One of the biggest market events of the coming year will undoubtedly be the Facebook IPO. You will read seven million articles about it in the next three months (sorry about that). It will likely come public as one of the largest IPOs in history, with a starting valuation somewhere in the vicinity of $100 billion. It is a tech giant to be sure, one of the most important companies in world right now.
But there is a major difference between Facebook and the other tech giants of the past and present like Microsoft, Apple, Google, Oracle, IBM, Yahoo, Netscape and Cisco. The difference is that Facebook will be the first tech giant to have come public after its growth rate peaks. it will be the first almost-mature tech giant to IPO at the end of it's biggest growth phase rather than in the early stages. The others offered public investors the chance to invest ahead of the Golden Age - but in this new era, the lion's share of valuation growth has been awarded to a relatively small handful of early stage investors and people need to accept that.
Facebook is a Red Giant, a star larger than the sun - but a dying star nonetheless. Red Giants are mid-sized stellar bodies that have already exhausted the hydrogen within their cores. They begin to live off the hydrogen surrounding them, burning it in a lower-intensity process called thermonuclear fusion. Similarly, Facebook is likely peaking right now in terms of new users, page views per user, engagement and so on - it will burn brightly off of the massive scale it's already built and that's pretty much it going forward.
This does not mean that the company won't become wildly profitable as they turn on the engines and monetize what's already there (which is obviously a huge amount of web real estate and mindshare at the moment). What it does mean is that, like the Red Giant, Facebook already is what it is. It is highly doubtful that the company's web presence and engagement can get any bigger or better.
In fact, it is more likely that:
Something new comes along - It is laughable how seamlessly, completely and quickly Facebook supplanted MySpace - let's not act like anything on the web is permanently dominant forever. Facebook is picking up major steam in countries like Indonesia and Brazil right now, the rate of new users signing up is breathtaking. But consider that they are pulling people from Google-owned network Orkut and that one day someone else will do the same to them. (...)
Kids rebel against a social network that includes their dorky parents - Can you imagine being 15 years old and being involved in any kind of socializing that involved your parents and aunts and uncles and Sunday school teachers and god knows who else from the dark side? There is a Facebook hipness hourglass somewhere and it has already been turned over...it is only a matter of time before the grains of sand slipping from the top to the bottom become noticeable and the tide turns. The kids will be first, the advertisers will follow. In the end, Facebook will be comprised of dormant and inactive profiles with a majority of its "engagement" coming from people in their forties stalking their exes from high school in the late 80's. For the younger generation, talking about Facebook at all will become painfully lame. Every generation mocks the one that came before. This moment rapidly approaches, the emptying of that hipness hourglass is inexorable.
by Joshua M. Brown, The Reformed Broker | Read more:
But there is a major difference between Facebook and the other tech giants of the past and present like Microsoft, Apple, Google, Oracle, IBM, Yahoo, Netscape and Cisco. The difference is that Facebook will be the first tech giant to have come public after its growth rate peaks. it will be the first almost-mature tech giant to IPO at the end of it's biggest growth phase rather than in the early stages. The others offered public investors the chance to invest ahead of the Golden Age - but in this new era, the lion's share of valuation growth has been awarded to a relatively small handful of early stage investors and people need to accept that.
Facebook is a Red Giant, a star larger than the sun - but a dying star nonetheless. Red Giants are mid-sized stellar bodies that have already exhausted the hydrogen within their cores. They begin to live off the hydrogen surrounding them, burning it in a lower-intensity process called thermonuclear fusion. Similarly, Facebook is likely peaking right now in terms of new users, page views per user, engagement and so on - it will burn brightly off of the massive scale it's already built and that's pretty much it going forward.
This does not mean that the company won't become wildly profitable as they turn on the engines and monetize what's already there (which is obviously a huge amount of web real estate and mindshare at the moment). What it does mean is that, like the Red Giant, Facebook already is what it is. It is highly doubtful that the company's web presence and engagement can get any bigger or better.
In fact, it is more likely that:
Something new comes along - It is laughable how seamlessly, completely and quickly Facebook supplanted MySpace - let's not act like anything on the web is permanently dominant forever. Facebook is picking up major steam in countries like Indonesia and Brazil right now, the rate of new users signing up is breathtaking. But consider that they are pulling people from Google-owned network Orkut and that one day someone else will do the same to them. (...)
Kids rebel against a social network that includes their dorky parents - Can you imagine being 15 years old and being involved in any kind of socializing that involved your parents and aunts and uncles and Sunday school teachers and god knows who else from the dark side? There is a Facebook hipness hourglass somewhere and it has already been turned over...it is only a matter of time before the grains of sand slipping from the top to the bottom become noticeable and the tide turns. The kids will be first, the advertisers will follow. In the end, Facebook will be comprised of dormant and inactive profiles with a majority of its "engagement" coming from people in their forties stalking their exes from high school in the late 80's. For the younger generation, talking about Facebook at all will become painfully lame. Every generation mocks the one that came before. This moment rapidly approaches, the emptying of that hipness hourglass is inexorable.
by Joshua M. Brown, The Reformed Broker | Read more:
