Facebook IPO, I just don't "get it"

Discussions about the psychology of the markets and the masses as it relates to trading.
Moto moto
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Post by Moto moto » Fri Feb 03, 2012 10:01 am

MarkS wrote: Finally, an observation: it appears most people on this discussion are of a value/growth-at-reasonable-price (GARP) orientation with equities. I am as well. So anyone else see irony that as LTTFs, are we are most likely long frozen OJ at all-time highs, long the Eurodollar near zero interest rates, and long gold at prices in excess of $1,700/ounce? :D
with equities at least maybe there is some idea for value.......
with commodities, indexes, FX, (maybe with the exception of rates) - how do you define value in these things....oil at $60 a barrel or $120 a barrel - cheap or expensive?
I have always wondered this - hence price action analysis seems a great response - saves some of the headaches :)

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Post by DPH » Fri Feb 03, 2012 10:02 am

LeviF wrote: I'm not sure why, but I often wonder if paid internet advertising with Facebook, Adwords, etc actually reduces credibility of a business like ours...
Good point......For me the honest answer is no with Google. I am a trading software-a-holic and often times while "shopping" on Google have found the Adwords results MORE relevant than the organic search results. I've never thought less of a vendor because I found them with an Adwords click verses an organic results click (in fact there is a subtle feeling that if they have the money to advertise they must be more stable)...Google does a good job of keeping results honest because the more relevant your ad and subsequent landing page, the less you pay for the ad. They give each of your ads a "quality score" based on this. If you are trying to sell something unrelated, or un-relevant to the keywords you have chosen to advertise with you will be penalized with a much higher cost per click. This encourages advertisers to try and only very narrowly seek those specifically interested in what they have to offer, THAT'S SMART! I don't know about you, but if someone has worked THAT hard to make sure I am interested in what they offer BEFORE they show me their ad, I WANT TO SEE IT!

Facebook ads on the other hand feel cheesy, cheap AND MOST TROUBLING, IRRELEVANT to me. If Facebook knows so much about me then why don't I give a shit about the things they are advertising to me!?

Here is my current screen shot of Facebook ads:

Image

I literally do not have the slightest interest in ANY of those! This is the brilliant business intelligence 100 billion dollars can buy me?

Yes LeviF, things on Facebook DO have a lower credibility to me.

Want more????

Here is a discussion forum I tried to set up at one point (3 years ago), I paid for ads on Facebook and quickly got over 100 people to sign up, but then dropped the idea within a week! Why??? Look at the wasted pixels that were used as posts!

http://www.facebook.com/group.php?gid=9 ... 495&v=wall

Maybe Facebook eventually morphs into something it currently isn't, and those with the foresight to see "what they will become" can enjoy the ride. But I stand by my opinion that I just don't "get it" (yet)....

Yes, I know they have 947 quadrillion-billion users, and certainly that has value......I just wonder if the value is a lot lower than many are assuming.
Last edited by DPH on Sat Feb 04, 2012 6:02 pm, edited 1 time in total.

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Post by sluggo » Fri Feb 03, 2012 10:15 am

I got a haircut on Wednesday; thanks to a front page story in the newspaper and incredible amounts of general "buzz", the stylist was enthusiastic about buying Facebook stock and asked dozens of questions about where/when/how to open an account and how to buy stock. It called to mind an anecdote from the 1929 crash (below).

I suggested the "when in doubt, do half" idea. Considering buying $4,000 worth of Facebook stock? Buy $2,000 worth instead. Now if it drops into the toilet you're only half-disgusted. If it zooms to the moon you're half-delighted.

For my web-programmer amigos in Silicon Valley that want to try out this stock trading thing, I've suggested they write a little bit of code that runs a cron job every day: download Fecebook stock prices from Yahoo Finance, compute trailing stop, if stop is hit, send email and text message and tweet and autodialled robospoken telephone message: FACEBOOK STOP WAS HIT, GET OUT TOMORROW. Believe it or not, the only piece that intimidates them is: computing the trailing stop. For the timid, I suggest X% retracement below the alltime high. For the brash, I suggest Chandelier. Ooooooh.
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MarkS
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Post by MarkS » Fri Feb 03, 2012 10:40 am

mojojojo wrote: This ^^^ ... doesn't matter if they have every world citizen as users for advertisers, having 1M "likes" doesn't mean anything if they aren't able to convert those "friends" to customers. (would be good for the game developers though).

