What is Facebook's Business Model? Worth $50bil? Uhm..No.

It seems that Goldman Sachs feels Facebook is worth $50bil. But Goldman Sachs makes money by finding suckers for bad investments and profiting off them. If I was Mark Zuckerberg and Goldman came to me with this offer I would take it.

I have two points of discussion here. One to enlighten you. The other to get some answers maybe. The reason Facebook would pursue this arrangement with Goldman is financial and market driven. The law states that once a certain number of people own shares the company must go public. It is capped at 500 Owners. We all know to attract talent start ups offer stock options and ownership stakes. They do the same to attract investor capital. If Facebook was worth $30bil today on the stock market wouldn't they be going IPO in less than 2 secs flat? The reason they have not gone public is because the inflated values are all lies. Trust me on this.

So what Goldman wants to set up is a way Facebook can sell parts of the business so they can hire more workers and keep their investors happy. Remember they have 2 key investments making Mark Zuckerberg sweat at night. One is from Russia valuing the company at $20bil and one is from China valuing them at $30bil. If Facebook could go public at $50bil these two men make a killing. These two men got their money from shady business deals based on Government graft and underworld connections. Though they are trying to be legit now, just like all Mafia organizations want to be some day.

Now comes the basis for the valuations. A stock's value is based on future earnings. The only successful product Facebook sells is Facebook ads and a share of Social Gaming from Zynga. Nothing else has been a revenue generator for them of any note. And most never will for various reasons. I have already proven there has been a 25% decline in time spent on their network. The Brand Fan pages make no money for big business. Open Graph, Places, Deals nada zippo yawn. What is their business model?

Adpulp just sent out a news letter. Only 33% of all Facebook users have become a Fan of a Brand!!! So 200mil. Of which only half log in each day. 100mil. Of which only 30% live in the US. 30mil. Whom are using the network less and less. I have already proven half the people who log in do nothing. 15mil. So you have a pool of 15 million active consumers you can possibly reach every day via Facebook. Hmmm...the Twitter looks better and better.

LINK to list of US Companies market Value

You can see which companies are valued over $50bil yourself. Only 43. Is Facebook worth more than Boeing? American Express? Ford? Target? Kraft Foods? You tell me. Facebook has nothing that will prevent people jumping for better technology when it arrives. They have done it before over and over again. Think AOL or Myspace. Great examples. 

Tell me you are not a....

 

Authors Note: The 15mil people in the US I calculated represents the number of people 1] logging into Facebook today 2] have also Fanned a Fan page and 3] will do something on the site other than read ie: post a status update, comment on a post, or click the like button. All this comes from Facebook's own stats.

Happy New Year Wishes for a Great 2011 from the Chief Alien!

I hope everyone had a great holiday season and is healthy and happy! Now get back to work! 8)

I thought this would be a good time to talk about me for once. Versus ranting about Facebook or Mashable or trying to give some insight into how things work. I was born in a covered wagon as my family trekked to Long Island from Queens, NY....wait that is not what you want to know!

My Alien persona and why I chose it is key to everything. Not sure if anyone follows Helen Klein Ross (@adbroad) on Twitter or read her blog (see link to the left), but she is one of the founders of the Brand Fiction Factory. Prior to coming into Advertising/Marketing my background is a BS Finance, 2 years of selling Telecommunications services in Los Angeles, and 12 years of B2B Sales selling industrial parts in Southern California and the Western United States. Some from catalogs and some that didn't exist. From the 3 companies I worked at during those years I got to work in every industry except for Mining, and intimately. I have been inside Oil Refineries, Missile Factories, Movie Studios and even once Arnold Schwarzenegger's Trailer on the set for Junior.

And working for smaller companies I have been blessed to also have experience in every facet of a businesses except Accounting. I have been involved with Manufacturing, Marketing, Sales, Warehousing, Shipping, Quality Assurance, Engineering, Distribution, Customer Service, Business Development and Strategic Planning.

I am inquisitive. I want to know how things work. Your NASA Probe crashed because you installed my part wrong? I want to see it. You are testing my Cooling Valve on your Hydrogen Fuel Cell  bus, take me for a ride in the Bus. You need to find a valve to replace a broken one in your oil refinery? Take me to it. I have worn Nomex Flame Retardant Outfits and Clean Room Bunny Suits.

