4 ms·

Seeing that chart of the 5 largest companies in 2010 vs 2020 blew my mind a bit. The idea that Facebook is bigger than Exxon was back in 2010 (even with the ra

Seeing that chart of the 5 largest companies in 2010 vs 2020 blew my mind a bit. The idea that Facebook is bigger than Exxon was back in 2010 (even with the rate of inflation), when electric cars were still a wet dream, crazy. Even more, the amount of "usefulness" as well. I'm not arguing that we should keep oil as a fuel source, but you have to admit, right now, if a big player (like Exxon) in the field just vanished, it would have a painful impact. At least fuel supply would be a bit crazy for a while until the competitors can ramp up to meet demand depending on reserve supplies being used. If Facebook just suddenly disappeared... meh. I mean, second and third order consequences... meh. Small business ads would need a new place, but that's not crazy bad. More inconvenience. Advertising companies would need a new supplier, but no really likes them anyways. Well, a lot of job openings, that's a problem. But I'm thinking beyond that, because no matter what the industry, a large player just folding suddenly causes a significant job shortage. That's a common denominator. But a hampering access to fuel supply vs. a social media wall for the general publish... one is more important than the other. At the very least, the other Faang companies have... useful significance? Edit: I'm aware of the limits to market cap. There's no perfect way of figuring out the size of a company. My point, there's a large level of monetary value in these companies and a difference in how they are significant in daily livelihood for the everyday person. It's just interesting how large Facebook is by a metric but how incredibly useless it is compared to another company using the same metric. It's the same how theres an interesting difference between the market cap of Tesla and Ford. Tesla is larger but they make a fraction of the amount of sellable goods. It's one thing to know this, but to see significant numbers, that makes it more interesting.

mathattack 6y ago
It’s market cap rather than revenue or employees. Exxon’s raw material (oil) was expensive, had high price volatility, didn’t scale, and required (relatively) more people. This capped gross margins, and made growth expensive. Facebook’s raw material (bits/electricity) is much cheaper and has Moore’s law at their back. It scales well, as does their (relatively) lower headcount. They get valued much higher relative to revenue or employees. This makes the market cap a weaker proxy for usefulness.
ChrisLomont 6y ago
Market cap is a weird metric to measure company size or influence. For example, by revenue, it's Walmart with 500B, Amazon at 280B, Exxon 264B, Apple 260B, CVS 256B, ... Alphabet 161B at 11th, Microsoft at 21st with 125B, ... By employees it's Walmart at 2.2M, Amazon at 800K, ...., Microsoft in 21st place with 144K, .... By profits, it's Berkshire Hathaway at 81B (massive growth), Apple at 55B (shrinking), MS 39B, Chase 36B, Alphabet 34B, BoA, Intel, Wells Fargo, Citigroup, .... FB 11th at 18B, .... Amazon 22nd at 11B.... https://en.wikipedia.org/wiki/List_of_largest_companies_in_the_United_States_by_revenue https://en.wikipedia.org/wiki/List_of_largest_companies_in_t... https://fortune.com/fortune500/2020/search/?f500_profits=desc https://fortune.com/fortune500/2020/search/?f500_profits=des...
- quicklime 6y ago
  I would argue that revenue is a weird metric to measure company size too. Doubly so when comparing companies like Exxon and Facebook, which have very different operating costs.
  - dmwallin 6y ago
    Revenue tells you roughly how much value you are creating for other actors in the economy.
    - quicklime 6y ago
      It does that in a one-sided way though. Do car dealers create value for car makers, or the other way around? The way revenue is measured seems to imply that retailers are the ones who create value for manufacturers, but not vice versa. In that sense, revenue is more of a measure of “how long and costly is your supply chain, and how close are you to the customer facing side of it?”
      - ChrisLomont 6y ago
        >Do car dealers create value for car makers Both - read about consumer and producer surplus in econ. > The way revenue is measured seems to imply .... Revenue estimates how much buyers were willing to pay for the product, but each buyer retains their surplus, so revenue undercounts the value to the buyers. But it's a decent representation of value added.
delish 6y ago
I did a google image search for 'facebook revenue', 'google revenue', 'apple revenue' etc. I saw the same thing for each: exponential growth, sustained for years. Google in particular surprised me because I "feel like" they've always been the same amount of huge: $29B revenue in 2010, $160B revenue in 2019. Exponential, many-year growth is enough to explain those market caps.
lotsofpulp 6y ago
> My point, there's a large level of monetary value in these companies and a difference in how they are significant in daily livelihood for the everyday person. It's just interesting how large Facebook is by a metric but how incredibly useless it is compared to another company using the same metric. It's the same how theres an interesting difference between the market cap of Tesla and Ford. Tesla is larger but they make a fraction of the amount of sellable goods. They are significant in people’s daily lives. Their future expected profits are enormous because they can do the work of so many with so few, hence their super high profit per employee. Software lets you infinitely scale, so it’s almost impossible to compete with the market leader. Email, calendars, smartphones, online retail, video streaming, etc have reduced demand for the labor for the vast majority of people, which has certainly impacted their livelihood. Camera companies, tv companies, advertisers, travel agents, secretaries, movie rental, retail, map makers, education, journalism and news, book publishing, and I could keep going on about businesses that have been negatively impacted because they can’t possibly compete with a FAANG. Software can also obviate people much quicker than in decades past, where people might have had time to retrain as new technology was deployed.
toto444 6y ago
It is more complicated than it seems. Many businesses depend so much on Facebook Advertising that they would have to shut down. I remember an article on the front page on HN talking about some businesses being idle when Facebook was down. Personally it would definitely improve my life if Facebook went down and people around me stopped scrolling their Instagram.

