Posts Tagged ‘Facebook’

Facebook Needs More Friends

Tuesday, August 7th, 2012

Facebook’s first earnings report is now public and it’s making people a little cool to the world’s biggest friendship chain (955m users by the end of June). Facebook made a quarterly loss, of $157m. Since its IPO on May 18th, the company’s share price hasn’t regained its $38 initial price. On August 1st Facebook’s shares closed at $20.88.

One problem has been the efficacy of its pay-per-click ad – a primary source of revenue. As the Economist put it, “On July 30th Limited Run, a New York platform for the online shops of record labels, artists and designers, said it would delete its Facebook page. It estimated that 80% of clicks came from “bots”—computers rather than people, but triggering payments to Facebook all the same”.  Another problem has been Facebook fatigue with the ratio of daily to monthly users dipping. And then there’s the issue that 57% of users check their accounts on smartphones, but Facebook ads work poorly on small mobile screens.

Facebook’s underwhelming post-IPO period may reveal the incongruousness of submitting a social media platform built on trust, privacy and non-commercial, human exchanges with the demands of quarterly earnings. USA Today called it, a “disconnect between serving consumers and serving investors”. “The fact that Facebook seems more concerned about designing products for its users than finding ways to profit from them is irking investors, says Colin Sebastian of R.W. Baird. For instance, Facebook created software for tablet devices without a plan for generating revenue, which is opposite to the kind of strategy investors are looking for, Sebastian says. While one sympathizes with the investors, the quote epitomizes Facebook’s integrity, something it would be a mistake to ignore as the company faces the public equity markets.

Still, for all the skeptics, nobody should count Facebook out. No other social-media site even comes close and no social media strategy can function without Facebook.

Still THE Social Network.

Get used to seeing “sponsored stories” in news feeds– ads from favorite companies that spread by recommendation. Sheryl Sandberg, the chief operating officer, told analysts that click-through rates on ads in news feeds were “multiple times better” than on ads to the right of the screen.  Sandberg and Mark Zuckerberg, Facebook’s founder and boss, said stories in news feeds were bringing in more than $1m a day, half of that from mobile devices. In addition, like Google adwords, Facebook is starting an exchange on which marketers will be able to bid for ad impressions in real-time. The other move is towards the small and medium-sized business market ; while big advertisers accounted for one-third of Facebook’s ad revenue last year, small firms and online businesses have stalled, leading to the slowdown in Facebook’s growth.

In the end, let’s remember that Facebook is 8 years old and worth $50 billion. How could you call that anything but a spectacular success?

Facebook IPO to Be Listed on Nasdaq

Tuesday, April 17th, 2012

Facebook is friending Nasdaq in one of the most-desirable deals among the Internet companies jockeying ahead in the race for social-media IPOs.  The addition of Facebook’s listing enhances Nasdaq’s reputation as the favored exchange among high-tech companies.  The exchange is home to several tech firms, including Apple and Google.  The stock will trade under the symbol FB, as Facebook prepares its initial public offering for May.

“This is a strong, substantial win for Nasdaq, and no doubt a momentum builder for future listings,” said Richard Repetto, an analyst at Sandler O’Neill & Partners.  Facebook’s IPO — which could raise as much as $10 billion — -is likely to be the biggest Internet IPO since Google’s in 2004.  “Winning Google further emboldened Nasdaq’s reputation as being the exchange of choice for the technology companies,” said Jay Frankl, senior managing director at FTI Consulting.  “The Facebook listing I’ve seen as being similar to the Google listing, which had a similar competition between the exchanges, and a similar win for Nasdaq.”

Companies pay an annual fee to list their stock, while exchanges receive listings-related income from the sale of market data and additional services offered to their listed companies.  A company can pay as much as $500,000 annually to be listed on the NYSE, while all Nasdaq fees are capped at approximately $100,000.

The decision is a big victory for Nasdaq, which competes intensely with NYSE Euronext, which operates the New York Stock Exchange.  The listing will give Facebook financial clout as it works to expand its global audience of about 845 million users.  It also might help Facebook avoid a challenge from Google, which wants to rival Facebook with its own social networking system.