MarkS .. do you have any good data on this?
Mojo -- do you mean data on the value of a "Like" to a business? I've put out a request to one of my peers who was a top person in digital marketing. It's Friday, so it might take a couple of days, but as soon as I get that, I'll post it here to share. I'm interested in the answer myself.

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Post by MarkS » Fri Feb 03, 2012 11:14 am

Here is a viewpoint on the valuation from a partner at Benchmark (who, as earlier investors in FB, obviously have bias for as big an IPO as possible). I disagree on some parts, but still an interesting read to see how the true believers see it. Especially his ranking FB on the ten factors that make a good company.

http://abovethecrowd.com/2012/02/01/why ... enue-club/

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Post by MarkS » Tue Feb 07, 2012 10:24 am

MarkS wrote:
mojojojo wrote: This ^^^ ... doesn't matter if they have every world citizen as users for advertisers, having 1M "likes" doesn't mean anything if they aren't able to convert those "friends" to customers. (would be good for the game developers though).

MarkS .. do you have any good data on this?
Mojo -- do you mean data on the value of a "Like" to a business? I've put out a request to one of my peers who was a top person in digital marketing. It's Friday, so it might take a couple of days, but as soon as I get that, I'll post it here to share. I'm interested in the answer myself.
Mojojojo -- as promised, here is the reply from my colleague yesterday. Interesting division between using Facebook for CRM versus advertising, and she also feels it is overvalued:

"There are quiet a few studies out there on this. Basically, the way I would position/think about a Facebook fan/like is similar to the value of a name on an email list. It's basically a modern day CRM (customer relationship management) channel that allows brands to continuously communicate with consumers. Solid brands use them for promotion, product news distribution, coupon distribution, etc. The big discussion that is going on right now within Facebook marketing is quantity vs. quality of Likes. So having a smaller, more engaged participatory group of "likes" is better than a large number of Likes who never come back to your page.

Here is a nice overview of this question with some ranges on value of the name. But again, the true value depends on what the marketer does with the community, how it nurtures/grows/engages with it. And not surprisingly the value varies by category/sector as well.

http://www.entrepreneur.com/blog/220796

Separately, I do think FB is overvalued. I really think the marketing value is the CRM application not the advertising application. Unfortunately, they have chosen to monetize the advertising side of the house. So valuable but feel it is overvalued."

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Post by mojojojo » Tue Feb 07, 2012 12:19 pm

MarkS ... thanks for the links.

Never really thought of FB as being a CRM-like application. From that point of view, the user/company of the page should be able to categorize their "Friends" into groups based off of their habits. Not sure if they do that or not.

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Post by stopsareforwimps » Tue Feb 07, 2012 3:19 pm

MarkS wrote:A common psychological mistake people make is to think that since X doesn't appeal or apply to them, it must not have much merit.

...

Well, on Facebook, you can get enormous granularity due to how much personal info they have on everyone. If I want to advertise to females, ages 25-30, who live in Boston, who have an MBA, who are single, who "Like" wine, and exclude those who have been divorced? I can do that on FB, and at cheaper cost than any alternative.
I've used Facebook for advertising. You are right - you can target very precisely and their rates per click through were (for me) much cheaper than Google's.

About 80% of Facebook activity is by females. Guess who controls the retail dollar? Hint: while men earn the money, someone else is spending it.

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Post by DPH » Tue Feb 07, 2012 3:20 pm

MarkS wrote:
MarkS wrote:
mojojojo wrote: This ^^^ ... doesn't matter if they have every world citizen as users for advertisers, having 1M "likes" doesn't mean anything if they aren't able to convert those "friends" to customers. (would be good for the game developers though).

MarkS .. do you have any good data on this?
Mojo -- do you mean data on the value of a "Like" to a business? I've put out a request to one of my peers who was a top person in digital marketing. It's Friday, so it might take a couple of days, but as soon as I get that, I'll post it here to share. I'm interested in the answer myself.
Mojojojo -- as promised, here is the reply from my colleague yesterday. Interesting division between using Facebook for CRM versus advertising, and she also feels it is overvalued:

"There are quiet a few studies out there on this. Basically, the way I would position/think about a Facebook fan/like is similar to the value of a name on an email list. It's basically a modern day CRM (customer relationship management) channel that allows brands to continuously communicate with consumers. Solid brands use them for promotion, product news distribution, coupon distribution, etc. The big discussion that is going on right now within Facebook marketing is quantity vs. quality of Likes. So having a smaller, more engaged participatory group of "likes" is better than a large number of Likes who never come back to your page.

