Facebook’s Need to Take Revenue Generation Mobile

Facebook’s IPO was one of the biggest in history. However, all of the hype wasn’t nearly enough to keep the company’s stock price afloat. Shares have fallen 11 percent below the initial IPO price because most serious investors view Facebook’s lack of a true mobile business strategy as an enormous problem. Over half of the sites nearly 900 million users access its content from a mobile device, but many of the site’s features and advertising, the primary revenue source, do not appear on mobile clients. All apps, including games, are also notably absent; a gap that eliminates the 30 percent revenue cut that Facebook could make from in game purchases by mobile users.

Although the company hasn’t publically articulated (or leaked) anything even remotely resembling a mobile strategy, they have been purchasing mobile-focused companies like I purchase shoes at a Nordstrom’s sale. In the last couple of months, Facebook has snapped up Lightbox, Glancee, TagTile and of course Instagram in addition to Karma. A big company acquiring smaller companies isn’t unusual, but Facebook isn’t known for having a purchasing habit, well, that’s until now.

Predicting the Future

It’s clear that Facebook made a very bad decision to not to create a more sophisticated mobile platform. The company even mentioned the risk in its IPO filing. Facebook wanted to drive users to its web client. However, users had other ideas. The number of mobile users has continued to climb, and they are being met with a handicapped version of the site. It’s obvious that Facebook needs to strengthen its mobile presence, but how is not so obvious.

Mobile users expect a fast and unobtrusive experience. Advertisers are concerned that ads will be smaller and more difficult to see and understand, which could reduce effectiveness. Inserting ads when users start or shut down the application could be viewed as intrusive. Earlier this month, Facebook launched a new app store, App Center, earlier this month, which might become a key part of its mobile strategy.

The company has begun allowing developers to submit applications, and Facebook will get a percentage of the sale price for any app sold via the platform. Facebook could add mobile applications via its app store and integrate its advertising into products sold via the new App Center. The most natural move may be for Facebook to use activity streams for ads. Ads would appear like any other post in a user’s mobile news feed.

No matter what direction Facebook goes, they need to proceed cautiously. Trying to roll out new mobile features or capabilities acquired from their many new purchases hastily will likely alienate users and investors. Everyone involved with Facebook seems a bit frustrated with the company’s current mobile position. However, there is one group of people that are thrilled by Facebook’s anemic mobile presence – the companies it just acquired.

Where Is Facebook’s Mobile Strategy Going? is a post from: SiliconANGLE We're now available on the Kindle! Subscribe today.

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Many experts say Zuckerberg deserves the position because he planned it, dreamed it and worked it out. He focused on his mission on making Facebook the number one social network in the world.

Facebook became a public company on May 18, 2012, and the first American company to debut in NASDAQ with a valuation above $100 billion. It was another big success for Zuckerberg’s influence on the social network that has changed the way people relate to one another.

During the early days of Facebook inception he said,

“When you give everyone a voice and give people power, the system usually ends up in a really good place. So, what we view our role as, is giving people that power. By giving people the power to share, we’re making the world more transparent.”

Surprising Zuckerberg facts

Mark Zuckerberg started “Thefacebook” because he wanted one online directory where all students could be listed at Harvard University.

Zuckerberg didn’t like the concept of putting banner ads on the site. He rented a house near Stanford after he dropped out from the university and to cover the cost of staff and running the site, he started looking into other advertising systems.

“We hate banner ads…lately we’ve been putting thought into other advertising systems that would be less offensive.  Right now we put up what we need…it’s not that cheap — we have to make $40,000 a month or something, but it works,” he said.

In 2011, Mark Zuckerberg tops the ranking of the 100 most powerful media person published by the Guardian newspaper, ahead of Rupert Murdoch, Larry Page and Steve Jobs.

Zuckerberg now owns roughly 28 percent of Facebook. By Facebook’s current valuation, he’s richer by another $24 billion.