Writing in Forbes, Robert Hof wonders if “Will Facebook’s sudden, outsized presence distort the Nasdaq index of 100 companies so that it becomes even more volatile than it already is?  It’s not a premature question by any means.  Already, just a few companies – Apple, Google, Microsoft, Intel, and Oracle – dominate the Nasdaq index, accounting for nearly half the value of the entire Nasdaq 100.  Thanks to its incredible run, Apple stock once again accounts for almost 20 percent of the index, after exchange operator Nasdaq OMX Group reduced its weighting to 12 percent a year ago.  It’s not clear yet, of course, what kind of presence Facebook will have in the index, since it obviously has to go public first and then get added by Nasdaq OMX.  But it seems a good bet that trading in its shares, like those of many new issues, will be anything but calm.  And given the huge interest in the company by investors and the press, and the relatively small float at the outset, every little announcement or hiccup seems sure to send the shares soaring or plummeting.  If Facebook becomes a significant portion of the Nasdaq index, as seems likely, that could make the famously dynamic index even more volatile.  This isn’t much of a problem for Facebook itself.  Its fate rests less with what the stock does in the short term than with how CEO Mark Zuckerberg and his business executives Sheryl Sandberg and others build out the company’s advertising, payments, and other potential businesses.”

CNBC’s Bob Pisani says that Nasdaq’s securing the Facebook listing is an important psychological victory. According to Pisani, “What does matter are the co-branding opportunities, and it here it gets down to a simple issue: what are you offering in the way of a partnership?  It’s not hard to imagine the pitch: the NYSE would certainly have argued that they have broader business-to-business connections with the biggest companies in the world, with whom they can partner to expand the brand name and co-venture with.  I have mentioned before that, as an example, if Groupon (which listed on Nasdaq) was doing something with Starbucks, Groupon might send out 65 million emails that references a deal with Starbucks and Groupon, with the solicitation noting that Groupon is listed on Nasdaq.  Nasdaq will pick up a portion of that cost.  Zillow, to take another company (also on Nasdaq), might have been very interested that Nasdaq has an enormous electronic sign in Times Square that is a virtual billboard for a company that wants to attract eyeballs to its website.  Get it?  What can you offer us?  And just what did Nasdaq offer to Facebook?”

Cash Mobs Form to Support Local Businesses

Tuesday, April 10th, 2012

First, there were flash mobs.  Now, there are cash mobs. A cash mob is an organized group of do-gooders who suddenly descend on small businesses, snap up merchandise and gather at pubs and restaurants afterward to celebrate their pro-community mission.  The shopping sprees have taken place in cities ranging from San Diego to Buffalo.  The cash mobs organize online at website such as Facebook or Twitter, where they get details.  Farmers markets, toy retailers and hardware stores have populated the hit list so far, with mob members typically spending between $10 and $20.  The cash mob trend started getting social media pickup last year, and as word spread, so has the benevolence. Community activists, non-profit employees and regular people have formed cash mobs in their towns.

The philanthropic acts provide an appreciated economic boost for small-business owners, said entrepreneur John Reburn, who was hit by a cash mob numbering more than 100.  His Appalachia Press, a letterpress and silk-screening shop in Roanoke, VA, rang up 54 sales in less than an hour as customers bought stationery, books and prints.  “We did the equivalent of a Christmas shopping day in 45 minutes,” Reburn said.

Reburn, who was informed of the cash mob visit three days in advance, said the throng not only stimulated sales, it raised his spirits.  “There are months when you just wonder if you can continue and if (printing) just has to be a hobby and not your career,” he said.  “But this little cash mob was just so joyful.  Even though it was just one night, it does make you feel appreciated.”  Although the term mob brings up connotations of a fight, Reburn said it was a pleasant experience when dozens of customers crammed into his small shop.  “They were very respectful and there to have fun,” he said.

The group was there to support local business, yet participants get something in return, said Jennifer Baker, an assistant professor of philosophy at the College of Charleston in South Carolina.  Under the “virtue ethics” point of view, if people try to continually do what they think is right, “It becomes second nature, and you end up with fewer worries and a better grasp on what is truly of value.”

