The Dollar Value of Facebook

I read an article on Forbes titled "The Truth About What Facebook Is Really Worth" at http://www.forbes.com/sites/brettnelson/2012/05/24/the-truth-about-what-facebook-is-really-worth/ and thought I'd comment on it here. I'd also like to preface that I'm not a stock analyst, so please correct me if I'm wrong.

At this point, why anyone would purchase FB stock is beyond my understanding. Perhaps we can blame the investment banks for misleading people on the IPO. Maybe we can blame FB for "poor service" and for fabricating advertising revenue. Maybe we can blame it for being over-hyped. It's all possible.

My opinion is that the technology is entirely too new. FB offers a service, but what is the dollar valuation of this service? An arbitrarily valued service, at an arbitrarily valued company, will no doubt lead to arbitrarily valued stock prices and profits. What product or service are we consuming from FB that can be (arbitrarily) monetized? We see on the news that the IPO will start at $38, but never ask why. We never ponder what social media enables us to do, and how much that enablement is valued at.

So my ultimate question is how much would you buy FB for, if you were hiring it like you would with a contractor? Has it really solidified itself as a product/service that you can't live without? What does it have (technology-wise) that other services do not? Who is selling, and who is buying?

I believe it's the banks and brokers (and Zuckerberg himself) who bought and dumped the stock are the only ones to benefit from this. Morgan Stanley and JP Morgan received $175 million for managing the IPO, and then an additional 65 million(ish) in FB stock. Zuckerberg dumped about $1.1 billion in stock early. Also, consider that the fact that FB employees are locked into their shares. After 90 days, they can start selling. I believe it is somewhere close to 300 million shares, which will plummet the prices even further. So in a nutshell, as a technologist and not a stock broker, I would dump all your FB stock. The company does not have a monopoly on social media, nor will it ever be as good as the new ones that are sure to become prevalent in the future as the technology matures.

In the end, investors didn't have a magical formula to determine that it's fair to value FB at $30, as the Forbes suggested. In the end, we knew that the valuation of FB is arbitrary, just as the investors did. We just didn't know how to price something that is visibly arbitrary. As a technology company, I don't believe FB is worth very much. It has terrible code, an awful UI that changes every two months, and privacy issues that gets worse with every iteration. Back in May, I told myself that I would jump on Facebook stock if it ever hit $7 a share. I just didn't think it would get there so soon.

More turtleneck, please.

A little preamble: I like apple products. I'm not a fanboy, but their products rock. I have a macbook pro, 5 ipods - old shuffle, new shuffle, old nano, old classic, new classic, and an iPhone 3GS.

I bought the 3GS when it first came out, and for the past two and a half years, I've loved it to pieces. I held off on the iphone 4 because I was in a contract, and it wasn't that drastically different. Fast forward 15 months. Like many of you, I sat in front of my work computer, wallet open, waiting for apple to announce the iPhone 5. They announced i OS 5 - great! Apple A5 chip? Awesome! 5 lenses in a cameraphone and f2.4? Sweet! 5...5...5...no iphone 5. No "oh, and one more thing."

I don't feel betrayed. I still think apple makes great hardware, but if I'm going to spend $200 on a phone and a new 2-year contract, I'm not sure I can justify upgrading. Next week, Samsung/Google will announce the next Nexus phone. Apple has cleverly sandwiched the announcement with the release of their new iOS and the "new" iphone, but I am hoping that fellow tech lovers would consider their options.

Deactivating Facebook

In 2003, a friend told me to get on facebook. It was at www.thefacebook.com. I ignored his hipster request for an entire semester. I first signed during the winter of 2003. I added about 100 friends in a day. I was hooked.

Eight years ago, facebook addiction didn't exist. Now, it is mainstream (1). New statistics come out every once in awhile, and are now updated in real time at http://www.facebook.com/press/info.php?statistics. The statistics and growth rates are very common online (2). These numbers give us the "wow" factor but are essentially pointless. The number of users ceased to matter after facebook did away with user verification. It was a great service when it was college-specific, a good service when it added workplaces, and less-than-mediocre when it opened up to the general public. Now, we have serious issues with social media security, digital identity, and the duty of harvesting digital crops on time.