With the current asset valuation of Facebook, the entire GDP of Afghanistan ($17.9 billion), Nepal ($18.3 billion) and Jamaica ($14.7 billion) is lower than Zuckerberg’s company market value. In addition, the entire earnings of the porn industry of the US (at $10 billion) is also lower than Mark Zuckerberg’s current value.

Moreover, the combined salaries of all NBA ($2.09 billion), MLB ($2.9 billion) and NFL ($3 billion) players is smaller than Mark Zuckerberg’s worth. And U.S. video game sales for 2011 were estimated at about $17 billion, still smaller than the assets under Zuckerberg.  Comparatively, at 28 Bill Gates had earned just $100 million, about $23 billion less than Zuckerberg’s worth at the same age.

Indeed, at 28 Zuckerberg is exactly half the age of the average S&P 500 CEO, but the IPO offering makes his company worth more than iconic companies such as Disney, Ford and Kraft Foods.

On a personal front, Zuckerberg doesn’t own a T.V. and he doesn’t like public gatherings, especially if he has to make a speech.

His friends on Facebook have access to his e-mail address and his cell-phone number. Zuckerberg has granted them access to browse his photograph albums, including the one titled “The Great Goat Roast of 2009.”

He’s like an addict when it comes to programming, and works like robot. More often than not he would stay awake, coding for days when he started the social network.

“I keep programmer time sometimes…programmers tend to stay up really late and work when everyone else is asleep. So it’s not really uncommon for me to stay up until 6 or 8 in the morning,” said Zuckerberg. “But the business world does not operate between 5 pm and 8 am, so that requires some waking up for.”

The lighter side of Mark

On the eve of Facebook’s IPO, Mark Zuckerberg published an unusual witty letter to potential investors.

“For years, you’ve wasted your time on Facebook.  Now here’s your chance to waste your money on it, too,” Zuckerberg said. “Facebook is the most successful social network in the world, enabling millions to share information of no interest with people they barely know.”

He continued, “Every time someone clicks on a Facebook ad, Facebook makes money.  And while no one has ever done this on purpose, millions have done it by mistake while drunk.  We totally stole this idea from iTunes.”

“Finally, if you invest in Facebook, you’ll be far from alone.  As a result of using Facebook for the past few years, over 900 million people in the world have suffered mild to moderate brain damage, impairing their ability to make reasoned judgments.  These will be your fellow Facebook investors.”

And some most interesting things about Zuckerberg have appeared on various social media sites with the full intend of headlining Zuckerberg’s life. On the day of IPO, CDZA music wrote a musical that’s all about Mark Zuckerberg (see below).

Mark Zuckerberg and Sean Parker made this music video about the history and future of Facebook just before the IPO.

And here are some more funny videos, including Facebook in Real Life, and The Social Network Parody Movie.

The Best of Mark Zuckerberg is a post from: SiliconANGLE We're now available on the Kindle! Subscribe today.

In the same vein:

• Facebook Waited Too Long to Go Public: Initial IPO Reactions
• IPO Websites’ Speed Test; Fusion-io Oddly Fails
• Will Facebook Enter IPO Sooner Than Expected?
• Can Microsoft’s New So.cl Network Revive Bing Search?
• Pinterest Joins the List of $1 Billion Dollar Enterprises
• Facebook IPO Sets Sights on $1 Trillion as Zuckerberg Inspires His Engineers

Pronounced “social,” the project from Microsoft’s FUSE Labs is not designed to compete with Facebook though it is launching with a similar premise, allowing students to share and search content with their peers for research purposes.

“FUSE Labs’ So.cl project is now accepting all users interested in joining the site,” Microsoft said in a statement. “So.cl is an experimental research project focused on the future of social experiences and learning, especially among younger people. So.cl combines search and social networking for the purpose of learning and is the latest experiment from FUSE Labs.”

So.cl search is integrated with public Bing APIs to display web pages, images, or videos search results data.