mathattack 6y ago

It’s market cap rather than revenue or employees. Exxon’s raw material (oil) was expensive, had high price volatility, didn’t scale, and required (relatively) more people. This capped gross margins, and made growth expensive. Facebook’s raw material (bits/electricity) is much cheaper and has Moore’s law at their back. It scales well, as does their (relatively) lower headcount. They get valued much higher relative to revenue or employees. This makes the market cap a weaker proxy for usefulness.

ChrisLomont 6y ago

Market cap is a weird metric to measure company size or influence. For example, by revenue, it's Walmart with 500B, Amazon at 280B, Exxon 264B, Apple 260B, CVS 256B, ... Alphabet 161B at 11th, Microsoft at 21st with 125B, ... By employees it's Walmart at 2.2M, Amazon at 800K, ...., Microsoft in 21st place with 144K, .... By profits, it's Berkshire Hathaway at 81B (massive growth), Apple at 55B (shrinking), MS 39B, Chase 36B, Alphabet 34B, BoA, Intel, Wells Fargo, Citigroup, .... FB 11th at 18B, .... Amazon 22nd at 11B.... https://en.wikipedia.org/wiki/List_of_largest_companies_in_the_United_States_by_revenue https://en.wikipedia.org/wiki/List_of_largest_companies_in_t... https://fortune.com/fortune500/2020/search/?f500_profits=desc https://fortune.com/fortune500/2020/search/?f500_profits=des...

quicklime 6y ago
I would argue that revenue is a weird metric to measure company size too. Doubly so when comparing companies like Exxon and Facebook, which have very different operating costs.
- dmwallin 6y ago
  Revenue tells you roughly how much value you are creating for other actors in the economy.
  - quicklime 6y ago
    It does that in a one-sided way though. Do car dealers create value for car makers, or the other way around? The way revenue is measured seems to imply that retailers are the ones who create value for manufacturers, but not vice versa. In that sense, revenue is more of a measure of “how long and costly is your supply chain, and how close are you to the customer facing side of it?”
    - ChrisLomont 6y ago
      >Do car dealers create value for car makers Both - read about consumer and producer surplus in econ. > The way revenue is measured seems to imply .... Revenue estimates how much buyers were willing to pay for the product, but each buyer retains their surplus, so revenue undercounts the value to the buyers. But it's a decent representation of value added.

delish 6y ago

I did a google image search for 'facebook revenue', 'google revenue', 'apple revenue' etc. I saw the same thing for each: exponential growth, sustained for years. Google in particular surprised me because I "feel like" they've always been the same amount of huge: $29B revenue in 2010, $160B revenue in 2019. Exponential, many-year growth is enough to explain those market caps.

lotsofpulp 6y ago

> My point, there's a large level of monetary value in these companies and a difference in how they are significant in daily livelihood for the everyday person. It's just interesting how large Facebook is by a metric but how incredibly useless it is compared to another company using the same metric. It's the same how theres an interesting difference between the market cap of Tesla and Ford. Tesla is larger but they make a fraction of the amount of sellable goods. They are significant in people’s daily lives. Their future expected profits are enormous because they can do the work of so many with so few, hence their super high profit per employee. Software lets you infinitely scale, so it’s almost impossible to compete with the market leader. Email, calendars, smartphones, online retail, video streaming, etc have reduced demand for the labor for the vast majority of people, which has certainly impacted their livelihood. Camera companies, tv companies, advertisers, travel agents, secretaries, movie rental, retail, map makers, education, journalism and news, book publishing, and I could keep going on about businesses that have been negatively impacted because they can’t possibly compete with a FAANG. Software can also obviate people much quicker than in decades past, where people might have had time to retrain as new technology was deployed.

toto444 6y ago

It is more complicated than it seems. Many businesses depend so much on Facebook Advertising that they would have to shut down. I remember an article on the front page on HN talking about some businesses being idle when Facebook was down. Personally it would definitely improve my life if Facebook went down and people around me stopped scrolling their Instagram.