The increase in cash mob activity comes at a time when America’s small businesses need community support to survive.  Nearly 40 percent cite declines in customer spending are one of the three most significant challenges to their firms’ survival, according to the National Small Business Association.

Long Beach, CA resident Francisco M. Dominguez organized his city’s first cash mob, taking the flash mob concept by organizing consumers to patronize a business on a certain day during a certain time and spend a minimum of $20 at the targeted store.  “I started cash mobs out of necessity for local businesses,” said Dominguez.  “Cash mob is a social economic movement, driven by the need to support our local businesses.”

For Dominguez, the criteria are simple: his cash mobs patronize no chains or franchises; the store has to be local and it has to be struggling.  “The business does not know we are trying to help as a community and the mobbers are willing to pay full price for (an) item,” he said.  “No one is looking for free stuff or (a) discount.  And we started to have a large number of followers.  We also started to get notice from larger businesses that have invited us to come and mob them but they have to be turned down because we can’t see if they are struggling or not.  We are getting contacted by many different people and businesses.  The problem that we are having is that we like to stay very involved, and for us to physically be able to attend several places one week is proving difficult.  We are working on implementing technology for expansion.  We will eventually be able to control and advertise one cash mob per week all over the U.S.”

Want an Energy Efficient Home? Push the Green Button

Wednesday, March 28th, 2012

Want more control over electrical use in your home?  The Green Button Initiative might be the answer. “Imagine being able to shrink your utility bill, or knowing the optimal size and cost-effectiveness of solar panels for your home, or verifying that energy-efficiency retrofit investments have successfully paid for themselves over time” said Aneesh Chopra, Chief Technology Officer for the United States.  “Far too often these and similarly important — and potentially money-saving — opportunities are unavailable to us.  Why?  Because consumers haven’t had standard, routine, easy-to-understand access to their own energy usage data.”

To help achieve that goal, the Obama Administration recently announced a major step forward in solving this problem.  According to Chopra, “I announced the launch of the Green Button initiative, an Administration-led effort based on a simple, common-sense goal: provide electricity customers with easy access to their energy usage data in a consumer-friendly and computer-friendly format via a ‘Green Button’ on electric utilities’ website.  With this information in hand, customers can take advantage of innovative energy apps to help them understand their energy usage and find ways to reduce electricity consumption and shrink bills, all while ensuring they retain privacy and security.”

Access to household energy use data is key to helping consumers conserve energy and save money. Because Green Button is available to everyone, it is already driving innovation among website and software developers interested in using that standard to provide innovative services –  from information about how to save energy or choose appropriately sized solar panels to fun Facebook apps.  Additionally, the Green Button is likely to support a new generation of interactive thermostats and virtual energy audits that will recommend retrofits that will improve efficiency in homes and businesses.

“Green Button marks the beginning of a new era of consumer control over energy use, and local empowerment to cut waste and save money,” Chopra said.  “With the benefits of open data standards, American app developers and other innovators can apply their creativity to bring the smart grid to life for families — not only in California but in communities all across the nation.”

Writing for the View on Energy blog, Jeanne Roberts says that “What it means for consumers is a way to monitor and take charge of their home energy use, via computer technology, and hopefully to lower monthly utility bills as a result. In short, a little bit of ‘green’ technology that could allow consumers to save a lot of green if used wisely.  As an added advantage, energy use reduction nationwide by residential consumers could help the nation reach Obama’s stated goals of energy security (by reducing dependence on oil) and energy efficiency, both of which lead to a ‘clean’ energy future.”

Philip Henderson of GreenBiz.com has an interesting take on the Green Button after perusing his difficult-to-read electric bill.  “If my bill were entered in a Worst Utility Bill contest, it probably would not win — I’ve seen some that are worse.  This is NOT to denigrate my utility company — it is a power company, after all, not a design shop.  This is why the ‘Green Button Project is so interesting and important.  It’s based on a simple concept — give the customer his or her utility billing information in a form that actually usable.  Click a green button on the utility’s website and billing data is delivered and can be used by various apps.  With my data, I will be able to use any billing presentation system I want — I can find the one that suits me best.  (Can’t you hear the iPhone developers tapping away to create cool new tools?)”

The Trouble With Kony 2012

Tuesday, March 27th, 2012

The “Kony 2012” film, made by an organization called Invisible Children, Inc., (IC) is a prime example of how social media can push out a video and people react to it without time to get context and background to make an informed judgment.

Joseph Kony, who is believed to be in his early 50s, is head of the Lord’s Resistance Army (LRA), a Ugandan guerrilla group accused of widespread atrocities.  Although he initially enjoyed strong public support, the LRA turned on its own supporters, allegedly wanting to turn Uganda into a theocracy.  Kony claims that he is the spokesperson of God and a spirit medium, primarily of the Holy Spirit, which the group believes can represent itself in multiple manifestations.  In 2005, Kony was indicted for war crimes by the International Criminal Court in The Hague, Netherlands, but has not yet been captured.

The film immediately spread virally on the internet. As of March 12, 2012, the film had more than 74 million views on video-sharing website YouTube and more than 16.6 million views on Vimeo, with other viewing coming from a “Kony2012” website operated by Invisible Children.  The forceful exposure of the video caused the Kony 2012 website to crash shortly after it began gaining widespread popularity.

But, there appear to be problems with Invisible Children that call into question how much of “Kony 2012” should be believed.  According to The Daily What website, the organization behind Kony 2012 — Invisible Children Inc. — is an extremely shady nonprofit that has been called ‘misleading,’ ‘naive,’ and ‘dangerous’ by a Yale political science professor, and has been accused by Foreign Affairs of ‘manipulating facts for strategic purposes.’  They have also been criticized by the Better Business Bureau for refusing to provide information necessary to determine if IC meets the Bureau’s standards.  Additionally, IC has a low two-star rating in accountability from Charity Navigator because they won’t let their financials be independently audited.

“By IC’s own admission, only 31 percent of all the funds they receive go toward actually helping anyone.  The rest go to line the pockets of the three people in charge of the organization, to pay for their travel expenses (over $1 million in the last year alone) and to fund their filmmaking business (also over a million).

Writing for the Atlantic Wire, Alexander Abad-Santos notes that the Invisible Children’s organization’s financials are questionable, with most of their money stashed in a tax-free bank in the Cayman Islands.  According to Visible Children, an anti-Invisible blog, the company spent only 33 percent of its $8 million-plus in spending on ‘direct services.’

Not surprisingly, Invisible Children is fighting back. On a video on the group’s website, Chief Executive Ben Keesey described his group’s finances, saying that more than 80 percent of funding is spent on program costs out in the field, and emphasized that most funds were spent through partner organizations in northern Uganda and the northeast Democratic Republic of Congo.  He also said that the group, which has launched the most viral YouTube video campaign in history, is dedicated to bringing warlord Joseph Kony to justice.  “I understand why a lot of people are wondering, ‘Is this just some slick, kind of fly-by-night, slacktivist thing?’ when actually it’s not at all,” Keesey said in Invisible Children’s response video.  “It’s connected to a really deep, thoughtful, very intentional and strategic campaign.”

“Any claims that we don’t have financial transparency, or that we’re not audited every year by an independent firm, or that we don’t have financial integrity, just aren’t true,” Keesey said.

“I understand because for many people they just learned about Invisible Children a couple of days ago through the Joseph Kony 2012 movie, according to Keesey.  “If all you see is the 29 minute movie and then you try to go to our website and it doesn’t exist because the traffic crashed it.  So you’re not seeing any information about our programs, you’re not understanding that this has been going on for a long time,” Keesey said.  The “goal has always been the same, it’s always been one thing and that’s to stop the violence of the LRA permanently and help restore the war-affected communities”.

Is AirBnB Becoming the eBay of Vacation Rentals?

