At my Future of Mobile talk at Thinkspace last week, someone asked me what I thought of Facebook’s future. I came up with an analogy for explaining my perspective, and have since developed it further.
“All the big guys have potential energy. They are objects with mass at altitude. Apple, Microsoft, and Google’s altitude comes primarily from their massive profits. Facebook’s altitude results from having lots of eyeballs in their social graph. There are other things that contribute to their altitude that are important like owning lots of credit card numbers.
I think a strong business model that is generating large profit margins and huge earnings (not revenue, but profit) means the ‘object’ has an aerodynamic shape and control surfaces. As these objects (Apple, Microsoft, Google for example) fall, and they use their potential energy, they fall in a controlled manner. They can have direction and purpose. This gives me confidence.
On the other hand, Facebook is like a brick. Yes there is potential energy. But as it uses that potential energy it just falls straight down. Maybe it will sprout wings and be directed, but right now it’s just a big ugly brick falling…
This is why I would never invest in Facebook and I don’t like investing my time in startups that are all about gaining eyeballs without a clear path to profit. Yes, there is potential there, but it’s just too uncontrolled.”
I’d love to know what you think of it this analogy. Does it fly (pun intended)?
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Facebook is a nightclub. A really big nightclub, that used to be the hottest one in town. But now the velvet drapes are looking a little worn. The bathrooms don’t get cleaned as often. The drink prices are too high. The cool kids have gone elsewhere. There’s nowhere to go but down. Luckily the owners have already bought their Ferrais and they have money in the bank. But if they want to keep making money they need to diversify. Or maybe they should just buy that hot new club down the block – remodeling or starting over in the same spot doesn’t seem to work with nightclubs.
Yep, it’s a brick. Like all social sites.