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Facebook

More Reasons to Dislike Facebook IPO

http://www.schoolforstartups.com/more-reasons-to-dislike-facebook-ipo/

A Pew Research Study was released yesterday, giving us more insight into the Facebook users and their habits.  Interestingly, this data should provide soon-to-be-shareholders with a scary insight into the user base.  Twenty percent of the users account for eighty percent of activity!!  Where have we heard that before?  The old 20/80 rule.  Makes me wonder if Pew really did any research or if an intern googled, “Where does user activity come from?”  Google responded, “20% of your customers will generate 80% of your profit, so focus there.”

Apparently though, the rule holds true for Facebook users too.   This 20% make the whole thing seem cool, hip, new, relevant, and trendy.  The fear is that they stop using the site and then it dies.   I bet the migration of less than 20% started the death of MySpace.  Think about it, if the one or two thought leaders that you follow leave, you are going too.

Jim Beach of School for Startups Dislikes Facebook

Jim Beach of School for Startups Dislikes Facebook

There are lots of us too that think of these heavy Facebooks users in a special way.  We call them dorks, losers, fools, and narcissists!  This 80/20 rule works here too.  Us normal Facebook-account-having-but-haven’t-checked-it-this-week people, us 80%, look at the other 20% and shake our heads.  Get a life!  Studies prove me right.

There are only two ways for Facebook to grow, by attracting more users (they are basically saturated already) or by producing more revenue from each of those users.  How to do that?  No one mentions who is clicking on the ads that support Facebook.  Are the magic 20% of content generators clicking on 80% of the ads too?  I doubt it.  See if this scenario makes sense.  I am bored with Facebook, I don’t really know who to check next, this seems a little silly, OH, but that ad is mildly interesting.  Ok, I will click it because it might be better than Facebook itself!   However, watch a 20% user, and they are always too busy doing Facebooky stuff to click ads.  I think the ad clickers and the ones bored with it in the first place.  Me.So, the “non-users” are the ones clicking, which makes the ads valuable in the first place.  I could take your whole ad platform and live without it, happily.  Don’t buy this stock.  Granted it will soar in early trading, but the stock is not worth more than Coca-Cola and Disney combined.  At the opening price, the stock will be trading at 27 times sales and 100 times trailing earnings.  NO WAY!!!

Facebook IPO Fools Errand

http://www.schoolforstartups.com/facebook-ipo-fools-errand/

Well Facebook has finally filed for their IPO, and it will make Mark probably the 4th or 5th richest person in the world.  Congratulations.  I am so happy for him and his new 1000 millionaires.

But, you people that are excited about buying shares soon, a word of caution!!!  Do not buy!!!  This stock is fully priced as is.  It has been traded on SecondMarket and SharesPost for years.  What this means is that the market price has already been set, and is widely known.   It will be around $29.75 per share.  So, that is the value of the company, not a cent more.  If you pay above $30 a share you are betting that the stock will grow faster in the future than it has in the past.  Is that possible or likely?  Not in a billion years!

Jim Beach of School for Startups Dislikes Facebook IPO

Jim Beach of School for Startups Dislikes Facebook IPO

Facebook has grown to some 875 million users.  Can it get another 875 million?  Or another 100 million?  Are there really people sitting on the sidelines waiting to join Facebook?  Enough to continue their past growth rates?  NO.  So, membership growth has and will continue to slow dramatically.  The question then is can they better monetize Facebook and make more money from it?  Can they sell more ads?  Sure they can, but those sales are already priced into the price too!

Usually with an IPO, founders leave lots of money on the table.  The founders sell in the morning at say $20 a share, and it jumps to $100 by nightfall.  The founders left $80 per share on the table.  Mark was smart enough to delay and delay the IPO, so that the IPO price now reflects true value.  The price may soar but its fools buying a already fully-priced stock.  Within a year, the price will be below its IPO price, I predict.

New Facebook Lawsuit and Shrugged Cult?

http://www.schoolforstartups.com/new-facebook-lawsuit-and-shrugged-cult/

Yet another guy is claiming that he thought of facebook.  He may have merit.

And a great article about the new Atlas Shrugged movie.  Has a compariosn of the book to today’s world….

 

Internet Bubble 2?

http://www.schoolforstartups.com/internet-bubble-2/

Today, the Financial Times reported on the exploding values of several net firms, raising the question, “Are we entering another internet bubble?”  No, we are not, but we are seeing runaway stupidity again!  And, as always the center of the stupidity is Twitter.

Zynga, a gaming company that sells virtual goods to people playing online games, has revenues approaching $2.5-3 billion.  recently it was valued at $5 billion in a private transaction, and is trying to raise another round of funds at a $9 billion valuation.  I think anyone that buys anything “virtual” is beyond a moron.  For example, people buy imaginary, non-existent fertilizer to make their plants grow faster on FarmVille, a Facebook game.  Morons.

Zynga, Facebook, and Groupon all make sense.  I see it.  The valuations are stupid high, but they will produce revenue to justify it, especially Groupon, which I think is by far the best of the group.  But $8 billion for Twitter with maybe $100 million in revenue?  Only the morons dumb enough to Twitter would invest at that ratio.  I don’t care if its a category killer, its still stupid.

LinkedIn Plans to Go Public In 2011

http://www.schoolforstartups.com/linkedin-plans-to-go-public-in-2011/

from Reuters….

LinkedIn, the social networking site for professionals, plans to go public in 2011 and has selected its financial underwriters, three sources familiar with the process told Reuters.