To connect to the social site, you must enter your Facebook or Windows Live login information. So.cl lets you initially define your interests based on themes (like music, sports, travel, art, food etc.).  Once you set up your profile, you can start to monitor the activities of several people, follow and be followed by other users. You can also comment and publish text, photos and video. The central search engine is powered by none other than Bing, searching these themes with a live chat option.

“We expect students to continue using products such as Facebook, Twitter, LinkedIn and other existing social networks, as well as Bing, Google and other search tools,” Microsoft said on the social site. “We hope to encourage students to reimagine how our everyday communication and learning tools can be improved, by researching, learning and sharing in their everyday lives.”

A Competitor to Google+

So.cl combines several functions of social media, search engines and an interface very similar to Google+ from which you can share content. Although the So.cl interface has a more than reasonable resemblance with Google+, you can also see the influence of other social networks like Facebook, Twitter and Pinterest.

The site resembles Pinterest in that users can create boards. It’s similar to Facebook in that it provides the ability to follow other users, and like Twitter in a way to follow general interests such as film or design.  And just like the initial days of Facebook, the network is only meant for universities and students.

Despite the glaring similarities to today’s most popular social networks, Microsoft is really building off its existing services, and even leveraging one of its most popular social partnerships to date. So.cl uses Facebook login to create new user accounts, and as Microsoft has a sizeable investment in Facebook, they’re likely to continue teaming up around certain things like social search and Skype integration.

As a standout feature, Microsoft adds “video parties” in So.cl that distinguish the site from other social networks as it allows users to search for videos, which then can be edited and shared with other users, though Google+ aims to do something similar with Hangout.

Microsoft’s Social Networking History

This isn’t the first time Microsoft’s gotten involved in social, having injected user-generated content to enhance search recommendations on Bing.  Bing’s social approach has largely been sidelined by Google’s massive reach, and has yet to prove the real potential and Bing.

Microsoft’s research team also developed location-based social networking that brings together the physical and online world for social networking services.

Future So.cl Goals

What priorities we will see in the furthered development of the Microsoft’s social network in the coming months?

On paper, so.cl is still an experimental project, but in fact it leaves little confidence that Microsoft intends to use so.cl as a research tool just for students. Rather, Microsoft likely plans to explore the social media space on a broader spectrum, targeting a niche audience in hopes of gaining early adoption through its research-enabled value proposition.

At first glance it appears that Microsoft is planning to use the experience of real search users to boost its own search engine, Bing.  Your search results are shared with others, and the results can also be access by third parties.  This means that the social interactions can also benefit other companies and partners, building a business model and potential advertising platform relatively early.

Microsoft is yet to integrate Bing search engine with So.cl, but looking at the long term, this may help revive Bing and enable Microsoft to take advantage of growing trends around social search and recommendations.

Window 8 operating system and the next version of Windows Mobile OS will also likely offer a number of ways to post on its social network, completing the circle and competing at a wider range with Google’s encompassing approach to social search and Apps.

Can Microsoft’s New So.cl Network Revive Bing Search? is a post from: SiliconANGLE We're now available on the Kindle! Subscribe today.

In the same vein:

• The Little Bird that Could: 100M Twitter Users Ripe for Ad Revenue
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After getting $100 million in investment funds from Japanese e-commerce giant Rakuten, the new kid on the social media block got a valuation 50 percent bigger than that of Instagram when Facebook brought it for $1 billion.

So what does the future hold for Pinterest that would justify a $1 billion valuation for the cloud-based vision board?  Pinterest still has a ways to go before it becomes a true platform player for social commerce, marketing and user recommendations.  Here are some areas in which Pinterest will need to develop its business:

Advertising in pictures

Pinterest is the third most popular social media site behind Facebook and Twitter, letting you organize and share all the beautiful things you find on the Web. The site also includes built-in ways to incorporate mutual respect, authenticity and properly crediting your sources.