Here is a nice overview of this question with some ranges on value of the name. But again, the true value depends on what the marketer does with the community, how it nurtures/grows/engages with it. And not surprisingly the value varies by category/sector as well.

http://www.entrepreneur.com/blog/220796

Separately, I do think FB is overvalued. I really think the marketing value is the CRM application not the advertising application. Unfortunately, they have chosen to monetize the advertising side of the house. So valuable but feel it is overvalued."
I agree, I have been using Facebook as a CRM tool for awhile. Here is a great app to do it with: Facebook CRM

***I also came across another Facebook integrated app today that I think has potential Facebook Document Sharing and Collaboration

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Post by DPH » Tue Feb 07, 2012 5:43 pm

stopsareforwimps wrote: I've used Facebook for advertising. You are right - you can target very precisely and their rates per click through were (for me) much cheaper than Google's.
I also used them, why did you stop? (I stopped because it was a waste of money with a negative ROI)

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Post by stopsareforwimps » Tue Feb 07, 2012 6:12 pm

DPH wrote:
stopsareforwimps wrote: I've used Facebook for advertising. You are right - you can target very precisely and their rates per click through were (for me) much cheaper than Google's.
I also used them, why did you stop? (I stopped because it was a waste of money with a negative ROI)
I stopped because I no longer have a need for advertising.

It's all about the target market and what image or brand you are trying to build. You would not advertise for an accountant in "Rolling Stone", or for a new lead guitarist for your metal band in The Economist, and I would probably not advertise my hypothetical hedge fund on Facebook. Unless I thought that teenage girls were likely investors.

I agree FB seems to be very overpriced. I like the network effect they have but it is not enough. I tried moving to google+ but most people are still on FB so I am still there too. I use a separate logon for FB so they can't track me on other sites. I have not seen much by way of ethical restraint on the part of FB.

Google may not be overvalued with PE of ~20 and growing earnings. They seem to be genuinely trying to be more ethical than the rest - though very focused on making money. When I say more ethical than the rest, I mean that I don't think the Google guys would unhesitatingly torture my baby daughter to death for a few bucks, unlike some CEOs I have known.

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Post by DPH » Tue Feb 07, 2012 6:33 pm

stopsareforwimps wrote:It's all about the target market and what image or brand you are trying to build. You would not advertise for an accountant in "Rolling Stone", or for a new lead guitarist for your metal band in The Economist, and I would probably not advertise my hypothetical hedge fund on Facebook. Unless I thought that teenage girls were likely investors.
No, I used their "granularity" to target my exact demographic.....Was still a waste...

So, are we saying that a Facebook 40-60 old, male, well educated, with an interest in investing is less valuable than that same demographic elsewhere?

In my case yes....(which is sorta my point)

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Post by LeviF » Wed Feb 08, 2012 10:23 am

DPH wrote:
stopsareforwimps wrote:It's all about the target market and what image or brand you are trying to build. You would not advertise for an accountant in "Rolling Stone", or for a new lead guitarist for your metal band in The Economist, and I would probably not advertise my hypothetical hedge fund on Facebook. Unless I thought that teenage girls were likely investors.
No, I used their "granularity" to target my exact demographic.....Was still a waste...

So, are we saying that a Facebook 40-60 old, male, well educated, with an interest in investing is less valuable than that same demographic elsewhere?

In my case yes....(which is sorta my point)
Have you had success finding investors using Adwords or other paid online advertising?

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Post by stopsareforwimps » Wed Feb 08, 2012 4:43 pm

LeviF wrote:
DPH wrote:So, are we saying that a Facebook 40-60 old, male, well educated, with an interest in investing is less valuable than that same demographic elsewhere?

In my case yes....(which is sorta my point)
Have you had success finding investors using Adwords or other paid online advertising?
It is hard to find rare people, such as people who want to invest in CTA funds. Even with what seem like tight search criteria you get a lot of false positives. It is really useful to start on fertile ground. It is also typical that conversion rates for advertising are really really low. Most software companies spend far more on advertising than on product development.

Bayes's theorem refers.

