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One difference between AOL and Facebook is that Facebook has hired some of the most talented CS folks of this generation, e.g. Yann LeCun. If their management h

by shas3 13y ago

One difference between AOL and Facebook is that Facebook has hired some of the most talented CS folks of this generation, e.g. Yann LeCun. If their management has the vision to foresee the social network's slide to irrelevance, they can leverage the talent to adapt. This is how it works for companies that have adapted well and lived through and grown amid some of the greatest technological upheavels ever: IBM is over a hundred years old, Microsoft is close 40+, HP is 50+, Xerox, Sony, Intel, Honeywell, AMD, Dow, DuPont, Johnson & Johnson, P&G, 3M, etc. etc. Hire top talent and make strategic acquisitions ---> Innovate ---> Get lucky with strategy at the executive level ---> Sail or sink. You could also go the way of Kodak, which always hired top talent, and still lose out, but at the end of the day, predicting success or failure of such a huge entity (in terms of $ and no. of users) isn't as easy as it is made out to be in this paper. I think everyone tends to take a simplistic approach. While AOL came out of the IT boom, so did Amazon, eBay, PayPal, Akamai, and a bunch of other companies which continue to do well. With the kind of investment that Facebook is capable of attracting, they can either become the next IBM or the next AOL.

untilHellbanned 13y ago
AOL hired talented people too.
- blisterpeanuts 13y ago
  Maybe, but they had some weird management issues. When they acquired Netscape back in '98, there was a notorious all-hands meeting at which an AOL executive informed the disgruntled Netscapers that they were "perfectly free to leave", and so they did, draining that unit of some top internet engineering talent.
  - untilHellbanned 13y ago
    Every place >=1 employee has weird management issues.
incongruity 13y ago
The problem isn't with the code -- it's with market & business viability and end-user desirability. "Get lucky with strategy at the executive level" I love how the most important part is hand waved away to luck. IBM, Amazon, Ebay, PayPal, Akamai all had/have a solid, long-lasting strategy around making things that are: 1) Desirable to users/buyers/decision makers 2) Feasible, but sufficiently advanced from a technological perspective and 3) Viable from a business perspective, over something more than a short-run. AOL and Facebook both did 1&2 pretty well (exceptionally well, in many ways) but #3 both fell short on -- Facebook has never had a really strong monetization strategy and now they're potentially slipping in terms of user desirability (amongst some segments) and still, they're failing to find an outright win with their monetization strategies. Ultimately, I think the OP was pretty spot on.
- shas3 13y ago
  Executive strategies change and their outcomes depend a lot on luck. And it is difficult to predict. Most of our discussions about Kodak, AOL, etc. (like this one right here) are with full benefit of hindsight. Look at how Google (or any other big company out there) has diversified. My point is just that: when you have hired the smartest people on the planet and are attracting investment, you have the opportunity to become the next great company. Whether it will happen remains to be seen, and cannot be predicted with simplistic analysis. Especially when investors (whose day job it is to watch Facebook) are still happy enough to invest in the company. Here's something to ponder: if you could spot the flaw in Facebook's business model so easily, why can't the hundreds of investors who have millions at stake see the same flaw? (Corollary: Bearish folks can make a lot of money short-selling Facebook.)
  - incongruity 13y ago
    First, don't confuse stock success with long-term financial success -- they're actually not completely aligned. Ideally, they would be, but many, many investors are irrational and/or uneducated. Many more are smart enough to prey on that and speculate/bet that they can ride the stock up and sell it at/near a peak. Second, here's something to ponder: If the masses are so good at picking investments, why didn't everyone see the housing bubble? In fact, some people did -- and they're the ones who were beating the drums about the need to pay attention to fundamentals and long-term trends. Similarly, many people have been pointing out that the irrational exuberance around Facebook is not supported by fundamentals -- and is, therefore, a bubble. Here's something to ponder: if you could spot the flaw in Facebook's business model so easily, why can't the hundreds of investors who have millions at stake see the same flaw? (Corollary: Bearish folks can make a lot of money short-selling Facebook.) Now, why could I spot the flaw in their business model? I don't actually think there's all that much special to it...it's not actually that hard to point out unsound business plans if you pay attention to the fundamentals… which seem to be so easily forgotten. I have not said that there isn't money to be made on FB as a short-term investment -- indeed, clearly the stock isn't at its low and it's safe to presume some are going to make money off of it. What I did say was that the business model is not sound. That could change, but thus far, I've not been given reason to be hopeful that they'll do so.

by shas3 13y ago

untilHellbanned 13y ago

AOL hired talented people too.

blisterpeanuts 13y ago
Maybe, but they had some weird management issues. When they acquired Netscape back in '98, there was a notorious all-hands meeting at which an AOL executive informed the disgruntled Netscapers that they were "perfectly free to leave", and so they did, draining that unit of some top internet engineering talent.
- untilHellbanned 13y ago
  Every place >=1 employee has weird management issues.

incongruity 13y ago

The problem isn't with the code -- it's with market & business viability and end-user desirability. "Get lucky with strategy at the executive level" I love how the most important part is hand waved away to luck. IBM, Amazon, Ebay, PayPal, Akamai all had/have a solid, long-lasting strategy around making things that are: 1) Desirable to users/buyers/decision makers 2) Feasible, but sufficiently advanced from a technological perspective and 3) Viable from a business perspective, over something more than a short-run. AOL and Facebook both did 1&2 pretty well (exceptionally well, in many ways) but #3 both fell short on -- Facebook has never had a really strong monetization strategy and now they're potentially slipping in terms of user desirability (amongst some segments) and still, they're failing to find an outright win with their monetization strategies. Ultimately, I think the OP was pretty spot on.

shas3 13y ago
Executive strategies change and their outcomes depend a lot on luck. And it is difficult to predict. Most of our discussions about Kodak, AOL, etc. (like this one right here) are with full benefit of hindsight. Look at how Google (or any other big company out there) has diversified. My point is just that: when you have hired the smartest people on the planet and are attracting investment, you have the opportunity to become the next great company. Whether it will happen remains to be seen, and cannot be predicted with simplistic analysis. Especially when investors (whose day job it is to watch Facebook) are still happy enough to invest in the company. Here's something to ponder: if you could spot the flaw in Facebook's business model so easily, why can't the hundreds of investors who have millions at stake see the same flaw? (Corollary: Bearish folks can make a lot of money short-selling Facebook.)
- incongruity 13y ago
  First, don't confuse stock success with long-term financial success -- they're actually not completely aligned. Ideally, they would be, but many, many investors are irrational and/or uneducated. Many more are smart enough to prey on that and speculate/bet that they can ride the stock up and sell it at/near a peak. Second, here's something to ponder: If the masses are so good at picking investments, why didn't everyone see the housing bubble? In fact, some people did -- and they're the ones who were beating the drums about the need to pay attention to fundamentals and long-term trends. Similarly, many people have been pointing out that the irrational exuberance around Facebook is not supported by fundamentals -- and is, therefore, a bubble. Here's something to ponder: if you could spot the flaw in Facebook's business model so easily, why can't the hundreds of investors who have millions at stake see the same flaw? (Corollary: Bearish folks can make a lot of money short-selling Facebook.) Now, why could I spot the flaw in their business model? I don't actually think there's all that much special to it...it's not actually that hard to point out unsound business plans if you pay attention to the fundamentals… which seem to be so easily forgotten. I have not said that there isn't money to be made on FB as a short-term investment -- indeed, clearly the stock isn't at its low and it's safe to presume some are going to make money off of it. What I did say was that the business model is not sound. That could change, but thus far, I've not been given reason to be hopeful that they'll do so.