The social sharing site shows tremendous growth in its user base. Over 80 percent of pins are actually re-pins of other people’s stuff, according to findings from RJMetrics.

“Pinterest demonstrates some of the strongest user engagement, retention and virality metrics I have ever seen in an online business,” wrote Robert Moore of RJMetrics. “The company has found tremendous success among its core demographic, and the potential reach of its appeal will be tested in the coming months as attention from broader audiences continues to increase.”

Pinterest can use the existing social platform as an advertising marketing tool for businesses selling easily photographed products and services. The company can look at developing their own tools to render itself a relevant business model with its current platform and projected growth.

To do this, Pinterest can build up an e-commerce platform overlapping e-commerce and social networks where both retailers and consumers can communicate, discover, and curate to make the experience more entertaining.

Charging Advertisers

Several brands are beginning to make Pinterest pages, pinning their own products to the site. Pinterest could potentially sponsored pins in the stream that are paid for by advertisers, similar to the model Twitter’s used to build out advertising on its microblog. Pinterest can also work with advertisers to create customized Pinterest-connected campaigns and pages.

Mobile App

Pinterest has yet to explore the mobile space, lacking a mobile app on any major platform and limited mobile-specific options for the mobile web (like pinning). Pinterest could potentially create a mobile marketplace by developing mobile apps where users/advertisers, instead of pinning products on the site, could upload product photos, price, description, and price etc. on their mobile devices itself.

The mobile marketplace could be modified further into a monetization platform where users can buy the pins and seller would be obligated to ship the product.

The biggest benefit of mobile integration is the added context of location to uploaded pins.  Pinterest is likely going to develop some recommendation tools around its site activity, and as retailers and marketers become more interested in user-generated pins, promotions for local venues can leverage Pinterest as a mobile outlet as well.

Pinterest API

Pinterest has the potential to become a notable marketing tool, but for that, the company needs an interface to interact with social and content feeds – an API could accomplish that requirement.

The API could create an environment where retailers can better integrate their offerings for two-way collaboration and sharing with their customers.

Pinterest CEO Ben Silbermann hinted in recent past that the company will acknowledge an API in the near future (although the page was listed for only a short time on Pinterest’s site).  In the post Silbermann said the Pinterest profiles will be very different to those of Facebook and other social networks, and will show a snapshot of what you’re really about. Through an API, Pintrest-related app development would further spur the rapid growth of the site, which already reached 11.7 million unique users in January.

Can Pinterest Build a Business Model to Justify $1 Billion Valuation? is a post from: SiliconANGLE We're now available on the Kindle! Subscribe today.

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Karma, a mobile social gifting app is Facebook’s most recent target, and was founded by the same duo that was behind Tapjoy.  The app allows users to send gifts via their mobile device, which can then be posted onto Facebook or through an SMS message as the means of alerting the recipient to the arrival of the gift.

A Facebook representative saying about the takeover, “We’ve been really impressed with the Karma team and all they accomplished in such a short time.  This acquisition combines Karma’s passion and innovating mobile app with Facebook’s platform to help people connect and share in new meaningful ways,” while also stressing that it is not an “acquhire” but instead an acquisition.  The inventors of Karma had wild success with the sale of Tapjoy and while the terms of the Facebook deal have not been released it can be assumed to be a lucrative deal for all of those involved.

Besides the billion dollar Instagram purchase, Facebook has recently swiped up other apps including Lightbox and Glancee, which leaves many speculating the reasons behind such purposes.  Is this Mark Zuckerberg’s attempt to buy talent into his corporate offices, or is Facebook preparing to create an entirely new interface where mobile devices, the web, and apps all work seamlessly and this is just the means by which that goal can be achieved?

Another Mobile Acquisition for Facebook. This One Comes with Good Karma is a post from: SiliconANGLE We're now available on the Kindle! Subscribe today.

