Computer Blew

In which we each give Zuckerberg a crisp $50 bill

*Update: It’s only a $5 billion IPO, but still, that’s a lot of money.

A few thoughts on the impending Facebook IPO, distilled over a weekend of throat lozenges and Seinfeld DVDs:

First off, the rumored $10 billion IPO (incidentally, the largest in history) and potential $100 billion valuation of the company is 100% justified.  Zuckerberg and co. have created the most ingenious marketing machine in history, in that they have somehow convinced 800 million people to voluntarily populate a database with their friends, family members, likes, dislikes, hopes, dreams, and occasionally fears.  This has allowed Facebook to tailor ads that fit you like a fine suit, and has subsequently yielded an obscene amount of money for the company.

Which leads me to my major objection to the IPO, and more broadly, to Facebook in general: Nobody uses Facebook as a platform for buying stuff.  This is not to say that people don’t click on ads on Facebook, or purchase upgrades to their Farmvilles – they clearly do.  But this isn’t the reason people religiously log in.

Facebook’s service to customers, the thing that keeps people coming back, is that it allows users to easily keep in touch with their friends and family.  In this regard, Facebook is essentially the phone company.  Diluting this core service, as Facebook routinely does with ads, games, apps, etc. routinely yields to rageful user backlash.

So take that one step further, and imagine you turn on the news one day to hear an announcement that thanks to all of the phone calls people have been making, AT&T was able to gather enough conversation data to make telemarketing much more efficient, boosting its stock price 5%.  How would you feel?

This is essentially the Facebook (and Google fwiw) model.  What’s more, because Wall Street has valued their service by the ability to serve ads, but not necessarily the ability to help users connect with each other, the majority of the company’s resources will go to improving the former, possibly at the expense of the latter.

Rant over, time for pretty infographics (courtesy of Mashable):