Morgan Stanley, Bank of America and JPMorgan are among the book runners, these sources said. Bankers made their pitches to the privately-held company in November, one of the sources said.

An IPO is just one of many tactics that we could consider,” a spokesman for LinkedIn said on Wednesday. He declined further comment.

Internet companies such as LinkedIn and Zynga, a popular maker of online social games, are considering offerings well ahead of a potential IPO of Facebook, two sources said.  

read rest

Facebook is Spying on You!!!

http://www.schoolforstartups.com/facebook-is-spying-on-you/

This video is fun to watch, especially for you conspiracy nuts….

http://www.youtube.com/watch?v=B37wW9CGWyY

Facebook Searches Double – Words per Search to 3.5

http://www.schoolforstartups.com/facebook-searches-double-words-per-search-to-3-5/

Ran across two search stats I wanted to share with you….

1 – The number of search conducted on Facebook doubled in the last year to 650 million searches.  Small compared to Google’s 10 billion, but growing faster!  Remember my series on the increasing value of Facebook advertising….

2 – The AVERAGE number of words per search has reached 3.5 – meaning the typical consumer types “iPad accessories camera” instead of just “iPad.”  Our searches are getting more and more specific, more and more precise.  Remember, optimize for the long tail!  (Don’t know the long tail?   For this web site, TONS of people search for “How to start a business”  but only about 12,000 a month search for “online entrepreneur classes.”  We are more likely to convert a sale at a cheaper PPC using the LESS searched term.)

Have a great day!

Facebook Beats Google

http://www.schoolforstartups.com/facebook-beats-google/

The Financial Times today reported than Facebook’s weekly traffic has surpassed Google’s.  Note:

  • Google makes tons of money, from ads, Facebook not so much.  Facebook has just become profitable.
  • The two sites control 14% of web traffic.
  • Google has 7.03% market share.
  • Facebook has 7.07% market share.
  • Google is barely growing, Facebook is doubling users yearly.
  • Google has announced their own social media engine, called Buzz.
  • Facebook will soon soar past Google is users.

Significance?  You must on Facebook, personally, corporately, and advertising.

Please refer to my series on Facebook ads from two weeks ago….  Scroll down to the grey bar on the right of the screen and in the Categories section, click Facebook…..

Adding a Facebook Fan Page for Your Business

http://www.schoolforstartups.com/adding-a-facebook-fan-page-for-your-business/

Now that we talked about landing pages for your Facebook ads, I wanted to show you how to build a Facebook fan page.  Remember, people have profiles and friends.  Businesses have pages and fans.  In addition to using a fan page as a landing page (as we discussed in my last post), a fan page is important to make it easy for users to find you and as a viral marketing tool.  Your fan’s friends will see that their friends are following you, and hopefully they will follow you too.

Facebook, for some reason, makes it hard to find the add fan page area.  Goto the bottom of any Facebook page and you will see a button that says Advertising, see below….

After clicking that, the screen below will pop up, and you will need to click the button that says Pages.

Finally, we are getting close.  The page below is an index page that offers some advice areas and the big green button for Create a Page.

After clicking the green button, the screen below pops up.  You are now actually creating a fan page.  The first question asks you to select a category, from many choices.  If you have a restaurant, select local.  If you are a consultant, select public figure.  After that, you select the name of the group, and you are done.  From there, the fan page will be displayed and be ready for you to add content…….

Great Facebooking!

Facebook Landing Pages – the Important Piece!

http://www.schoolforstartups.com/facebook-landing-pages-the-important-piece/

The final, and by far the most , important piece of advertising on Facebook is what we will call the landing page.  Creating an ad is easy and not nearly as important as where the ad points to.  On Google, the ads point to you website, driving traffic directly to the site that sells your good or service.  This wont work on Facebook.

The most important consideration for advertising on Facebook is to remember why people are on the site.  When people are on Google, they are shopping. When they are on Facebook, they are there to check on their friends.  They are not there to shop.  Nor does Facebook take it kindly when marketers interfere with their users’ online experience.  Meaning, we must advertise different on Facebook.  And the primary implication of this is no ads that go directly a sales page.

The landing page is the web-place where your Facebook ad will send users. Remember a couple posts ago when we talked about designing a good ad? Remember how we talked about asking a question in the top title bar?  A good ad asks a question that entices users to click your ad.  Something like, “Want to lose 25 pounds by Christmas?”  And then a resolution statement, “Click here to learn how.”  The “click here” should lead to a landing page that answers the question asked in the title bar.  But, this page does not sell, does not push, does not try to be aggressive.

The best landing page is therefore a sandwich page, something between the ad and the ultimate sales page.  Click here for an answer to the question, a sandwich page that answers the question and offers a discount or a special offer, and then a link to your normal sales page.  The sandwich page should give value, but not slow the sales process.  It should be short, answer the question, offer some content, perhaps have an opt-in box where users can add their email, may include a short video, maybe will send them to a blog, and then sends them to a sales pitch.  The sandwich page can be internal to Facebook, as a fan page, or external to Facebook.  Internal pages are more trusted by users, but you lose some control.  External pages offer more flexibility, but may scare users when they see they have left Facebook.

After clicking on an ad that asks, “Do you want to be the next apprentice?”, you land on the page above.  It is good.  It offers the answer the question and allows you to click on a sales page.

We cannot over-estimate the importance of a good landing page.  Click on lots of ads and study the landing pages before you design your own.

More to come……..