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>Facebook is a publicly traded company; they have to make decisions that benefit their stockholders or they will go bankrupt. This is a very short-sighted view

>Facebook is a publicly traded company; they have to make decisions that benefit their stockholders or they will go bankrupt. This is a very short-sighted view, common to many companies. The BEST way to satisfy the stockholders is to create a fantastic product that users love, long-term. Example: Amazon. Unless your primary interest is creating a short-term bubble and profiting before it pops, which seems to be the mentality of many investors and companies these days. I don't like that attitude. I'm not looking to get rich quick. I'm looking to do cool and interesting things. And if I get richer in the long term, all the better.

pdonis 13y ago
The BEST way to satisfy the stockholders is to create a fantastic product that users love, long-term. In other words, you agree with me that a publicly traded company must make decisions that benefit the stockholders. You just think that "benefit the stockholders" should be evaluated on a long-term basis, not a short-term basis. But there are two key points that you have not mentioned: (1) Creating a fantastic product that users love benefits the stockholders to the extent that users are a source of revenue. In Amazon's case, they are, directly; revenue comes from users coming to the site and buying stuff. (And from buying services like Amazon Prime.) In FB's case, users are, at best, an indirect revenue source: more users spending more time on FB means more ad revenue. That's a much weaker link between a good user experience and stockholder benefit. (2) How long-term the calculation of "stockholder benefit" should be depends on the stockholder's time horizon. If I'm investing in a company as a means of giving myself retirement income in 30 years, obviously I'm interested in the company's long-term health, not the next quarter's returns. But if I'm investing on a shorter time horizon, I'm going to want benefits to show up more quickly. Half a century ago, most stock ownership was by individuals, so the scenario of someone buying shares in, say, IBM and holding them until retirement was actually common enough to have a significant effect. But now most stock ownership is by mutual funds; my 30-year retirement income doesn't depend on how any single stock does for 30 years, only on how my mutual fund does over that time horizon. Mutual funds trade individual stocks all the time based on short-term performance, so to the companies, it looks like everyone's time horizon is a lot shorter, and they act accordingly. I'm not looking to get rich quick. I'm looking to do cool and interesting things. Just to be clear, I am not saying you are wrong at all in having this attitude. I am only commenting on the difference between what you want to do and what Facebook wants to do.
- mattkruse 13y ago
  If Facebook created something that was so awesome that users would be willing to pay for it, they wouldn't need to rely on ads. They could have a much bigger and more stable revenue stream from people who actually wanted their service and were willing to pay for it. I would buy into this model. Not everyone would, no. But I imagine enough would that it could change their focus. Maybe.
  - pdonis 13y ago
    Maybe. Exactly.
pdonis 13y ago
Unless your primary interest is creating a short-term bubble and profiting before it pops I don't think that's FB's primary interest, exactly: I think FB's primary interest is in capturing an overwhelming market share in social media during the window of opportunity when that market, worldwide, is not yet saturated. But that ends up making them do many of the same things they would do if their primary interest were creating a short-term bubble and then profiting before it pops.

pdonis 13y ago

The BEST way to satisfy the stockholders is to create a fantastic product that users love, long-term. In other words, you agree with me that a publicly traded company must make decisions that benefit the stockholders. You just think that "benefit the stockholders" should be evaluated on a long-term basis, not a short-term basis. But there are two key points that you have not mentioned: (1) Creating a fantastic product that users love benefits the stockholders to the extent that users are a source of revenue. In Amazon's case, they are, directly; revenue comes from users coming to the site and buying stuff. (And from buying services like Amazon Prime.) In FB's case, users are, at best, an indirect revenue source: more users spending more time on FB means more ad revenue. That's a much weaker link between a good user experience and stockholder benefit. (2) How long-term the calculation of "stockholder benefit" should be depends on the stockholder's time horizon. If I'm investing in a company as a means of giving myself retirement income in 30 years, obviously I'm interested in the company's long-term health, not the next quarter's returns. But if I'm investing on a shorter time horizon, I'm going to want benefits to show up more quickly. Half a century ago, most stock ownership was by individuals, so the scenario of someone buying shares in, say, IBM and holding them until retirement was actually common enough to have a significant effect. But now most stock ownership is by mutual funds; my 30-year retirement income doesn't depend on how any single stock does for 30 years, only on how my mutual fund does over that time horizon. Mutual funds trade individual stocks all the time based on short-term performance, so to the companies, it looks like everyone's time horizon is a lot shorter, and they act accordingly. I'm not looking to get rich quick. I'm looking to do cool and interesting things. Just to be clear, I am not saying you are wrong at all in having this attitude. I am only commenting on the difference between what you want to do and what Facebook wants to do.

mattkruse 13y ago
If Facebook created something that was so awesome that users would be willing to pay for it, they wouldn't need to rely on ads. They could have a much bigger and more stable revenue stream from people who actually wanted their service and were willing to pay for it. I would buy into this model. Not everyone would, no. But I imagine enough would that it could change their focus. Maybe.
- pdonis 13y ago
  Maybe. Exactly.

pdonis 13y ago

Unless your primary interest is creating a short-term bubble and profiting before it pops I don't think that's FB's primary interest, exactly: I think FB's primary interest is in capturing an overwhelming market share in social media during the window of opportunity when that market, worldwide, is not yet saturated. But that ends up making them do many of the same things they would do if their primary interest were creating a short-term bubble and then profiting before it pops.