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But almost as quickly the early gain faded, and shares of the world’s largest social networking company were trading just above their initial offering price before rebounding in the afternoon. Facebook’s stock was trading at $38.15 by 1 PM in New York.

The price band was initially set as $34-38. To celebrate the much-anticipated IPO, founder and CEO Mark Zuckerberg rang the opening bell at the NASDAQ stock exchange Friday morning. Facebook put up 421 million shares of its common stock for sale.

The IPO filing was managed by Morgan Stanley, JP Morgan, Goldman Sachs, Bank of America, Merrill Lynch and Citigroup.

Facebook’s initial public offering was “unprecedented in terms of the demand” from average investors, said Stephen Kay, a managing director at brokerage Knight Capital who works with retail brokerages.

Confidence in the Company

The IPO price now values the company at 107 times more than its 12- month earnings, which is more than every Standard & Poor 500 member except Equity Residential and Amazon.

“It shows tremendous confidence in the guy wearing the hoodie,” said Erik Gordon, a professor at the University of Michigan’s Ross School of Business, referring to Zuckerberg and the signature sweatshirt he wore during meetings to market the stock. “He hasn’t specified how he’s going to do it, but he’ll have to do it to justify this price.”

Facebook grew its earnings 65 percent last year, faster than most companies. Facebook’s $16 billion share sale has surpassed that of General Motors, making it the second-largest stock market debut in US history.

Market Cap

At the current valuation, Facebook is now placed ahead of Amazon and Cisco, and ranks the 23rd largest U.S. company by market cap, according to Capital IQ.

In terms of total market cap, Facebook is now at $104.1 billion, the largest in the U.S history.

“Facebook is the 18th IPO worldwide so far this year to price above initial projections,” said Dealogic.

With a total share of 484.4 million, the social giant would be generating $18.41 billion, making it the second-largest U.S. offering ever behind record-holder Visa’s $19.65 billion deal in 2008.

Initial Reactions

Some asset managers responded the Friday debut as a disappointment following a historic run-up to the offering.

Michael Mullaney, vice president and chief investment officer for Boston-based Fiduciary Trust, said only a handful of clients are interested in buying Facebook shares.

“If we did get one it would have been a small piece,” said Mullaney. “And then who would we give it to? Which one of our clients gets the shares? I’d rather trade it on the open market with every Tom, Dick and Harry. It makes my life easier.”

Ronald Coleman, head of research and institutional equity of Columbus Advisors Group in Taunton, Mass., said he was looking a target price of $50 to $55 a share.

“It’s a flop,” he said. “I was looking for a 20% to 30% pop on day one, and you didn’t see that. Long term, the model is still a good one, but the problem was they waited too long to go public.”

Underwriters then bought the stock to keep it from falling below $38 after its debut.

Chris Brown, manager of the Pax World Balanced mutual fund, made a $14 million investment on a secondary market before the IPO.

“Going into the IPO, there has been a lot of skepticism from investors, in particular institutional investors, questioning anything from whether the price of the stock is fair, to whether Facebook can successfully monetize and sell ads,” he said. “We’re long investors. It’s nice to have the stock up for one day, but it’s only one day. It’s hard to extrapolate much as to the future of the company.”

Investors’ Future Plans

Facebook has allocated nearly 15 percent of the shares to retail investors. Executive management team of Facebook plan to sell 89.4 million shares, including restricted stock units, options and common stock.

Others like Goldman Sachs aimed to sell 28.7 million, and Venture capital firm Accel Partners planned to offer 49 million shares to investors.

“There’s hundreds of millions of people that want to emotionally buy this stock and most of them are going to have to buy it in the aftermarket,” Jon Merriman, chief executive officer at investment firm Merriman Holdings Inc. in San Francisco, said before the stock began trading. “I’d like to see it season over a couple of months.”

David Menlow, president of research firm IPOfinancial.com expects to see the shares appreciate in coming days and investors should hold it for longer period.

