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Is this some sort of extreme cognitive dissonance? Why can't people just accept that Facebook is a fad? It does not mean the world is going to end. It's a fa

by cfront 14y ago

Is this some sort of extreme cognitive dissonance? Why can't people just accept that Facebook is a fad? It does not mean the world is going to end. It's a fad, not a solid company. We went through this before 12 years ago. Eventually the market figures it out. Move on. That's what Thiel is doing. More fads are around the corner. Investors will keep falling for the same old tricks. Gates and Ellison are very poor comparisons. Their software was not web-based (=ad-based), their main market was the enterprise and they went to great lengths to create long-term customer lock-in. They began in a different era, and are nothing like Facebook, which is a photo-sharing website that relies on display ads and game-playing "whales" to make money.

mikeryan 14y ago
It's fad, not a solid company. I'm pretty bearish on Facebook's stock, but there's nothing here to indicate its just a fad. This is a company with over a billion dollars in revenues per quarter with a pretty consistent 15-25% profit margin. Is it the next Google? Its looking more and more like its not, but that doesn't mean its going to be the next Yahoo! either.
- jfb 14y ago
  Facebook would be unbelievably lucky to be the next Yahoo! -- sure, they're dead meat now, but that just means its easy to forget what a success Y! used to be.
  - bps4484 14y ago
    Facebook would have to really screw up at this point in order to end up the next Yahoo! They made 1 billion in 2011, while yahoo only made over 1 billion 3 times (max was 1.8 billion in '05, my sources are the yahoo annual reports) since 96. The question isn't whether Facebook can be as big as Yahoo!, that is basically assured. The question is whether they can be the next google (who went from making 400 million when they ipo'd to 9.7 billion today).
    - jfb 14y ago
      Absolute numbers are not a meaningful metric -- much better to compare e.g. each sites percentage of overall traffic, or dollar of revenue per user. There's so much more money being flushed down the internet toilet these days that I would be shocked if Facebook were anywhere near Yahoo!'s numbers from their peak.
      - bps4484 14y ago
        I guess we haven't agreed upon what metric we are even trying to compare (not surprising then we have a disagreement). I was making a comment on facebook vs yahoo as a profitable business, so I looked at profit. Facebook may never get to yahoo in terms of $/user (I don't know what yahoo's numbers are like now, or at their peak) but what exactly are you trying to compare such that you think $/user is a worthwhile stat to look at? You can make the argument that it's a different era now, so looking at total profit isn't an apples to apples comparison, but a counterargument could be that the internet is a much more competitive landscape than it was in, say, 1996 so that it's actually more impressive what facebook has done in this era.
qq66 14y ago
Not sure how I can explain it any further than I already did, but diversification is smart regardless of what company you've founded. Even if you've created a company which cures cancer, educates the world's children, and solves global poverty at a 40% profit margin, once you have 100% of your multi-billion dollar fortune tied up in it, it's time to diversify.
- cfront 14y ago
  Yes, diversification is smart. But you're trying to use this general idea to explain a specific decision that is clearly a matter of timing. You could claim that everytime an insider at any company sells the majority of his stock he is diversifying. But that's not really looking at what the real reason is. There is a reason that "now" is the "time to diversify". And it's not just because diverisification is generally smart investing. I guess Facebook represents something for a lot of HN commenters. When Facebook starts it's decline it signifies some larger problem. It was a tremendous success, some people made many millions from Facebook. So what's the problem if the fad dies down and it all goes south eventually?
  - 001sky 14y ago
    "So while the timing may look ugly, Thiel has been with Facebook since [2004] nearly the beginning of the company’s eight-year slog towards going public. It’s not anathema to cash out — especially at an 800x return." (quote from WSJ/All things D).
- tatsuke95 14y ago
  He dumped his shares at half the IPO price. Say what you will about diversification, it doesn't represent much faith in the future growth of the company. You don't "diversify away" from a good investment. So, if you believe that Thiel is a savvy investor, then it's hard to be bullish in Facebook.
  - cfront 14y ago
    And it's not slowly selling in over an extended period, a schedule of planned sales. It's the lion's share of his holdings, over 20 million shares, in one shot.
saraid216 14y ago
> Why can't people just accept that Facebook is a fad? I actually made the prediction that Facebook would be where MySpace is--forgotten and irrelevant by the mainstream--by 2006. I was wrong.
- cfront 14y ago
  Only as to the year. Give it time. They have a lot of money to spend so the decline will be slow and they will not go down without making lots of noise and buying out lots of potential successors. But the decline is beginning. Sooner or later Facebook believers have to accept this. I'm excited about the decline because it means the rise of something better. Continual improvement. When one door closes, another opens. But I recognise that many others do not share my optimism. Facebook represents something to them, I guess. I can't quite understand it. Facebook is one step along the path. It was a fad that drew a remarkable amount of attention and participation. The internet just keeps growing. We are in its infancy.
  - TillE 14y ago
    > The internet just keeps growing. We are in its infancy. Exactly. The internet 10-15 years from now will be unrecognizable, especially the social parts. Facebook (and Twitter, by the way) certainly won't be doing the innovating, and odds are they won't be able to keep up either. Personally, I thought FourSquare might be the next big thing, but they failed to do anything compelling with the basic idea of location-based social networking. I still think that something big will come along in that space eventually, though.
xpose2000 14y ago
Facebook a fad? Think of it this way... The social web is just as important as search on the web. The web will always have search engines, and it will always have social networks. Google took over where Excite and Altavista left off. Facebook took over where MySpace and Friendster left off. Google controls the majority of the social search market. Facebook controls the majority of the social network market. So you might be saying, that's nice, but Facebook can't monetize it's users! Have you ever looked at Google search results lately and noticed that nearly 1/2 the screen above the fold could be ad space? Don't believe me? Search for "iphone". Yet we all think nothing of it. We've accepted it as users of Google. Imagine if Facebook found a way to get it's users to ACCEPT ads. Start small, like Google and gradually increase it over time to what it is now. That doesn't sound far fetched does it?
- spaghetti 14y ago
  The "social web" is no where near as important as search. Imagine removing search from the net. Now imagine removing Facebook or other social networking sites. The difference is staggering.
  - aeturnum 14y ago
    I think you should consider your own example more closely. "Search" is not just Google, it would be all search engines (good luck finding that old email). Similarly, removing social would not just remove Facebook, it would also remove hacker news (certainly a social website) and all the other forums you frequent. Social websites, widely, are websites that allow users to connect to each other. Even 4chan is social. Without search, we couldn't find anything on the web, but without social we couldn't talk to anyone. I don't know which is worse, but they would both be enormous losses.
    - chii 14y ago
      I think you are calling more things social than the word pre-supposes. If you call 4chan "social", then you have the wrong definition - 4chan is a forum, a place people discuss things. Facebook, or "the social web" as its coined these days, is about the friend graph (ditto with twitter - its about who you follow, and who follows you), not about discussions. Imho, the web will function perfectly well without facebook - each of the features of facebook such as photosharing, event organizing etc, all have ready replacements. Sure, the friend graph helps you connect easier/faster, but taking it away isn't as detrimental as taking away search.
PakG1 14y ago
Eventually the market figures it out. Move on. That's what Thiel is doing. Thiel is an investor. Most investors eventually move on. He invested in 2004. 8 years, and he netted a billion dollar cash profit so far on a $500,000 investment. He's not in it for long-term company building like Zuckerberg is. He's not trying to be Warren Buffett. He shouldn't be panned for this. And he still owns millions of shares. So it's not like he's completely out.