Recognizing my own addiction, I've decided to act upon it. I turned 27 in June. It took me that long to realize that you have to give up who you are in order to turn into who you want to become. Tonight, I want to become one of the elite few who do not have facebook. I want to be left alone. I told my heartbroken fiance that I would deactivate my account and that technically, her account will no longer show her as being engaged to me, which effectively ended our digital engagement. Luckily, she has a ring to prove it in real life.

Then again, there is always Google+.  



1) http://www.psychologytoday.com/blog/positively-media/201005/social-media-addiction-engage-brain-believing
2) http://www.checkfacebook.com/
3) http://www.computerworld.com/s/article/9135795/Study_Facebook_use_cuts_productivity_at_work

Technology Adoption vs. Social Technology Complexity

Everett Rogers’ “Diffusion of Innovations” is a popular graph that is useful for breaking up adopters into 5 different categories, depending on what time they opt to adopt a particular technology. For example, early adopters can either benefit extensively from new technology, or fall into “The Chasm” where the technology never takes off to be utilized by the majority. This can be due to several factors, including lack of interest, IT project failures, immature technologies, etc. Technologies that have fallen into “The Chasm” include Artificial Intelligence (AI), Computer-aided software engineering (CASE), a variety of Enterprise Resource Planning (ERP) systems, and Enterprise social media. There is a plethora of specific corporate examples including AMR Corp’s “Confirm” reservation system in 1992.

The problem with this chart, is that it doesn't take into account how rapidly "Innovators" become "Early Majority." The adoption process for social technologies depend on the complexity of the technology, over a specific period of time. Here is a chart that I've drawn to illustrate this: 

This proprietary graph provides us with three pieces of key information pertinent to modern IT that builds upon Everett Rogers’ idea. The adoption curve here has been divided into three categories based on the complexity of the technology and the rate of adoption.

The first stage shows an adoption increase along with the maturity of a new technology. At the end of this first stage, adoption rates will either increase exponentially (i.e. cloud computing) or cease to exist (The Chasm.) The technology is in its prototypical state, and offers a demonstration of a vision rather than a full fledged product.

During the second stage the technology is becoming the norm, and there is controlled risk in adopting the technology. Complexity in this stage continues to increase gradually, as the majority of users will demand new features.

During the last stage, the majority has already adopted the technology and those who do not adopt the technology will perish. For example, VMWare and virtual computing. In this stage, the technology will become increasingly complicated until it is no longer sustainable, or it is limited by currently available information and hardware.

Google+ and why it matters

I've been on Google+ for about a week now. I wholeheartedly support competition to facebook for the sake of competition, and not necessarily the advancement of social networking technology. Google+ is significant because we are overwhelmed by information. I've been a facebook user since 2004, and during this time I've seen it grow to unwieldy proportions. It has both the power to connect you with the world, and the power to take you out of the real world in order for you to harvest your crops. We need to learn how to use social media wisely, and for the most part, it is a disconnected and jarring place full of non important status messages and regurgitated information.

I like Google+ because it is fresh and new. Facebook is a dinosaur in terms of social networking technology. The reality is that facebook can come up with something similar to Google+ overnight, if they really wanted to, but they can't do it without involving the rest of the facebook "experience." We need a new way to think about how we connect with people, and how to use this technology for enablement instead of the technology being a stand alone experience in itself. Google+ quite simply has what I need to do just that - it's simple, minimally-invasive, and allows you to stay in touch without overwhelming you with unnecessary information. The idea is simple and effective: sometimes I only want to deal with certain social "circles." I don't want my status broadcast to everyone in my social world, because it dilutes the message I want to put out there for specific people. With circles, I'm able to very effectively control who and what I say to different groups of people. It makes us human again in the way we communicate through technology.

I wish G+ the best. I, for one, can't get off my facebook addiction fast enough. I only wish there was a way to port over my facebook photos to picasa...

Exchange of Statuses vs. The Exchange of Ideas

I've been an introvert all my life. I dislike large groups of strangers, and thrive in one-on-one conversations. This has enabled me to go for "quality, not quantity" in terms of the friends that I have. I have 650+ friends in my friends list, but really only care about 20 of them. This is because with those 20 individuals, I've developed a deeper friendship that revolved around the exchange of ideas - a sharing of life and its share of troubles, triumphs, and inconsistencies.The other 630 people might know me from church, school, or work. I might know them on the surface, but I haven't invested time in getting to know them. I might know how they are through an exchange of statuses, but I don't really know what makes them tick.

