I was preparing to pour forth my bile RE:FB, but MIT and Michael Wolff beat me to it:
The problem, as we discussed in the MCDM Mobile Class was very simply this:
Engineered for maximum distraction
My sleep-deprived low-blood-sugar fueled rant about how much I ****ing hate FaceBook aside, the problem of FB mobile ad delivery has actually kept me up nights recently. And I have come to a conclusion. There IS a solution to the FB ad problem. Short Selling.
The idea that a business should be an institution built over a lifetime, to be handed down generation to generation as the pride of a family–or series of monarch-like CEOs and majority shareholders is an ancient and outdated one. Now we see that companies have life-cycles. Sometimes that lifetime is longer than any human can hope for. But this is really only the case with companies with products that never grow old. For example, Beretta, the 500 year old Italian firm, remains an excellent investment. This is because of customer “Lock-in.” People have a significant fear of buying the proverbial “two-dollar pistol.” If it jams, misfires or “suffers a catastrophic breach failure.” You could die, and “If you die, you’ve lost a significant part of your life.*” The US military sidearm contract doesn’t hurt either†.
FaceBook doesn’t have these advantages. All they have is a lot of people using their service, right now, at this particular moment. Now, it turns out that these people are increasingly FBing using mobile devices, not only because they feel the need to constantly interact through FB’s interface, but because by doing so, they see less advertising. This is a problem, because ads are the only significant profit center FB has, and as Mark himself said (at least in the movie, which means he probably didn’t but what the hell, it’s a nice quote): “Right now, it’s cool. So people use it. If you put ads on it, it won’t be cool.”
Facebook has been around for eight years now. In that time, the two most innovative things they have given us have been a huge number of games developed by Zynga, which don’t make much money for FB, and worse, I personally find horribly annoying (your milage may vary). And the timeline interface, which everyone seems to hate. Thus, unless there is a secret project three weeks from fruition deep in the bowels (the bowels, I say!) of FaceBook Labs, what Facebook should do is simple:
Stage One: Close the API.
Allow other apps to post to FaceBook, but only allow the official FB app to display any of them. Make sure that the official native app ships with every phone ever, everywhere. If Apple blocks this, then PAY people to download and use the thing. Give them a free drink at Starbucks. Three free songs from the iTunes store. A $5 amazon gift card. Whatever it takes.
Then stage two: Shortsell
Suddenly, overnight, with no warning whatsoever, every other entry in the mobile timeline is an ad. Ads that look indistinguishable from content coming from one of the thousand friends whose name you cannot remember. A massive stream of marketing copy battering the retinas of the world’s impulse consumers. FB profits/expenditure for that quarter look absolutely amazing. Ad rates also soar, the money pours in. Huge success!
Stage Three: Gathering the windfalls
The second quarter is when you should start selling your FB stock, it’s now probably jumped up, possibly as much as it’s initial valuation. Facebook itself starts a SuperPac with the ready money sloshing around, legally spending a billion or two to buy themselves a favorable outcome in the inevitable Securities and Exchange Commission investigation two or three years from now. The owners of FaceBook, Inc pay themselves a massive dividend, sell and short their stock, and generally leave FaceBook a gutted mess, holding nothing but debt. As a Limited Liability corporation, it can rid itself of this debt by dissolving itself. The profits, meanwhile are safely in Swiss, Liechtensteinian and Aruban bank accounts belonging to the erstwhile social network’s principles. The service itself joins the junk heap of history, playing virtual hearts (TM) on a PDP-8‡ somewhere in cyber-heaven.
Stage Four: Rinse and repeat
Facebook’s fall leaves a billion people with nothing to do, and hungry for entertainment. Fortunately, a group of scrappy tech-sector job-creators have some money (tucked in an Aruban sock drawer from an old venture nobody remembers) and comes up with another service that fills this need. After all, there’s a great deal of data center equipment going for fire sale prices, and hundreds of unemployed engineers, marketers, and designers who will work cheap now that Facebook is out of business…..
*Brook Shields might not have said this about cigarette smoking either. People are misquoted so often, don’t you think?
†All of which are manufactured by Beretta of USA. Why do I know all this? I grew up in the sticks and read Guns & Ammo™ in the church bathroom while skipping Sabbath-School. I’m much better now, thanks. Eating bacon helps.
‡ This is a snarky dig at the movie Swordfish