by cfront 14y ago

mikeryan 14y ago

It's fad, not a solid company. I'm pretty bearish on Facebook's stock, but there's nothing here to indicate its just a fad. This is a company with over a billion dollars in revenues per quarter with a pretty consistent 15-25% profit margin. Is it the next Google? Its looking more and more like its not, but that doesn't mean its going to be the next Yahoo! either.

jfb 14y ago
Facebook would be unbelievably lucky to be the next Yahoo! -- sure, they're dead meat now, but that just means its easy to forget what a success Y! used to be.
- bps4484 14y ago
  Facebook would have to really screw up at this point in order to end up the next Yahoo! They made 1 billion in 2011, while yahoo only made over 1 billion 3 times (max was 1.8 billion in '05, my sources are the yahoo annual reports) since 96. The question isn't whether Facebook can be as big as Yahoo!, that is basically assured. The question is whether they can be the next google (who went from making 400 million when they ipo'd to 9.7 billion today).
  - jfb 14y ago
    Absolute numbers are not a meaningful metric -- much better to compare e.g. each sites percentage of overall traffic, or dollar of revenue per user. There's so much more money being flushed down the internet toilet these days that I would be shocked if Facebook were anywhere near Yahoo!'s numbers from their peak.
    - bps4484 14y ago
      I guess we haven't agreed upon what metric we are even trying to compare (not surprising then we have a disagreement). I was making a comment on facebook vs yahoo as a profitable business, so I looked at profit. Facebook may never get to yahoo in terms of $/user (I don't know what yahoo's numbers are like now, or at their peak) but what exactly are you trying to compare such that you think $/user is a worthwhile stat to look at? You can make the argument that it's a different era now, so looking at total profit isn't an apples to apples comparison, but a counterargument could be that the internet is a much more competitive landscape than it was in, say, 1996 so that it's actually more impressive what facebook has done in this era.

qq66 14y ago

Not sure how I can explain it any further than I already did, but diversification is smart regardless of what company you've founded. Even if you've created a company which cures cancer, educates the world's children, and solves global poverty at a 40% profit margin, once you have 100% of your multi-billion dollar fortune tied up in it, it's time to diversify.