This sets up a fundamental problem in a society inundated with social information technology, and a lack of user-based understanding of what it means to be "connected." Internet addiction has been in the limelight for the past 15 years, and is considered a serious disorder. Addiction to social media, as it has matured over the past decade, has been recognized as a cause of loneliness (1). While various factors that go into this addiction including personality and social lives outside of social media, the reality is that there has been a shift in the past decade from an exchange of ideas, to an exchange of statuses. This fundamental shift affects the way we communicate with each other as individuals, which ultimately affects the way we view ourselves and our roles in a technology-enabled society.

For example, I might update my twitter and facebook status daily, but if you take all the accumulated status messages I've ever written which has been read by my hundreds of online "friends" in the past 5 years, the accumulated content of these status messages will tell you very little about who I am as a person. I imagine that any person, however capable they are with working with the 140-character limit, can't be broken down into a series of pithy comments. The artificial connectedness that people feel via social technologies falls short of our social needs because it lacks CONTENT. You might know what I had for dinner, who I had it with, and where I had it - you might even get the gist of the dinner conversation - but you will never actually be there at dinner with me when I discussed the contemporary applications of Tolstoy with an equally geeky friend. We are at an age of communication where people try to speak in perfect pithy phrases.

Leo Tolstoy once remarked that as a person, we must choose between "conscience and life." This is a status-worthy message, but it means very little on its own without elaboration, context, and a basic understanding of philosophy (2). Can we consciously choose to commit to meaningful relationships, while still living out our digital lives? Can we use our current social technologies in a manner that enables and encourages its users to simply talk to one another where there is as much exchange of ideas, as there are memorable, pithy comments? I have to believe that it is possible if we focus on developing social technology to enable meaningful discourse. The exchange of statuses will continue to proliferate - the question is how can we enable social media users to move beyond the frivolous in order to feed on the substantive. This is one of the questions I will explore in my dissertation.


1) http://www.huffingtonpost.com/lisa-haisha/is-your-facebook-addictio_b_533530.html

2) http://www.ebooksread.com/authors-eng/lon-tolstoi/the-complete-works-of-count-tolstoy-volume-24-slo/page-25-the-complete-works-of-count-tolstoy-volume-24-slo.shtml

I like open source, but not when it comes to business applications.

Open source communities have successfully developed many pieces of cross-platform software amidst a plethora of proprietary applications. The usability of open source software was once regarded as a reason limited distribution, but presently most of us use it but might not notice that it is open source. For example, the wordpress platform is used worldwide, currently with over 200 million users, and is cross-platform and open source (1).  The existing evidence of the popularity of open source software and how the characteristics of open-source development influence usability is largely important in implementation. Currently, OSS is widely distributed to developers and the public via networked communities.

The thing with open source, especially free open source software, is its quality. There are millions of projects started and never finished. A look at SourceForge reveals that the majority of projects are abandoned. Good software is developed “when one or more very good programmers work closely full time together over a period of time developing, maintaining and improving it.” (2) Ultimately, distribution in the commercial world, especially corporate and government settings, is difficult because the available product does not meet the requirement standards. In contrast however, corporations support open source for competition against existing products. For example, IBM’s Lotus suite vs. Microsoft Office. The advantage is that if a corporation uses Lotus, it would be helping IBM against Microsoft. The disadvantage is that Lotus is vastly inferior to MS Office, and that just because IBM promotes (and financially supports) open source, it doesn’t mean it’s good for the individual developer and users as a whole.  

As a former IBM employee, I would never recommend using Lotus because it is very buggy and compatibility issues get in the way of communicating with clients who is already using MS office. Interestingly, I had both Lotus and MS Office on my laptop when I was a consultant, but never used Lotus software because it simply isn’t as good as MS Office. We were forced to use Lotus Notes, however. When I worked at GE Financial, there was also an effort to try to use OpenOffice instead of MS Office. This also failed because even though we had programmers working on this software, the open source software was still unable to provide the stability and usability needed. 

1) http://www.tripwiremagazine.com/2010/03/20-most-popular-open-source-software-ever-2.html
2) http://www.lambdassociates.org/blog/the_problems_of_open_source.htm