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There are four ways a business can grow: 1) Add more users 2) Sell more to each user 3) Retain a higher proportion of users 4) Reclaim churned users (a corollar

There are four ways a business can grow: 1) Add more users 2) Sell more to each user 3) Retain a higher proportion of users 4) Reclaim churned users (a corollary of #1) It seems like Meta, Oculus and such notwithstanding, had essentially focused exclusively on #1. Then they ran out of humans on earth. Folks rarely "churn" in the conventional sense (unless their government bans use!), so #3 became irrelevant. So now what?

alex_young 5y ago
It’s a bit strange to think about business success as purely a function of users isn’t it? Especially when those users are product themselves. Facebook, and all other advertisers, sell the attention of their users to third parties called customers. If this customer base is growing, and the amount of user attention is growing, it seems like there is plenty of greenfield to prospect to me.
- evancoop 5y ago
  That's the argument in Sarnoff's law: https://en.wikipedia.org/wiki/David_Sarnoff https://en.wikipedia.org/wiki/David_Sarnoff
irrational 5y ago
Don’t grow? Stay the same, maintain the status quo, be happy with what you achieved, get over the need for more more more, etc. The shareholders will get over their disappointment.
- Kalium 5y ago
  That's a great plan, provided you can consistently hit profit targets. Meta's had trouble with that one lately.
  - irrational 5y ago
    Well, there will be a period of adjustment as they find their equilibrium.
- MagnumOpus 5y ago
  That's of course perfectly fine, but the stock will re-rate to a P/E of 15 - as it has for Facebook - and long time average stock price growth shrinks from 15%+/yr to 5%/yr - which will suddenly halve the compensation of the staff, who suddenly realize that stock- or option-based comp can go down as well as up... (Of course you could then also draw the conclusion that a company in maintenance mode doesn't need 45,000 people earning half a million a pop, but can make do with paying half as much to half as many -- but that might be a bridge too far for a corp that is still on course to earn $60 billion EBITDA a year...)
stjohnswarts 5y ago
I agree I think they hit the top and will be wavering around but have a solid "clientele" but tech investors do not want to hear that from a growth stock.

alex_young 5y ago

It’s a bit strange to think about business success as purely a function of users isn’t it? Especially when those users are product themselves. Facebook, and all other advertisers, sell the attention of their users to third parties called customers. If this customer base is growing, and the amount of user attention is growing, it seems like there is plenty of greenfield to prospect to me.

evancoop 5y ago
That's the argument in Sarnoff's law: https://en.wikipedia.org/wiki/David_Sarnoff https://en.wikipedia.org/wiki/David_Sarnoff

irrational 5y ago

Don’t grow? Stay the same, maintain the status quo, be happy with what you achieved, get over the need for more more more, etc. The shareholders will get over their disappointment.

Kalium 5y ago
That's a great plan, provided you can consistently hit profit targets. Meta's had trouble with that one lately.
- irrational 5y ago
  Well, there will be a period of adjustment as they find their equilibrium.
MagnumOpus 5y ago
That's of course perfectly fine, but the stock will re-rate to a P/E of 15 - as it has for Facebook - and long time average stock price growth shrinks from 15%+/yr to 5%/yr - which will suddenly halve the compensation of the staff, who suddenly realize that stock- or option-based comp can go down as well as up... (Of course you could then also draw the conclusion that a company in maintenance mode doesn't need 45,000 people earning half a million a pop, but can make do with paying half as much to half as many -- but that might be a bridge too far for a corp that is still on course to earn $60 billion EBITDA a year...)

stjohnswarts 5y ago

I agree I think they hit the top and will be wavering around but have a solid "clientele" but tech investors do not want to hear that from a growth stock.