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Losing your marbles might look a lot like what happens when you're desperately looking for something to reverse a decline. There's only so many things that can

Losing your marbles might look a lot like what happens when you're desperately looking for something to reverse a decline. There's only so many things that can sustain an FB size valuation, and most of those things have an existing 800 pound gorilla sitting on them. So then you're left with speculative bets that could maybe balloon one day, and you have to twist yourself into a pretzel to believe in the thesis for one of them.

rich_sasha 5y ago
> Losing your marbles might look a lot like what happens when you're desperately looking for something to reverse a decline. Somehow it feels like Facebook is a Ponzi scheme, except with users not money. Valuation always seems to be based on user growth. It’s amazing to me how quickly the sense of desperation kicks in once user count flatlines.
- jon-wood 5y ago
  I think for a lot of the golden geese we're entering a period where entropy is going to force a change to how they're valued, simply because infinite growth is impossible. At some point (and I think we're there or close) you run out of people who both want and don't have a Facebook account, or a Netflix subscription, or whatever else it is you're shilling. Similarly there was a dip in Amazon's share prices after their latest earnings call after 2021 income only increased by two billion dollars. I get that these companies all started as scrappy startups, but they're now the establishment, and maybe they need to stop chasing infinite share value growth and start talking about paying reasonable dividends to retain value.
  - usrusr 5y ago
    Growth expectations are a seemingly inevitable side effect of the stock exchange: imagine there was a perfectly highly profitable and perfectly stable (in both directions) company. To people sure of that stability, a "correct" share price would be defined as a function of central bank interest rate. Buy when below, sell when higher. But if that perfect stability existed in reality, people would not know. Even if the average expectation was spot on perfect stability, it would be a bell curve distribution with some being more optimistic and others less. Share transactions only go one direction, pessimists selling to optimists. You end up with an all-optimist ownership after pessimists and realists are bought out.
    - zozbot234 5y ago
      There is a corrective mechanism to this dynamic and it's called the takeover bid. As soon as the "optimists" fail in their growth goals (and they will fail at some point, pretty much by definition), their valuation drops and the pessimists who had better foresight can take back control.
      - usrusr 5y ago
        But before that happens, any amount of "grow or die trying" can take place: as long as inertia keeps the lights on, team "reinvent ourselves!" enthusiastically digs an ever deeper hole. Occasionally those do strike gold I think, but I can't really think of an example right now. Some might say Nadella Microsoft, or the iPod company, but I'd say that the former wasn't quite down enough to qualify, and iPod-age Apple wasn't a growth bet at all: everything they did at the time would have been considered a success if it only stabilized on the level reached by the CRT iMacs.
  - notahacker 5y ago
    Tbf, I think what he wants to do is basically the Amazon/AWS and Google/Waymo pivot where they basically use their massive piles of cash and engineering talent pipeline to try to capture the Next Big Market. And with a PE ratio based on growth that they'll struggle to achieve that roll of the dice might even be the best (or least worst) option. Problem is they're just so unfocused and goofy about it. To the extent that VR immersive experiences become big (which is likely not as big as Zuck thinks), it's more likely to be dominated by a company with a culture based around immersive worldbuilding and storytelling, not a company culture based around advertiser metadata and surfacing stuff people click on. And rebranding itself as a metaverse whilst all it has to show the average user is a website which has been around in essentially the same format for 15 years underlines that.
Sebb767 5y ago
> Losing your marbles might look a lot like what happens when you're desperately looking for something to reverse a decline. Facebook still has an user count who's market limit approaches the human population, has lost users for the first time just last month and is still the largest social network, despite being said dead for 5+ years now. Facebook-the-company (Meta, I guess) also still has Instagram, which does not look like it's loosing out against TikTok, and WhatsApp+Facebook Messenger, which together have an enormous market share in the messenger market. I don't think there's really a need for panic, yet.
- pdimitar 5y ago
  Then how do you explain their recent behaviour?
- long_time_gone 5y ago
  > despite being said dead for 5+ years now Maybe those people were right all along. The problem is that their valuation is based on continued growth, that can no longer be assumed based on last quarter.
- datavirtue 5y ago
  Instagram users are, or will be, parallel TikTok users. If you are up tight about adding users this is a panic situation. In real terms it's not a concern to anyone but Facebook and TikTok. Users just shrug and use what interests or benefits them. Facebooks business model is quicksand because if they leverage users to enter another market welcome to antitrust. They could do payments and a million other things but social it is because that's what created the beast. They dominated a market that has no costs for users to walk away from. Customer value proposition is/was thin.
deleted 5y ago
[deleted]
specialist 5y ago
Yup. Yes and: the audience for "metaverse", crypto ("libra" IIRC), etc are developers. For both retention and recruiting. IMHO. Tangent: I'm reminded of when tabloids paid premium salaries. For pretty much all the same reasons. Having National Inquirer on your CV severely limited future prospects, the work sucked, the world and your peers hated you, etc.

