With the recent Facebook IPO, the internet’s latest phenomenon is front and center.
The world is wondering on various topics. What will the newly minted billionaires & millionaires do with all their monies? Has the free publicity by the media over the years turned FB into the household name it is today? Is the company really worth $100 billion with only about $4 billion in revenues and $1 billion in profits? What kind of person is Mark Zuckerberg? Will his focus now shift to catering to his shareholders and making more money for them? Will he now start selling your and my information to companies looking to leverage the data for various reasons including selling us what we may or may not want? How much information should we make public on social networking sites? Is anything ever private? What is the future of Facebook (FB)? What modes will FB adopt to grow its revenues and what controversies will that cause? Do I still want to continue on FB? Is spending a few minutes to an hour daily on FB a waste of my time? As a user, how is it that I am not making a single penny while my data is worth something to someone out there? So on and so forth……
True, there are a lot of questions and a lot more new ones may evolve over time. But, let’s take a step back. Eight years ago, when 19-year-old Mark Zuckerberg was building “TheFacebook” product, even he wasn’t aware that it would grow to be what it is today and perhaps much bigger in the future. He probably didn’t envision building a social networking site just to benefit mankind but had thoughts of making money off of it, as any youngster venturing out at that age would. It’s an undeniable fact that Facebook, as it is today is the result of investments and hard work from all those in line to gain from its IPO. There have been and are other companies in the same space that have not tasted similar success. Well deserved, indeed. And of course, scores of people like you and me are the reason FB is such a big success today.
At its core, FB is a connector, a platform for connecting, networking and relationship building, both at personal and professional levels. That is where the draw is for businesses to reach out to people through FB. Earlier, personal and professional spaces were clearly defined and segregated. With FB, that line no longer exists. A company can pitch its products and services right to you and in your face and that too very quickly. Now, that is immense power and reach, if you have something to sell.
Today, we live in the age of instant gratification. Success and failure can happen overnight. You do not have to wait a lifetime to become a success and attribute all that you did over time to it. You put your case in front of the audience and the verdict is instant. In one way, it’s good since that allows you the time to step back and act on your next endeavor before a lifetime has passed away.
Well, back to our initial discussion. FB has thrived as a result of the team’s focus on the product and maturing it over time; and, people’s affinity to interact. It’s basic human nature to interact, share, build and nurture relationships and here is the ideal platform to do so in today’s age. When the platform showed up, people jumped at it. There are those who say that I’d rather meet and talk than use FB. True, face to face interaction or talking over the phone trumps over using a screen in between but, it’s not possible in all cases. FB has let us find relatives and friends living across the world and lost over time. It has become a valuable medium to reconnect and cherish these relations.
Talking about the impact of the IPO on the company’s future, the FB team had to cater to the stakeholders before the IPO and it will continue to do so in the future too. Earlier, they were a very product focused team whose sole aim was to evolve the product while finding ways and means of making money. About 85% of the FB revenues come from the sponsored ads you see on the right hand side of your FB page. Of course, there may be a very small percentage of people who actually click on them. Nevertheless, these are sponsored ads. There is talk that each FB user’s data may be sold to buyers for about $120.00 per head. This has been portrayed as another way the company will make money. Concerns over what is being sold, user privacy and user consent have arisen. These are valid concerns and over time, we will hear more about them. But the bottom line is that FB succeeded because of its product and that’s where the focus should lie. The product needs to be evolved and related innovations need to occur to ensure user stickiness and to find new realms of revenue.
Of the 845 million member base that FB enjoys, over 80% is international with India attributing to 46%. The US membership base has trimmed by about 15% over the past year. Now, those are serious things to consider. International growth is good but domestic membership has to be healthy too to attract and sustain national advertisers. Loss in membership has to be researched to determine causes and to act on them. One thing to remember, in the internet world, if membership numbers can grow overnight, they can drop overnight too. Hence, it becomes all the more important that product innovation and customer service (whether direct or indirect) are prime considerations in the future FB growth strategy.
Here’s to the continued growth of the world’s beloved “keeping in touch” platform…..