Wednesday, January 25th, 2012

The global apartment sharing startup AirBnB has raised $112 million at a $1.3 billion valuation, confirming rumors about the fast-growing company which books rooms, apartments and houses in destinations from New York to San Francisco to Hawaii to London to Paris to Barcelona to Buenos Aires.  The round was led by Andreessen Horowitz (AH).  Reports are that Andreessen invested $60 million; another $40 million came from DST; $5 million from General Catalyst, and the rest from earlier investors and Amazon CEO Jeff Bezos.  The round is the second for the San Francisco-based company, bringing its total amount raised to date to $119.8 million.  The firm lets people travel to places more affordably by letting them book places to sleep from people around the world.  AirBnB plans to use the capital to fund its worldwide growth of private properties, often at amazingly low prices.

“Over the past three years, we’ve built a community marketplace for unique properties and brought it into the mainstream and into almost every country on the planet,” said Brian Chesky, co-founder and CEO of AirBnB.  “Today is a watershed moment – both for AirBnB as a company and for our community – that will enable us to touch new markets and expand our vision to make the world’s most interesting and inspiring places accessible to our users.”

At present, AirBnB has more than two million nights booked, more than double its rate of bookings just four months ago.  Its website receives more than 30 million hits per month and the number of AirBnB social connections has tripled to 54 million since the feature launched in May.  AirBnB has the capacity to rent properties by the night, owned by real people in 16,702 cities in 186 countries.

“We started realizing there is a growing trend of people who are doing this and making a living on Airbnb,” said Chesky, who founded the company in 2008 with Joe Gebbia and Nathan Blecharczyk.  “That’s what turned this into a movement and tipped it into the mainstream.”

AirBnB tries to prevent bad behavior on the part of the host or visitor by allowing people to post ratings and reviews of both hosts and travelers on their website, similar to eBay.  Users who connect to the site via Facebook can see if they and a potential guest or host have any mutual friends or a shared alma mater.  The site lets hosts ask for a deposit to cover damage or other problems.  To use the AirBnB website, visitors search for listings in the location they want to visit.  Once they have found the preferred location, they send a message to the host with any questions about the room or its location.  Next, users pay for their stay using a credit card or PayPal.  AirBnB holds the money until the day after the guests check in, assuring that the hosts are not cheated out of their cash.  The site profits by charging a transaction fee for each reservation.

When a young Toronto woman’s roommate moved out, she decided to rent out her extra bedrooms to travelers. The service has unexpectedly made her a bed-and-breakfast owner, bringing in approximately $1,800 a month, a nice cushion as she works on starting her own business.  “It pays my rent with a little left over,” she said.  “I’ve been able to upgrade my place, paint and get new furniture, which in turn means I can charge more.”

“The AirBnB movement has changed the way people experience the world,” Gebbia said.  “This investment will help us respond to increasing international demand by accelerating hiring, and the opening of offices around the world, in order to support our growing community on more local levels.”

On the Forbes website, Nicole Perlroth says that “Venture firms have been salivating to get a piece of AirBnB for months.  Union Square Ventures’ Fred Wilson famously referred to AirBnB as the one that got away. Other investors have been falling all over themselves trying to back AirBnB copycats for office space, tutoring, cars and even, experiences. The round, pricey as it may be for a three-year-old startup, is still coup for the VCs involved.  Andreessen-Horowitz initiated talks with AirBnB about a potential investment long before Jordan joined the firm last month.  (Andreessen-Horowitz’s newest partner Jeff) Jordan, a former eBay executive, says he was eager to lead the deal for AH because ‘(AirBnB) reminded me more of eBay in its early days than any other business I had seen.’”

Craig Wortmann on Being an Entrepreneur

Tuesday, January 10th, 2012

Virtually anyone can be an entrepreneur, although starting one’s own business is a giant leap.  Many people look at becoming an entrepreneur as a cause and effect – the academic term being “causal logic”.  That may not be the optimal way to view entrepreneurship, however.  Rather, the world’s most successful entrepreneurs use effectual logic.  According to Craig Wortmann, Clinical Associate Professor of Entrepreneurship at the University of Chicago Booth School of Business, “It goes like this:  I’m an entrepreneur, I’ve got this idea, I’ve got this limited set of resources and I’m just going to begin, and I’m not exactly sure what the effect will be.”  Wortmann has more than 20 years of experience in entrepreneurial sales and marketing strategy experience.