In my case I was looking for people interested in the technological singularity and I found that people with science fiction as an interest were the best bet.

http://www.singularity.com/

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Post by Moto moto » Fri Feb 17, 2012 8:36 am

to make you feel better, or validate your thoughts....

http://www.bloomberg.com/news/2012-02-1 ... etail.html

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Post by DPH » Fri Feb 17, 2012 3:21 pm

Moto moto wrote:to make you feel better, or validate your thoughts....

http://www.bloomberg.com/news/2012-02-1 ... etail.html
Wow, thank you Motto, indeed that pretty much mirrored my own feelings and experiences to date...

A few key quotes that really resonated with me were:

“But it was like trying to sell stuff to people while they’re hanging out with their friends at the bar.â€

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Post by ajhhall » Fri Feb 24, 2012 5:13 pm

I would also not be totally convinced that Facebook is set for the total global domination that seems widely assumed. Of course there are places where Facebook has no presence - in particular China where it cannot be accessed (legally and easily, at least).

More than that, though, I'm not at all sure that it can remain the social network of choice for generation after generation (defining a generation for this purpose as five years or so) of young people. My guess that something else will come along that takes over as the cool service, with an ability to port over your Facebook content, and stay away from your parents, grand-parents, etc. Certainly I would be reluctant to bet against it.

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Post by DPH » Thu Mar 01, 2012 3:10 pm

Great article for this thread....

http://www.inc.com/eric-markowitz/guy-k ... do-it.html

A "Silicon Valley venture capitalist" and former "Apple evangelist" explains why he thinks Google+ may overtake Facebook...And how to promote using social media without being "nauseating"....

I also liked his views that social media is "really more about effort than expense." IE you cant "buy" respect, you have to earn it.....

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Post by MarkS » Fri Mar 02, 2012 10:50 am

DPH wrote: A "Silicon Valley venture capitalist" and former "Apple evangelist" explains why he thinks Google+ may overtake Facebook...And how to promote using social media without being "nauseating"....
DPH -- It's funny timing, because yesterday the WSJ had an article how Google+'s average user is on the site for 3 minutes per month (IIRC) versus 7 hours for Facebook. Interesting to see how Google+ will grow/compete.

Also, just had an offsite midweek with a portfolio company that specializes in social media. Two great takeaways -- if you are not actively out there in social media with your brand, someone else will be. And you run the risk of losing your message to them, be they customers, competitors, etc. Best way to eliminate negative comments is to address any concerns or complaints right away and always be on the offensive with new posts, information, etc. Obviously this applies more to some industries (consumer goods) than others (trading).

Second takeaway was that with all these sites out there (add Pinterest and Tumblr as the two new ones that are becoming "hot") a dashboard site like Hootsuite will become the main way for a business to control its content. Perfect for a small business that cannot afford an employee spending all his time on the internet.

BTW -- anyone else see the story of Zynga trying to get consumers to go directly to their site rather than through Facebook? 12% of FB's revenues are from Zynga games. I bet the I-bankers doing FB's roadshow aren't very happy about the timing of this story! :)

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Post by mojojojo » Fri Mar 02, 2012 11:14 am

MarkS wrote:
DPH wrote: A "Silicon Valley venture capitalist" and former "Apple evangelist" explains why he thinks Google+ may overtake Facebook...And how to promote using social media without being "nauseating"....
DPH -- It's funny timing, because yesterday the WSJ had an article how Google+'s average user is on the site for 3 minutes per month (IIRC) versus 7 hours for Facebook. Interesting to see how Google+ will grow/compete.

Also, just had an offsite midweek with a portfolio company that specializes in social media. Two great takeaways -- if you are not actively out there in social media with your brand, someone else will be. And you run the risk of losing your message to them, be they customers, competitors, etc. Best way to eliminate negative comments is to address any concerns or complaints right away and always be on the offensive with new posts, information, etc. Obviously this applies more to some industries (consumer goods) than others (trading).

Second takeaway was that with all these sites out there (add Pinterest and Tumblr as the two new ones that are becoming "hot") a dashboard site like Hootsuite will become the main way for a business to control its content. Perfect for a small business that cannot afford an employee spending all his time on the internet.

BTW -- anyone else see the story of Zynga trying to get consumers to go directly to their site rather than through Facebook? 12% of FB's revenues are from Zynga games. I bet the I-bankers doing FB's roadshow aren't very happy about the timing of this story! :)
It's funny you mention pinterest.com ... just heard of that this morning. With all the new sites coming up, it's definitely getting harder and harder to manage everything.

Might have to take a look at hootsuite

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