Zuckerberg’s Zany Comparisons
Posted on July 24, 2008
Filed Under Web 2.0 Kool Aid |
At Facebook’s F8 developer conference, Mark Zuckerberg proved once again that not only is he still socially awkward (ironic for a “social” networking startup CEO) but that he is still capable of stating with a straight (or robotic?) face.
at Valleywag, Zuckerberg used his keynote to prove that he’s completely out of touch with reality by making some zany comparisons about Facebook applications.
iLike is Like MySpace, Only Better
According to Zuckerberg, the “top 5,000 bands on iLike have more fans on iLike than they have on any other site on the web.” He goes on to note that this is especially impressive because it puts iLike ahead of MySpace.
But just what is a “fan” and what is an iLike “fan” worth to Facebook? Very little revenue-wise.
Earlier this week, iLike announced an ad platform and a partnership with Rhapsody. Facebook ostensibly won’t see any of the revenue generated by iLike’s ad platform and partnerships.
Compare that to MySpace, which a joint venture with three of the four major record labels earlier in the year. It a new music service as part of this joint venture in September.
In other words, MySpace is looking to monetize its music-loving users. Facebook has essentially allowed its music-loving users to run into the arms of iLike.
Al Gore’s Causes
Causes, a Facebook application designed to help save the world, has more than 30% more members for the “Global Warming” cause than Al Gore’s Alliance for Climate Protection.
Yet what is Causes doing to save the world? Not a whole lot. Beth Kanter ( ) has noted that not much money is being donated.
As one honest person , the total amount donated is “trivial.”
But when something trivial is accomplished “all social graph,” it’s apparently worth a Zuckerberg mention even if it’s doing nothing business-wise for Facebook. After all, we’re talking about Al Gore here. The man invented the Internet and global warming!
Zynga: More Poker Players than Vegas Hotel Rooms
Every day, four times as many people play Texas Hold ‘Em using free online gaming startup Zynga’s Facebook poker application than there are hotel rooms in Las Vegas.
Unfortunately, casinos on the Las Vegas Strip generated $6.75 billion in gaming revenue in 2007 (not turnover, which is greater). That’s more than 22 times the total amount of revenue that Facebook hopes to do in 2008 (while operating at a loss). MGM Mirage, which operates three casinos on the Las Vegas Strip, generated net income of $872 million in Q4 2007 alone.
All told, 40 million people visited Las Vegas in 2007 and they spent nearly $11 billion.
Obviously, Zynga isn’t making that type of money from its free Texas Hold ‘Em application and Facebook isn’t seeing any of that non-existent money either.
In other words, one must ask: would you rather be Frank Fertitta III (who earned nearly $126 million in 2007) or Mark Zuckerberg?
Conclusion
Of course, pointing out that the (supposed) “success” of top Facebook application developers does little to nothing for Facebook revenue-wise is a moot point in the eyes of Facebook COO Sheryl Sandberg, who isn’t all that concerned with revenue.
At the Fortune Brainstorm Tech conference, she stated that Facebook’s not worried about monetization:
Our focus is on growth–we believe this is the moment people are joining social networks. Then it’s monetization to support that growth.
Brilliant.
She added that Facebook sees “a huge opportunity in performance and brand marketing. More than 90 percent (of marketing dollars) spent in the world are not in direct, but in brand, and that’s (about) generating awareness.”
Apparently Facebook has given up on the hope that it can actually drive results for advertisers (wasn’t that of Beacon?) and has resorted to pitching brand advertisers on Facebook’s ability to boost awareness via the ads that its users ignore and the groups that its users don’t use.
But I say, “Why even worry about revenues?” When Facebook files to go public, I’m sure that prospective investors will be excited by the opportunity to invest in a negative cashflow company that has known monetization issues yet has enabled its application developers to build all these cool services that the company receives little to no financial benefit from.
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Drama 2.0 spikes the Web 2.0 kool aid by providing a critical analysis of Web 2.0 startups and the impact of Web 2.0 on the media industry. Other topics are explored when Drama 2.0 has a slight buzz. Read more about the Internet's version of Keyser Söze here.
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Your insight is spot on, as always. Facebook is the true epitome of Silicon Valley’s irrational exuberance. The idea that you can build a company without revenue as your central focus is one that will surely go away as this tech bubble bursts. At least it had better go away if SV hopes to retain ANY credibility on the world stage.
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