rich_sasha 5y ago

> Losing your marbles might look a lot like what happens when you're desperately looking for something to reverse a decline. Somehow it feels like Facebook is a Ponzi scheme, except with users not money. Valuation always seems to be based on user growth. It’s amazing to me how quickly the sense of desperation kicks in once user count flatlines.

jon-wood 5y ago
I think for a lot of the golden geese we're entering a period where entropy is going to force a change to how they're valued, simply because infinite growth is impossible. At some point (and I think we're there or close) you run out of people who both want and don't have a Facebook account, or a Netflix subscription, or whatever else it is you're shilling. Similarly there was a dip in Amazon's share prices after their latest earnings call after 2021 income only increased by two billion dollars. I get that these companies all started as scrappy startups, but they're now the establishment, and maybe they need to stop chasing infinite share value growth and start talking about paying reasonable dividends to retain value.
- usrusr 5y ago
  Growth expectations are a seemingly inevitable side effect of the stock exchange: imagine there was a perfectly highly profitable and perfectly stable (in both directions) company. To people sure of that stability, a "correct" share price would be defined as a function of central bank interest rate. Buy when below, sell when higher. But if that perfect stability existed in reality, people would not know. Even if the average expectation was spot on perfect stability, it would be a bell curve distribution with some being more optimistic and others less. Share transactions only go one direction, pessimists selling to optimists. You end up with an all-optimist ownership after pessimists and realists are bought out.
  - zozbot234 5y ago
    There is a corrective mechanism to this dynamic and it's called the takeover bid. As soon as the "optimists" fail in their growth goals (and they will fail at some point, pretty much by definition), their valuation drops and the pessimists who had better foresight can take back control.
    - usrusr 5y ago
      But before that happens, any amount of "grow or die trying" can take place: as long as inertia keeps the lights on, team "reinvent ourselves!" enthusiastically digs an ever deeper hole. Occasionally those do strike gold I think, but I can't really think of an example right now. Some might say Nadella Microsoft, or the iPod company, but I'd say that the former wasn't quite down enough to qualify, and iPod-age Apple wasn't a growth bet at all: everything they did at the time would have been considered a success if it only stabilized on the level reached by the CRT iMacs.
- notahacker 5y ago
  Tbf, I think what he wants to do is basically the Amazon/AWS and Google/Waymo pivot where they basically use their massive piles of cash and engineering talent pipeline to try to capture the Next Big Market. And with a PE ratio based on growth that they'll struggle to achieve that roll of the dice might even be the best (or least worst) option. Problem is they're just so unfocused and goofy about it. To the extent that VR immersive experiences become big (which is likely not as big as Zuck thinks), it's more likely to be dominated by a company with a culture based around immersive worldbuilding and storytelling, not a company culture based around advertiser metadata and surfacing stuff people click on. And rebranding itself as a metaverse whilst all it has to show the average user is a website which has been around in essentially the same format for 15 years underlines that.

Sebb767 5y ago

> Losing your marbles might look a lot like what happens when you're desperately looking for something to reverse a decline. Facebook still has an user count who's market limit approaches the human population, has lost users for the first time just last month and is still the largest social network, despite being said dead for 5+ years now. Facebook-the-company (Meta, I guess) also still has Instagram, which does not look like it's loosing out against TikTok, and WhatsApp+Facebook Messenger, which together have an enormous market share in the messenger market. I don't think there's really a need for panic, yet.

pdimitar 5y ago
Then how do you explain their recent behaviour?
long_time_gone 5y ago
> despite being said dead for 5+ years now Maybe those people were right all along. The problem is that their valuation is based on continued growth, that can no longer be assumed based on last quarter.
datavirtue 5y ago
Instagram users are, or will be, parallel TikTok users. If you are up tight about adding users this is a panic situation. In real terms it's not a concern to anyone but Facebook and TikTok. Users just shrug and use what interests or benefits them. Facebooks business model is quicksand because if they leverage users to enter another market welcome to antitrust. They could do payments and a million other things but social it is because that's what created the beast. They dominated a market that has no costs for users to walk away from. Customer value proposition is/was thin.

deleted 5y ago

[deleted]

specialist 5y ago

Yup. Yes and: the audience for "metaverse", crypto ("libra" IIRC), etc are developers. For both retention and recruiting. IMHO. Tangent: I'm reminded of when tabloids paid premium salaries. For pretty much all the same reasons. Having National Inquirer on your CV severely limited future prospects, the work sucked, the world and your peers hated you, etc.