One important fact to remember is that Facebook was not built
to be a cash register but really a tool to make the world more open and connected. That being said Facebook looks to be changing
these values by giving business unprecedented access to the new feed. This
might be good for short term profits but how will it affect their mission.
Mr. Constine said this is the second most dangerous moment in
his eight years at Facebook, right under the opening of the platform, quizzes
and games to other companies. I think this goes beyond the actually impact on
the user but more that Facebook is turning to the dark side/MySpace.
These sponsored stories are needed for the mobile device because
of their limited space to advertise but on their desktop website version it might
be over kill.
There are limits to keep these ads form overrunning the feed
but as I stated before it’s a slippery slop. With the share price under $20 I
feel Facebook is getting desperate and for good reason because they have
saturated the market and have to focus on revenue.
Mark Zuckerberg
There is a huge need and a huge opportunity to get everyone in the world
connected, to give everyone a voice…We’ve always cared primarily about our social mission…
By focusing on our mission and building great services, we believe we will create the most value for our shareholders and partners over the long term.
Simply put: we don’t build services to make money; we make money to build better services.
I think Wall street should have known what they were getting
into before they decided to hype Facebook up.
3 comments:
I understand this argument, but, unfortunately, companies don't get to have their cake and eat it too. If you take public shareholder money, you have to play by public shareholder rules. Which means, you need to build the business for the long term, but also drive near-term monetization levers. In other words, provide value for your shareholders.
If you want to serve your mission, stay private, or find backers who don't want a return. But don't insult shareholders' intelligence by pretending they care for what you stand for.
Facebook is now scrambling to prove to investors that they can provide value, mainly backed by the idea that they have the personal data of 955 million users (http://www.nytimes.com/2012/08/17/technology/facebook-shares-hit-new-low-as-a-lockup-period-ends.html).
I understand that Facebook has a vision and meeting their mission is front and center - but now, they do have to understand that they have a fiduciary responsibility to their investors. Investors are evaluating their company for their future growth and ROI potential - if investors do not believe that facebook is appropriately managing the company and seeking out the necessary venues in order to generate more revenue, investors will jump ship.
It's the nature of the game. However, Facebook does have the potential and has the base in order to create revenue, especially if they can make a successful transition to mobile.
I understand that management can have a vision, but it must be balanced with their responsibility to shareholders - to the people that are providing them with the funds to actually meet their vision.
Perhaps what Facebook really needs is a shift in consumer perception of what degree of privacy they care about, or they just need to push the privacy boundary a step at a time (like boiling a frog in a pot by raising the temperature a few degrees at a time) in order to "activate" the value in their personal data asset. No one is arguing that Facebook doesn't have outrageous amounts of personal data useful for marketers, it's just not able to make full use of it because of privacy issues. Despite Mr. Zuckerberg's professed idealism, let's not forget that he has some serious skin in the game...going from 24 billion to 9-ish billion in personal FB stock value couldn't have been particularly enjoyable, and the thing about money is that most people can say they don't care about it, but once you get used to having it, it's hard to let go...
I'm sure the delicate balance between user experience and the economic realities of running a public entity is slowly tipping towards reality...but I think Facebook has been properly cautious in how quickly it introduces features to monetize its user base. After all, it's a lot harder to leverage a user base that's leaving your platform.
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