“I think people will buy and hold for the longer term,” Menlow said. “We would like to see the company’s stock settle somewhere between $40 and $45.”

Facebook Waited Too Long to Go Public: Initial IPO Reactions is a post from: SiliconANGLE We're now available on the Kindle! Subscribe today.

In the same vein:

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• Will Facebook Enter IPO Sooner Than Expected?
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ComTranslations new service, SociaLingo, is offering a first of its kind human translation service for those wishing to post content through social media.  This service can be used with Facebook, Google+, Twitter, YouTube, and LinkedIn as well as other social media channels.  SociaLingo supports more than 140 languages through near real-time translation, and as a recent Pew Internet report found, two thirds of adults who use the Internet use at least one social media channel.  This service allows businesses to better connect to their market, thus opening the doors for increased visibility and profit.  ComTranslations are completed by native speakers who are certified as translators and are chosen for each individual project through their translation management system called TrRank.

The importance of social media cannot be understated in the business model. “With 93% of marketers using Social Media for businesses, social media tools are giving business and corporations an outlet to communicate with their target audience in a way that wasn’t possible before,” ComTranslations CEO Carlos Garcia explained.  He continues to point out that there are an estimated 50% of social media users who use languages other than English.

Translating a new world

ComTranslations and other translation companies such as Globalization Partners International (GPI) and One Hour Translation offer an invaluable service to international companies and users who wish to reach outside of their native language arena.  Translation tools are an important part of the global market and allow businesses to transcend the language barrier that once precluded companies from expanding into new markets.  While companies such as GPI and One Hour Translation are able to provide quicker translation services, ComTranslations new SociaLink service is an industry first.

Lingotek has developed a new service, called the Collaborative Translation Platform that is designed for smaller jobs, such as those that would be used for a social media platform which offers faster translation times, higher quality and real-time monitoring.  A downside to this service is that the translations are not completed by a professional translator; instead it is members of the community that provide the initial translation with the option to have it reviewed by a professional.

The demand for human translation services is ever increasing, while Google’s translator web application provides sufficient translation, it is difficult for a computer generated translator to properly understand the nuances of speech.  By incorporating social media into their business model ComTranslations is opening up the door for businesses to better communicate with their target audiences in an entirely new way.

ComTranslations Goes Social to Strengthen Human Impact is a post from: SiliconANGLE We're now available on the Kindle! Subscribe today.

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• Ebay and Craigslist Duke it Out in Federal Court: Classified Ads War Heats Up
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The stock’s price is on the higher end of the $34 to $38 forecast released earlier this week.

Starting today Facebook will be holding on to two more records: the second largest IPO ever after Visa’s, and the company with the highest valuation on record.  But at the same time the social network reported revenue of only $1 billion  in the first quarter of 2012, and is currently occupying the 909^th spot on the stock exchange in terms of annual revenue.

Facebook is not likely to run out of money anytime soon, and claims to have 900 million registered accounts, but just over a decade after the dot-com bubble, monetization still remains a big topic.  The Silicon Valley powerhouse currently lives off royalties from targeted advertising, and while its early backers will undoubtedly realize a massive return on investment today, the company will still have a lot of ground to cover on the long run.

In this regard, the market seems to have no shortage of optimism. That is partially thanks to the trends that are the key drivers behind Facebook, and in which the latter is only becoming more and more invested.  These key trends are helping to pump valuation for another rising star–Pinterest.

“Both Facebook’s IPO and Pinterest’s $100 million investment [a content sharing service that announces Series C funding yesterday] from a leading ecommerce provider highlight the massive opportunity that the intersection of mobile, social and commerce present,” said Anne Frisbie, the VP for InMobi North America. “InMobi believes that mobile-social commerce is one of the largest transformative revolutions that we are undergoing and that this intersection fundamentally changes how consumers find, connect, share and buy products around the world.”

