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WhatsApp put Facebook in a situation in which Facebook only could lose

4 points by imartin2k 13y ago

ChuckFrank 13y ago
The multiples on valuation still has my head spinning. Blink and I'd say $3B was crazy, but this. makes. no. sense. Especially now that you see that it's a lose lose situation for FB. Market irrationality undermines my confidence in my own work. I don't like it one bit. Thanks for the post.
- dhoulb 13y ago
  $3-4b does sound about right - factoring in the market/investor factors this article goes into. If they convince all of their users to pay the $1 next year, that's $450m in revenue, so 8-10x revenue is a reasonable price for a tech company (outrageous for any other industry, but it's tech). But 40x revenue, that's just INSANE. I'm sure there's something Facebook could've spent $10b on that would've achieved the same goal (making Facebook more kid friendly). How about a free iPad for every kid in the US?... Not an outrageous idea.
dhoulb 13y ago
I have a couple of problems with the analysis. First, users don't use WhatsApp because they're concerned about Facebook hoovering up all the data. They use it because their slightly cooler social influencer friend uses it, so they think they should too. Regular users don't care about Facebook from a privacy angle - they obviously do if it's splashed across CNN, but they forget again the next day. Second, a factual error: > Facebook’s business model on the other hand is built on the idea that the more a user interacts with Facebook (or Facebook-connected sites and apps), the more Facebook can earn, because it can present more ads. Not more ads — _better_ ads. They already fill all their inventory. The difference is important. Better targeted ads annoy users less, but command a higher price from advertisers. And change 'giving them data' from a negative activity to a positive one! Right now, Facebook's in a weird place. They know loads about me, but their targeting is still really crap. I don't know why they don't just add a 5 minute "improve your ads" survey, where they ask outright which ads they should be showing me. I'd happily tell them the sorts of things I buy loads of, if they'd promise to only show me ads about those things. Anything to get rid of belly fat ads. If Facebook stored 10 times as much data about you, but the adverts were awesome and you wanted to buy every single thing, would you give them the extra data? HN users might not, but I think most people would.

4 points by imartin2k 13y ago

The multiples on valuation still has my head spinning. Blink and I'd say $3B was crazy, but this. makes. no. sense. Especially now that you see that it's a lose lose situation for FB. Market irrationality undermines my confidence in my own work. I don't like it one bit. Thanks for the post.

dhoulb 13y ago
$3-4b does sound about right - factoring in the market/investor factors this article goes into. If they convince all of their users to pay the $1 next year, that's $450m in revenue, so 8-10x revenue is a reasonable price for a tech company (outrageous for any other industry, but it's tech). But 40x revenue, that's just INSANE. I'm sure there's something Facebook could've spent $10b on that would've achieved the same goal (making Facebook more kid friendly). How about a free iPad for every kid in the US?... Not an outrageous idea.

dhoulb 13y ago

I have a couple of problems with the analysis. First, users don't use WhatsApp because they're concerned about Facebook hoovering up all the data. They use it because their slightly cooler social influencer friend uses it, so they think they should too. Regular users don't care about Facebook from a privacy angle - they obviously do if it's splashed across CNN, but they forget again the next day. Second, a factual error: > Facebook’s business model on the other hand is built on the idea that the more a user interacts with Facebook (or Facebook-connected sites and apps), the more Facebook can earn, because it can present more ads. Not more ads — _better_ ads. They already fill all their inventory. The difference is important. Better targeted ads annoy users less, but command a higher price from advertisers. And change 'giving them data' from a negative activity to a positive one! Right now, Facebook's in a weird place. They know loads about me, but their targeting is still really crap. I don't know why they don't just add a 5 minute "improve your ads" survey, where they ask outright which ads they should be showing me. I'd happily tell them the sorts of things I buy loads of, if they'd promise to only show me ads about those things. Anything to get rid of belly fat ads. If Facebook stored 10 times as much data about you, but the adverts were awesome and you wanted to buy every single thing, would you give them the extra data? HN users might not, but I think most people would.