cfront 14y ago
Yes, diversification is smart. But you're trying to use this general idea to explain a specific decision that is clearly a matter of timing. You could claim that everytime an insider at any company sells the majority of his stock he is diversifying. But that's not really looking at what the real reason is. There is a reason that "now" is the "time to diversify". And it's not just because diverisification is generally smart investing. I guess Facebook represents something for a lot of HN commenters. When Facebook starts it's decline it signifies some larger problem. It was a tremendous success, some people made many millions from Facebook. So what's the problem if the fad dies down and it all goes south eventually?
- 001sky 14y ago
  "So while the timing may look ugly, Thiel has been with Facebook since [2004] nearly the beginning of the company’s eight-year slog towards going public. It’s not anathema to cash out — especially at an 800x return." (quote from WSJ/All things D).
tatsuke95 14y ago
He dumped his shares at half the IPO price. Say what you will about diversification, it doesn't represent much faith in the future growth of the company. You don't "diversify away" from a good investment. So, if you believe that Thiel is a savvy investor, then it's hard to be bullish in Facebook.
- cfront 14y ago
  And it's not slowly selling in over an extended period, a schedule of planned sales. It's the lion's share of his holdings, over 20 million shares, in one shot.

saraid216 14y ago

> Why can't people just accept that Facebook is a fad? I actually made the prediction that Facebook would be where MySpace is--forgotten and irrelevant by the mainstream--by 2006. I was wrong.

cfront 14y ago
Only as to the year. Give it time. They have a lot of money to spend so the decline will be slow and they will not go down without making lots of noise and buying out lots of potential successors. But the decline is beginning. Sooner or later Facebook believers have to accept this. I'm excited about the decline because it means the rise of something better. Continual improvement. When one door closes, another opens. But I recognise that many others do not share my optimism. Facebook represents something to them, I guess. I can't quite understand it. Facebook is one step along the path. It was a fad that drew a remarkable amount of attention and participation. The internet just keeps growing. We are in its infancy.
- TillE 14y ago
  > The internet just keeps growing. We are in its infancy. Exactly. The internet 10-15 years from now will be unrecognizable, especially the social parts. Facebook (and Twitter, by the way) certainly won't be doing the innovating, and odds are they won't be able to keep up either. Personally, I thought FourSquare might be the next big thing, but they failed to do anything compelling with the basic idea of location-based social networking. I still think that something big will come along in that space eventually, though.

xpose2000 14y ago

Facebook a fad? Think of it this way... The social web is just as important as search on the web. The web will always have search engines, and it will always have social networks. Google took over where Excite and Altavista left off. Facebook took over where MySpace and Friendster left off. Google controls the majority of the social search market. Facebook controls the majority of the social network market. So you might be saying, that's nice, but Facebook can't monetize it's users! Have you ever looked at Google search results lately and noticed that nearly 1/2 the screen above the fold could be ad space? Don't believe me? Search for "iphone". Yet we all think nothing of it. We've accepted it as users of Google. Imagine if Facebook found a way to get it's users to ACCEPT ads. Start small, like Google and gradually increase it over time to what it is now. That doesn't sound far fetched does it?

spaghetti 14y ago
The "social web" is no where near as important as search. Imagine removing search from the net. Now imagine removing Facebook or other social networking sites. The difference is staggering.
- aeturnum 14y ago
  I think you should consider your own example more closely. "Search" is not just Google, it would be all search engines (good luck finding that old email). Similarly, removing social would not just remove Facebook, it would also remove hacker news (certainly a social website) and all the other forums you frequent. Social websites, widely, are websites that allow users to connect to each other. Even 4chan is social. Without search, we couldn't find anything on the web, but without social we couldn't talk to anyone. I don't know which is worse, but they would both be enormous losses.
  - chii 14y ago
    I think you are calling more things social than the word pre-supposes. If you call 4chan "social", then you have the wrong definition - 4chan is a forum, a place people discuss things. Facebook, or "the social web" as its coined these days, is about the friend graph (ditto with twitter - its about who you follow, and who follows you), not about discussions. Imho, the web will function perfectly well without facebook - each of the features of facebook such as photosharing, event organizing etc, all have ready replacements. Sure, the friend graph helps you connect easier/faster, but taking it away isn't as detrimental as taking away search.

PakG1 14y ago

Eventually the market figures it out. Move on. That's what Thiel is doing. Thiel is an investor. Most investors eventually move on. He invested in 2004. 8 years, and he netted a billion dollar cash profit so far on a $500,000 investment. He's not in it for long-term company building like Zuckerberg is. He's not trying to be Warren Buffett. He shouldn't be panned for this. And he still owns millions of shares. So it's not like he's completely out.