As online networks take center stage for investments and stock offering these past few months, from Groupon to Facebook, it’s clear that we’re entering a new era where expectations are high for social networks and mobile monetization in particular, as localization becomes increasingly relevant in the social space.

Zuckerberg’s $16BN Opening Bell Ticket is a post from: SiliconANGLE We're now available on the Kindle! Subscribe today.

In the same vein:

• Android’s Google Play Faces Rising Competition from Amazon, Facebook and China
• Where Is Facebook’s Mobile Strategy Going?
• The Best of Mark Zuckerberg
• Can Microsoft’s New So.cl Network Revive Bing Search?
• Another Mobile Acquisition for Facebook. This One Comes with Good Karma
• Facebook Waited Too Long to Go Public: Initial IPO Reactions

Rakuten said that this investment helps the site grow in the U.S. and its 17 overseas markets, including entry into Japanese market.

“While some may see e-commerce as a straightforward vending machine-like experience, we believe it is a living process where both retailers and consumers can communicate, discover, and curate to make the experience more entertaining,” said Rakuten CEO Hiroshi Mikitani. “We see tremendous synergies between Pinterest’s vision and Rakuten’s model for e-commerce. Rakuten looks forward to introducing Pinterest to the Japanese market as well as other markets around the world.”

Pinterest has become the sensation of recent social media history, and has positioned itself as the third largest social network in the US.  Pinterest, where users can share their photos, has grown rapidly in recent months–the website has become the sixteenth most visited site in the US, according to Alexa.  In April alone their user base has reached more than 20 million, up from 1 million in July 2011.

“Our goal is to help people discover things they love, by connecting people through their shared interests. Bringing Rakuten on board gives us an amazing opportunity to move a step closer to this goal,” said Pinterest CEO Ben Silberman.

A partnership with Rakuten could open many doors for Pinterest to expand its presence in Asia. The company sees great potential in markets like France, Germany, Japan, Portugal and Spain.

Pinterest Weekly – New Platform to Keep Users Engaged

Pinterest remains undefined in its business model, at least publicly, and the company has yet to disclose its revenue.  But faced with such high expectations and an outstanding valuation, it’s time for Pinterest to start developing its user engagement and monetization strategies.

One step in that direction is the introduction of Pinterest Weekly, a weekly email board. The company has started sending users a weekly e-mail featuring basic account stats, like their top pins, and other popular boards in an attempt to keep them engaged between pinning sessions. This week’s feature is user George Takei’s “Cats and Dogs” as he shares “Pins You Might Like” from users’ friends.

Pinterest as a social network is more popular amongst the ladies, and has been nicknamed the “Tumblr for girls” as women trust product recommendations reviews from this social networking site. Amazon recently integrated Pinterest to their service in an attempt to drive more consumers to their retail outlet, particularly including women, and power more recommendations.

Pinterest Joins the List of $1 Billion Dollar Enterprises is a post from: SiliconANGLE We're now available on the Kindle! Subscribe today.

In the same vein:

• Can Microsoft’s New So.cl Network Revive Bing Search?
• Pinterest Goes to Amazon, BBM Friends Facebook and Twitter
• Android’s Google Play Faces Rising Competition from Amazon, Facebook and China
• The Best of Mark Zuckerberg
• Can Pinterest Build a Business Model to Justify $1 Billion Valuation?
• Facebook Waited Too Long to Go Public: Initial IPO Reactions

Since its founding in 2004, the company has seen its valuation soar from $4.9 million in 2004 to $104 billion based on today’s IPO pricing.

My friend Dan Primack at Fortune has a great summary of who makes what in the watershed moment for a new generation of internet companies.

This IPO has been compared by many to Google’s historic IPO. My angle is that this IPO is more like the Netscape IPO where it’s so obvious that the future is social yet many can’t figure out how to justify the valuation. The browser from Netscape ushered in the Internet boom then bust. Why? Because Netscape and the web were so intoxicating in terms of possibilities. That spawned a massive bubble. Facebook has many similarities to that Netscape moment. Facebook is intoxicating yet elusive in its’ value.

