The Irony of Facebook

There’s a lot of irony surrounding the existence of Facebook and social media in general. For example, spending more time on electronic social media means you spend less in the company of friends or family or co-workers. Where’s the gain in that? But that’s not the real irony. The eventual life cycle outcome of the Facebook phenomenon will tell that tale.

Most companies have a business model that includes producing a product or service. Not Facebook. Most companies have customers who use their product or service and pay them for it. Not Facebook. Most companies grow value by making themselves unique in some way and thereby establishing barriers of entry for would be competitors. Facebook…not so much. They claim to have 900 million users, but there are no users fees. It’s free… forever. For users, free is a really good price. But for the company, free means zero revenue from the user base. For investors, no reliable cash flow means your back to the internet bubble of the 1990′s.

All the talk about Facebook is becoming irritating. How big will social media get? Is Facebook a substitute for actually participating in your life? Is Facebook more than games and gossip? How do you figure out the “value” of Facebook? If its worth $100,000,000,000. If it is, then the dollar has already been devalued. Thanks Ben.

If you have a Facebook page you begin to hear from people who want to “friend” you. This “friending” business is really odd. Facebook prods you to supply personal information and then uses it to act like a matchmaker. A Facebook message says: “Davis wants to be your friend”. Now you accept or ignore. Is there any way to say “NO, don’t ever friend me again”? Don’t these people have anyone to talk to? Maybe have lunch, take a walk?  Really, is there an objective here?

So here we have a company with no product to sell and no paying customers in a market space where a smart guy with a computer is the price of entry. This is dangerous. Facebook must rely on advertisers to make up the bulk of their revenue. Sort of like television except they don’t even produce new shows. They rely on their users to supply the content to keep other users coming back. This is the real danger…people get bored.

The irony is that the rate of speed with which Facebook has grown may be the instrument which hastens its demise. By accelerating  the ability to quickly tell friends (who will in turn tell their friends, who will in turn tell…never-mind) and pass on the the new next big thing which insures that something else soon will be the next big thing and therefore replace the current big thing. When that comes along, all the friends will let their friends know via Facebook, and they’ll be gone in a flash.

SRBAC

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