Facebook Proves Social is Dead...

my ass

Let's party like it's 1899 and close the patent office because innovation is dead.

Back in 1999 to 2001 I played polo at the Circus Club in Menlo Park and heard more horse shit pitches from 24 year old punk assed dot com startups that got funded than those ponies could produce in a lifetime.  I watched the opportunity in the valley unfold before me, passed on a job at Inktomi and headed for a New England backwater to raise kids instead.  I should have stayed in California and I should have gone to work for Google.  Ten years on I am a little wiser now, a bit grayer and my boots are just a tad tighter but here is what I know.

Facebook fell flat because it lacks dimension in its plan.  If you divide the Facebook market cap by the total number of users you get a per user value of $73.75.  The average user has 130 followers (just at the cusp of social viability) given that this is the average it means the many are below this threshold and can be discounted.  This pop acquisition price seems a bit high if you are not in the ad and search business.  Facebook is not in the ad and search business.

Total min of use on Facebook per month averages out to just one min of use per user, again low numbers.  External website connection is 1 per 3.3 users per month.  Facebook's value given it's current model is probably overstated. I say that kindly.

It also highlights why Google is so dangerous.  Remember that Instagram acquisition?  Facebook spent 1 billion on that.  Google Plus launched with 695 million on the table.  Thus far they have ~270 million registrations.  Pop acquisition cost to date ~$2.57, I will take that.  Google would have to invest 28 times the current stake or 19.2 billion dollars or about 12% of their market cap in Google Plus to reach the point where Facebook is now. Google Plus was created with less than half a percent of Google's market cap value and has better than 30% of Facebook's pop count subscriber rate in less than a year.  At this point they are not dependent or focused on reaching social penetration of 125 users to make the model work.  +Vic Gundotra, who some say is the most interesting man on the internet said to me, "We will take our time and get it right.  Social is not an end game it is a layer."  The man is genius incarnate with a glass of wine. 

Google, I think, is focused instead on understanding the behavior of the organic interaction between users and building a strong platform to support the social layer of their business model.  By the way, Google put up just seven days of Gross revenues in order to dip it's toe in social and guess what happened? +Sergey Brin's toe turned to gold.

Google's market cap is currently at 5 years of its daily gross rev.  That's 365 not 223.  Maybe a touch high but when you see the vast expanse of their reach, the fact that they get in excess of one billion unique users who search a month and their ad model is evolving at a pace they control in the market place I understand Vic's warm, comfortably self assured, Mr Rogers sweater, glass of wine in hand demeanor.  The only company that may understand human behavior better is locked in a black tower in Laurel, Maryland and does not trade on the exchange.  

Facebook v. Google, I think you have two vastly different approaches to the idea.  Social is not dead.  +Sparkstir, and entrepreneur like +Tom Rolfson and +Tim Moore  are about to show the market what resides in the white space.  "Market innovation depends on and builds across the foundation of social in order to be durable." as +John Lilly so elequantly pointed out during his +VC Office Hours interview with +Bradley Horowitz  You can bet that +Larry Page has a viable plan for the evolution, integration and layer that social plays.  He bet Sergey's toe on it.

and yes I need a job.
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