According to Wortmann, this is a powerful way to think about entrepreneurship because the concept has such an underlying vibe of optimism.  This notion of entrepreneurship is just start the business, anyone can do it.  They are all personality types; they don’t have to be deep in domain knowledge.  Anyone can start a business.  The research suggests that as long as people are not rigid about reaching a certain outcome, they will be successful.

Wortmann asks budding entrepreneurs to think about the idea they have and ask what is the relative value to the idea.  He believes that many people get stuck as entrepreneurs because they say “I can’t be an entrepreneur because I don’t have the next Google.  I’m not waking up in the middle of the night with the next idea for Facebook.”  Any idea that will change the focus of people or get them to do something better or a bit different – you have a potential business.

Would-be entrepreneurs need to begin taking action.  They need to talk to potential customers and partners, and start to formulate a product or service to offer to people.  Chances are the fledgling entrepreneur will be rejected; there is no question about that.  But if they keep embracing that chaos and making contact with the market, things will begin to take shape.  They need to get out there and realize that they are the structure and the process.

The challenge for entrepreneurs can be maintaining momentum.  If it’s the product, stay close to the product.  If it’s the people, get out into the market, meet people and maintain energy.  According to Wortmann, “One of the things I like to talk to students about:  is shutting down a business failure?  It is in a way, but we’re all on a journey and that’s just a chapter.  In a microcosm, it is a failure.  But is it really a failure if you take those lessons and start something new or go back to a big company and leverage all those things you learned?  That looks like success to me.”

To listen to Craig Wortmann’s full interview on entrepreneurship, click here.

Is the Timing Right for a Facebook IPO?

Wednesday, December 14th, 2011

Facebook is contemplating the idea raising about $10 billion in an IPO that would value the predominant social-networking website at more than $100 billion.  At $10 billion, the offering would raise significantly more money than any other technology IPO, and Facebook expects investors to be eager to buy into the social-networking company.  The IPO would overshadow that of the previous record holder, Infineon Technologies AG, which generated $5.23 billion in its 1999 debut.  Agere Systems Inc., which raised $4.14 billion in 2000, currently occupies second place.

Mark Zuckerberg, Facebook’s 27-year-old founder and CEO, will undoubtedly be rewarded by the website’s rise.  A valuation of $100 billion will further increase Zuckerberg’s net worth which had earlier been estimated at $17 billion, according to Forbes magazine.

Facebook expects federal regulators to call for the firm to disclose its financial results by April 30, 2012 — if it doesn’t go public sooner.  Facebook chose to wait until next year to launch its IPO to give CEO Mark Zuckerberg extra time to add users and increase sales.  Facebook, which has a staggering 800 million users, is also increasing its focus on mobile technology, aiming to leverage the shift to smart phones and tablets.  The firm expects its next billion users to connect primarily via mobile devices, rather than desktop computers.

Zuckerberg noted that an IPO isn’t something he has spent “a lot of time on a day-to-day basis thinking about.  We’ve made this implicit promise to our investors and to our employees that by compensating them with equity and by giving them equity, that at some point we’re going to make that equity worth something publicly and in a liquid way.  Now, the promise isn’t that we’re going to do it on any kind of short-term time horizon.  The promise is that we’re going to build this company so that it’s great over the long term.  And that we’re always making these decisions for the long term, but at some point we’ll do that.

Writing in the New York Times’ “Deal Book” column, Steven M. Davidoff isn’t certain that this is the correct time for a Facebook IPO.  “Facebook is in a corner.  Another Internet hotshot, Groupon, is trading below its offering price, and the market for internet initial public offerings over all appears to be deflating.  The European sovereign debt crisis isn’t helping the market gloom.  The coming months are shaping up to be a bad time to undertake an IPO.  Still, Facebook will almost certainly have to go public during this time whether it wants to or not — and whether or not it can get a valuation of $100 billion or more in doing so.  And it’s partly Facebook’s fault — it just has too many shareholders.  Securities regulation requires a United States company with 500 or more shareholders of record to begin filing reports, including audited financial information, with the Securities and Exchange Commission four months after the year it exceeds this threshold.  Facebook most likely exceeded 500 shareholders this year.  By the end of April 2012, it will become subject to this heightened regulation and have to disclose a spate of confidential business information.”

