc. If I want to maintain these relationships, I'm forced to either stick with Facebook, or rebuild my social network elsewhere. If I wanted to rebuild my network elsewhere, I would have to convince most of my social network to defect to the new service, otherwise the new service is of little value. Facebook's recent moves around privacy (and changes in functionality) are clearly unnerving its customers; however, this alone won't cause the collapse of the service.
- fnid2 16y ago
  I think it's bubble-nomics. People sign up for services for the same irrational reasons they buy stocks -- they perceive a future value.

by fnid2 16y ago

jasonlbaptiste 16y ago

Facebook is not sticky? hundreds of millions of people logging in every day and consuming the site for a high number of pageviews redefines sticky.

jacquesm 16y ago
I think whether it is sticky or not is not the right item to focus on (though it obviously is). The question of whether or not they have serious user churn is the interesting one.
- fnid2 16y ago
  I don't believe it is and here's why. It's easy to link to your facebook profile. If you create an orkut profile, you can add a link to your facebook profile there and simply stop using facebook. Eventually, it'll get too costly to maintain the infrastructure to support facebook or the customers -- that is, the advertisers -- will think another ad network is hotter and people will forget about facebook. You could say, "But all my messages are in there. All my photos and my farm..." But I'm a techie and I have had computer hard drives fail and take my life with them. Within a week, I forgot all about it. Sure, I wish I had that awesome paper I wrote for some class or another or the code for some program I wrote in high school that drew pretty pictures with mathematical formulas, but I'm okay with out it and life goes on. And life will go on without facebook. Life goes on without myspace and linked in and friendster and...

m0th87 16y ago

My technically inept family members have been using Google for years. But I don't see their shares tumbling.

jacquesm 16y ago
I'm sorry, I don't see your point. Could you elaborate?
- deleted 16y ago
  [deleted]
- m0th87 16y ago
  I think it's a false dichotomy to compare the tech bubble with facebook. The former was an economic phenomenon that was dependent on the continued supply of new money from increasingly clueless investors (essentially a pyramid scheme, like all bubbles). The latter is a business with a ton of users and a disturbing amount of information on those users. They have several options for further monetization that don't necessitate unsustainable growth. I do hope facebook fails because of its stance on privacy, among other issues. But I don't think its situation is at all comparable to that of the tech bubble.
- deleted 16y ago
  [deleted]
ananthrk 16y ago
I don't think he is referring to facebook aboption as an indicator here, rather the fact that someone clueless said that there are so many people using it and millions can be made

kristiandupont 16y ago

You've known for years that the end is near for Facebook and yet facebook has been and is growing insanely. I am tempted to repeat jacquesm's comment about all os us dying above..

fnid2 16y ago
No, now... You're putting words into my mouth. I have known for years that people would complain about facebook's privacy violations and their pressure to make money would cause a user revolt. I've also said they will change their privacy policies to the worst interest of their users. Don't discount the validity of that prediction simply because I did not put a time stamp on it. Many people have said, and probably will say soon, that facebook will always be around and always be part of our lives and as integral to it as television. Those predictions are bad predictions, yet people argue them. I did put some date based predictions in another comment above, what is your prediction?
- kristiandupont 16y ago
  I have not seen anyone predict that Facebook will last forever. I personally wouldn't say that about any company. I myself predicted that apps would be the demise of fb. I received so many invites that I couldn't keep up - and it was accelerating. But they solved that problem by taking apps off of peoples primary pages. App developers complained and some probably missed showing what kind of ninja they were, but looking at it now, it looks like they made the right decision. I wouldn't be surprised if they manage to fix current problems as well.

patrickgzill 16y ago

It will fall, no doubt about that, however you are early on the curve and thus are underestimating the amount of time it will take to first hit its apogee and then decline.

julio_the_squid 16y ago

That's funny, I often think of a similar maxim in the book "Groucho and Me" by Groucho Marx. Essentially, he said that in 1928-29, he knew it was time to get out of a certain stock once his taxi driver started talking about it. It's a great book, you can find most of the text here : http://books.google.com/books?id=tFsnGr2SQJ0C&printsec=frontcover http://books.google.com/books?id=tFsnGr2SQJ0C&printsec=f... though I can't find the section about the cab driver. The whole part about the 1929 stock crash is great.

philk 16y ago

Recently, I started another side business. One of my cousins who knows almost nothing about technology came to me and said, "Let me tell you something. I know how you can get your business started and I want to tell you about it." At this point, I was already skeptical, but she continued... "There's this thing on the internet called Facebook and millions of people use it and you can make millions of dollars there..." Oh no, I thought. Another negative indicator for FB: I've also had some of my more tech-savvy friends tell me "I don't really use Facebook much anymore, I've switched over to Twitter". I'd suggest that "losing early adopters" might be an even better indicator of decay than having random laypersons tell you about a company.

mjfern 16y ago

I don't think this analogy works, given the significant differences between investing and product adoption. Just because a product has become mainstream doesn't indicate that the "end is near." In fact, I would argue the contrary, particular in this case. There are significant network effects in social networking. As the number of Facebook users increases, the value of Facebook to existing users (those already on the network) increases. Now, not only can I use Facebook to communicate with my college and grad-school friends, but I can use Facebook to stay in touch with my extended family, more distant friends, acquaintances, etc. If I want to maintain these relationships, I'm forced to either stick with Facebook, or rebuild my social network elsewhere. If I wanted to rebuild my network elsewhere, I would have to convince most of my social network to defect to the new service, otherwise the new service is of little value. Facebook's recent moves around privacy (and changes in functionality) are clearly unnerving its customers; however, this alone won't cause the collapse of the service.

fnid2 16y ago
I think it's bubble-nomics. People sign up for services for the same irrational reasons they buy stocks -- they perceive a future value.