That's a piss poor analysis, to be frank. First, let's be honest: Facebook's problem is that it spends more on each user than it receives. In other words, its

That's a piss poor analysis, to be frank. First, let's be honest: Facebook's problem is that it spends more on each user than it receives. In other words, its current operating P&L sheet is negative. That cannot possibly be disputed, unless there is some magical fairy dust that generates ad-revenue many magnitudes greater than the norm. It's really irrelevant whether you believe that it costs Facebook $100M a month to operate, as Arrington seems to, or whether you figure FB can get by on a $1M a month shoestring budget. The fact remains that, regardless the numbers of users, per capita there is negative revenue generated. Arrington argues that increasing the number of users, while not solving the per capita loss, hastens the use of those capital reserves of $500M. On this point, he is exactly correct. It's basic math. The rest is just semantics. They need to solve the problem that revenue on a per user basis is a negative number. Not only do they need to make that number positive, they need to bring it into the black far enough that they can pay back their $500M in borrowed money, and give some sort of return. They need to do this before any of their current (or future) sources of funding collapse. This is a very tough problem to solve. (BTW, google was in this position once) My humble opinion is that they won't be able to do this anytime soon, and will most likely fail in the future. As much as they laugh at the ad-driven screenshot in the article, that's probably what FB will look like in due time. I'm just going with the odds. Outside of Google, I don't know of any company that's been able to come up with the last minute Hail Mary business plan.