Advertising is a Mid-Life Career Change. Coming up on 3 years now. Sky Pulse Media is only 16 months old. I was not groomed in this 'World' and thus I am Alien to it. I have read voraciously Blogs, News, and anything I can get my hands on but not any Advertising Books. I don't read Business Books. I prefer real life observation and case studies. I don't need a Book for this. You should be reading the Harvard Business Journal, the Economist, Fortune, Business Week, Bloomberg, to learn how business works and how it is performing. Observe your customers. Ask questions. My Finance background has me crunching numbers like crazy and my B2B work has me skeptical if I can not measure ROI. There is a lot wrong with the Ad Industry. Marketers and Brands are suckers just like many of the people they get to buy their stuff.

When I read that 50% of Ad Spend is wasted I spent months observing why. Advertising is like Government. The goal is not to spend smarter it is to spend more. I want to change that. I want to show Pepsi they can spend 10% less and sell just as much Soda. Their Agency would hate me. The Media Companies would hate me. But their Shareholders would love me! I champion the Brand first, second and third. They are my customers. And every time I see a horrible media buy or crappy advertising I see waste. Big waste.

So when I lay out numbers or observations here I try to have my facts straight from real data, not some fluff Mashable throws at you, or Ad Week writes up where often they are PR pieces with an Agenda. I spent time in the Personal Care section of my local Market trying to find one person buying Old Spice did you? I run a Facebook Page and a Twitter account for a client. My observations are real life because that is where real things happen. Ask your Social Media Guru if they have done this for a client directly vs just advising them.

So I am an Alien. I will challenge things that do not make sense. Logic and Hard Cold Facts rules my world. Not the Warm and Fuzzy Marketers try to use on everyone. I want to help you bring results and to have realistic goals. I want to help you value the aspects of marketing properly so that you can decide where to allocate your resources or how much you should pay for something. If I don't have an answer I hope to get you thinking and possibly we can figure one out together.

But one thing is a fact. If you make a great product, give great service, give great value, you will be successful.

I'm Old Fashioned So Sue Me. But I am a Great Consumer Case Study

 

Most of you think Technology is about Cleverness. But it is not. It is Clever. But it preys on two Human constraints. Time and Laziness. If anyone saw the movie Wall-E, that is where we are heading. All those humans who did nothing but sit and have robots letting them rot into blobs that can't even walk let alone do things for themselves. Isn't Facebook 100% about Laziness? So I don't have to call a friend or see them in person? Isn't online shopping about Laziness so I don't have to get in my car and mingle with other people?

So Technology often is about laziness. Yes please say that again at least 217 times. It is. People will pay good money to cram more things into their days and allow them less effort in doing so.

Great Examples of Laziness Break Throughs:

Digital Phone Buttons: That rotary dial was killing me.

Digital Phone Books: I used to know about 50 people's phone numbers by heart. Now I know none.

Digital Music Collection: Because leafing through albums and then using a record player was a bummer.

Cars: Because Horses were a bitch to house and feed and ride.

But before these breakthroughs in Technology we were completely happy to walk somewhere. Or have long chats with a friend we haven't seen in quite some time.

But there are lessons learned. If you make a Great Product, offer Something Unique, or an Incredible Experience. People will do anything to patronize. We still drive long distances to see or experience, or go above and beyond to do something.

See my list of Blogs to the left, that I read by very thoughtful and insightful people? I do not have an RSS Feed or subscribe to anyone of them. I go there manually on my own, often. Because the content is compelling and exceptional.

And this might upset Marketers and Advertisers. But Great Products, Great Content, Great Experiences sell themselves. Advertising can tell people about something, but if the Product, Content, Experience sucks, it can not overcome that! But Great Products, Content, Experiences can overcome crappy Advertising or no Advertising.

I wish to give credit to @LizStrauss who during a chat last night on the Twitter said "many Brands are not sure what they sell or whom their customer is". She was correct. If you do not know what you sell you can't focus on making it best in class now can you? 

Focus not on honing your message or your branding, though this doesn't hurt. Focus on honing what you sell. The rest will take care of itself. That will condition your customers to come back. Whether it is to visit your website, read your writing, buy your product, watch your content or come to your store or restaurant. And conditioning is not about Laziness or Cleverness. Those Blogs to your left? They all conditioned me to visit on my own. And I do.

*photo credit above Walt Disney Pictures