I was at the SAP SapphireNow annual conference and I talked publicly on theCUBE (SiliconANGLE.tv flagship video telecast) that Facebook is what the web would have looked like if Tim Berners-Lee privatized the World Wide Web. Instead, the World Wide Web was open sourced. The web then went on to define the internet generation and its’ value for decades. To me Facebook is what the World Wide Web would look like if it went public rather than free and open.

So here’s a quick list of who made what, based on the assumption that underwriters exercise their entire over-allotment, plus the value of their remaining position (based on $38 price):

INDIVIDUALS

Mark Zuckerberg: $1.5 billion ($19.14 billion)
Dustin Moskovitz: $285 million ($4.8 billion remaining)
Peter Thiel: $848 million ($852m remaining)
Mark Pincus: $4.1 million ($158 million remaining)
Sean Parker: $38 million ($2.27 billion remaining)
Reid Hoffman: $412 million ($138 million remaining)
Jim Breyer: $125 million ($320 million remaining)

INSTUTUTIONS

Accel Partners: $2 billion ($4.72 billion remaining)
DST Global: $2 billion ($3 billion remaining)
Goldman Sachs (GS): $1.25 billion ($1.25 billion remaining)
Greylock Partners: $332 million ($1.06 billion remaining)
Elevation Partners: $202 million ($1.32 billion remaining)
Mail.ru Group: $857 million ($1.28 billion remaining)
Meritech Capital Partners: $306 million ($1.23 billion remaining)
Microsoft Corp. (MSFT): $287 million ($959 million remaining)
Tiger Global Management: $1.03 billion ($1.02 billion remaining)

Where Does Facebook $100 Billion Value Compare To Other Public Companies

Hewlett-Packard: $46 billion (-$54b)
IBM: $228 billion (+$128 billion)
Microsoft: $250 billion (+$150b)
Oracle: $130 billion (+$30b)
SAP: $60 billion (-$40b)
Salesforce: $18 billion
Amazon: $98 billion (-$2b)
Google: $203 billion (+$103 billion)
Yahoo: $18 billion (-$82 billion)

My Angle:
Being close to Facebook since they moved to Silicon Valley and within the core tech circles, I have a unique perspective. I am “long” on Facebook. I think the analysis of the pundits this week are completely missing the boat on the analysis. Facebook’s revenue model has nothing to do with online advertising because reach advertising is dying. It’s about data. If you look at Facebook’s revenue since Timeline was introduced Facebook has taken a massive hit in operating revenue. Their Timeline moves shows that Facebook is winding down display advertising. They will move to a contextual data model that is not yet “baked out’. I can assure you that they will have something because the user base is too massive.

Big advertisers are going to market with direct advertising business models. Big advertisers are executing huge large-scale social media campaigns streamed online using social and mobile marketing with Facebook, Google Plus, YouTube, and Twitter being the primary vehicles not TV or magazine ads. This flys in the face of the General Motors story going around that Facebook isn’t a good ROI for them. Maybe GM is just foobar on social not the other way around.

My analogy to Tim Berners-Lee inventing the Web is how I see it. Question is this: what would the value of the World Wide Web be if it wasn’t open sourced (donated) by Tim Berners-Lee. Cough Cough: It would be like Facebook’s IPO.

The big opportunity for Facebook is about the future. Think about transactions that are possible. I’ve documented signs of this with the recent success of the Hunger Games and Thismoment.com. Think about it all and any kind of transaction (direct advertising, online and offline sales) can happen in the Facebook (and Facebook Connect) network. So the value per user could be as high as $5000-$10,000.

Yes it’s a bubble so pop the champagne and enjoy. Then buckle up and go for the ride because social is the new web.

(side note: this is what I wrote about in 2007 about Facebook - I called them a money machine when everyone was doubting Facebooks prospects)