What does the prospect of an IPO mean to potential investors? TechCrunch writer Josh Constine wasn’t optimistic in a post bluntly titled “Why Greedy Stockholders and a $100 Billion IPO Could Hurt Facebook.” Constine says that if Facebook becomes subject to the desire of its stockholders, the site will innovate less by making profit a higher priority than user experience.  For example, more ads are likely to pop up on users’ pages.  “Outside stockholders could detract from Facebook’s vision and momentum,” he wrote.  “They could push for faster returns, and pressure the company to display more ads, turn mobile into a direct revenue stream, and play it safe with product.  This might produce short-term gains, but could hamper what CEO Mark Zuckerberg has built into a core communications utility for the world.”

Google+ Off to a Good Start – Will It Last?

Tuesday, August 9th, 2011

Just one month into its launch, Google+ has seen extraordinary growth, netting some 20 million unique visitors.  Still, it faces several key challenges before it can become the dominant force in social media.  Online metrics company ComScore said that of the 20 million users, five million of those are from the United States.  “Google+ is on an unprecedented growth trajectory over its first three weeks, reaching 20 million visitors faster than any site in recent memory,” Comscore Vice President Andrew Lipsman said.  The estimate comes a week after Google CEO Larry Page said that the company already had accumulated 10 million registered users. While registered users and unique visitors are not necessarily the same thing, that growth has been nothing short of impressive.

While the rate of growth is unparalleled, the social network is still small when compared with its rivals such as Facebook and Twitter, which have 750 million and 200 million registered users, respectively.  Google+’s success will depend on how Google “converts this strong trial base into regular users,” Lipsman warned.  While competitors Facebook and Twitter have become online destinations in themselves; more than 50 percent of traffic coming to Google+ is initiated by visits to Google or Gmail, according to Experian HitWise.  YouTube is a significant referrer.

Writing on the DVice website, Raymond Wong says that “Google+, the new guy on the social networking scene isn’t doing too bad.  After Google CEO Larry Page announced last week that Google+ had 10 million users in a mere two weeks, it appears they’ve added another 10 million users.  Talk about being the hottest thing in town.  People said that Google couldn’t build a social network that anybody would give two cents about, but somehow they’ve managed to do just that.  According to an independent comScore report, the new Google+ social network has hit 20 million unique visitors in three weeks.  Some have called Google+ a Facebook rip-off.  Some have joined simply to see what the buzz is all about, much like how everybody started Google and for a brief moment in time and then disappeared into oblivion. For now, none of that matters.  Google+ is gaining more users everyday, and Google is sure to be super excited by all the signups.”

So while we have a lot of work still to do, we are really excited about our progress with Google+,” Page said, noting that Google will re-focus on its core products and on new innovations.  “Google+ is also a great example of another focus of mine — beautiful products that are simple and intuitive to use and was actually was one of the first products to contain our new visual redesign.”  Google+ isn’t Google’s first expedition into the world of social media and its excitement over having 20 million Google+ users may be early.  Google introduced Google Buzz in February 2010 and immediately saw user numbers swell; it was later panned.

Reports are that Google will, unlike Facebook, host games on its own servers — this could make them faster and less prone to glitches.  The Google+ code mentions a gaming platform, and the company has reportedly invested as much as $200 million in the leading social gaming company Zynga.  There has been no official announcement about if and when the Google game platform will launch or how it will be designed.

Facebook is still beating Google+ in time spent on a social network.  HitWise research director Heather Dougherty said the average visit time for Google+ is five minutes and 50 seconds, compared with almost 22 minutes on Facebook.  Dougherty also examined how users arrived at Google+.  Google.com (at 34 percent) and Gmail (at 26 percent) account for 50 percent of all traffic to Google+; another six percent come from YouTube and Google Profiles.  Facebook ranked third among websites visited immediately prior to Google+, an indication that many social-network users have multiple accounts.  Google+ ranks as the 42nd most visited social networking site in the United States, and was the 638th most visited website.  Broken down by region, most of Google+ visitors are from Los Angeles, New York City and San Francisco (in descending order).

Facebook Is Worth $50 Billion? Anyone Remember the Dotcom Bubble?

Tuesday, July 12th, 2011

Could social media be the victim of the next dot.com bubble? Although Facebook has been valued at $50 billion – more than Yahoo!, eBay, and Time Warner and butting heads with such giants as Amazon and Google, there is some question about what the valuation is based on.  According to Newsweek, “Some media experts have compared Facebook with Disney, valued at about $70 billion.  But Disney has real, tangible assets – parks, hotels, cruise ships, iconic images to market on everything from T-shirts to tableware, and a massive library of classic animated films – to back its assessed value.  Facebook has a virtual network that, according to Time, links one-twelfth of the world’s population.  However, according to The Wall Street Journal, Facebook still has enormous infrastructure costs that include as much as $700 million for two data centers, and its profits have yet to be publicly disclosed.  When an investor buys a piece of Facebook, what exactly does that investor get?  The sudden, meteoric explosion in value of online social media sites like Facebook and Twitter is eerily reminiscent of the rise about 15 years ago of the online businesses that created the ‘dotcom bubble.’”

On the PBS Newshour,  Ray Suarez interviewed Josh Bernoff, a senior vice president of Forrester Research, who has written two books on social media.  According to Bernoff, “I certainly think that there’s no rational way to understand these valuations.  I want to be clear here.  Social is very exciting.  There’s a lot of business perspective, a lot of optimism that goes along with it.  But I think these valuations are based on where people think the next buyer will come from and not on where the actual revenues of these companies are going.”  Earlier this year, Microsoft bought Skype for $6.5 billion, although its revenues are less than $1 billion a year.  When LinkedIn went public, it was valued at $9 billion.  Its profits are just $12 million annually.

According to Experience:  The Blog “The dot-com crash of 2000 was devastating.  Even now, 11 years later, the NASDAQ Composite is just a hair over half of where it stood in March 2000.  The crash caused the loss of $5 trillion in market value, huge numbers of people lost their jobs, and the facade of most of those dot-com millionaires crumbled as their paper wealth evaporated.  (To me, the insanity of the dot-com craze is demonstrated by a single story told to me by a now-successful exec in a social enterprise company.  Back in 2000, he ran a tiny startup that got caught up in the dot-com hysteria; at one point it hit a market cap of $1 billion but was generating just $60,000 of revenue.)  I am taking you on this trip down Memory Lane for a reason:  It’s happening again.  Investors in social media startups are looking to cash in, and valuations are soaring despite modest to no profits.  Recently, Airbnb, a site that allows people to arrange short-term vacation rentals of rooms, homes and apartments, received a round of funding based on a $1 billion valuation.  While the company has not released financials, best guess estimates are that Airbnb only generates around $10 million of revenue.  To put this into perspective, Marriott has $12 billion in revenue and a market cap of $14 billion.”

The Next Web disagrees with predictions of a second dotcom bubble.  “Dotcom 2.0 is much stronger than its predecessor.  People are more technologically savvy and, crucially, broadband and smart phones are approaching ubiquity.  The world is switched-on, tuned-in and can’t get enough Internet.  Technological advances aside, the one thing that will ensure we don’t see another dotcom disaster is social media marketing.  The key to success this time lies in finding ways to monetize the many ventures – it’s understood that driving traffic isn’t enough, which is why Twitter is actively seeking ways to drive its revenue.  In fact, Twitter may make as much as $150 million this year, according to some reports.  There’s no question there are a lot of over-valued companies out there at the moment; some will undoubtedly crumble and some will flourish. But Dotcom 2.0 isn’t a bubble, and it won’t burst.”