Zuckerberg heads for the iceberg

“All that bubbly good feeling that erupted through the investment markets as Zuckerberg rang the bell on Wall Street on Friday lasted as long as mid-afternoon. The big institutional investors stepped in to make sure that the stock price didn’t actually fall below the opening trade of $38 per share, costing them money just to save face.”

I wrote that sentence on Friday night, and in the days since (while this post has been in draft) the price has continued to drift down – currently touching $31 a share as I write now. (UPDATE: by 22nd August, the stock is just above $19. Wow!)

I’ve said before that the dotcom bubble is still here┬ábut FB’s feeble open day showing on the NASDAQ perhaps indicates that investors are maybe wiser than I give them credit for. Why do I think Facebook is a fail?

Taking Myspace as a template for Facebook is maybe a bit facile. The actual numbers for Facebook are phenomenal in direct comparison:

Regardless of size, there are some interesting comparisons.

For all the interest, the hundreds of millions of active users and an unparalleled depth of profiling information, FB have still not found a way to make realy money from their users. Google’s business model had money-making baked into it from the start. While their recent attempts to diversify into the social sphere have been dismal, the core operation of Google continues to print cash for the company at insanely profitable levels. Why? Because their model is, uniquely, based around intent.

A core component of Facebook’s money comes from third parties such as Zynga – whose games often encourage people to buy “Facebook credits” to access feature sets unavailable to players of the otherwise free games they offer. How are they doing through their use of the Facebook platform? Well over the first quarter of 2012, they posted a cool $85,000,000 in losses.

It’s obviously not unknown for companies in the tech sector to take a long time to reach profitability, but permissable timescales aren’t what they were. Back in the 00s with lax financial markets and phantom growth from hedge funds and CDSs swilling about, people were happy to punt on tech as a long term bet. In today’s environment of a shaky economic backdrop and advertisers looking for direct ROI from their marketing, FB as an advertising channel just doesn’t cut the mustard.

While it might be suitable for people who can afford to punt on demographics FB is an option (just as advertising during Coronation Street is) it just isn’t a viable route to market for most businesses. Partly this is because of FB’s woeful advertising. Whether it is due to the FB platform itself, or incompetent advertisers I can’t recall ever seeing an ad I wanted to click. Sorting this out has to now be Zuck’s top priority, and the only conclusion is that the user experience will start to suffer. The truth is (as GM pointed out) that a free FB page for a business is as good a channel – in fact probably better than – the advertising that FB is banking on.

So Zuckerberg, for all his Harvard smarts, is in a stupid place.

Now Facebook is half publicly owned, the pressure will start to grow on Zuck to produce the goods, money-wise. After Google floated, the pressure on them grew to do “other stuff”, which has led them into terrible decisions like Google+, while knocking on the head the science-y fun stuff they used to do. Next in line: Twitter – who surely will face pressure to float from investors looking for a return.

Twitter Debuts in Google+

Logged into Google+ today and found a new button alongside Home, Profile, Explore etc. This button is for Twitter and lets you add your Twitter stream so you can check it from within Google+.

Here’s an exciting screenshot.

What else do you notice? Yep – ads.

Interestingly, it seems that these ads are nothing to do with Google themselves. They are not served by AdSense or AdWords or anything else normally associated with Google, but rather a company called AutoTweeting – one of these companies that is there to serve people looking to automate the running and promotion of their Twitter accounts.

I find this all very odd, and further evidence that Google has no clear vision of what Google+ is supposed to do within the broader framework of the internet. If you could include Twitter feeds directly into your timeline then it could make some sort of sense. As it is, it is thrown in on a separate page within your Google+ account.

Presumably Google have noticed that people spend more time on Twitter than they do on Google+ and so this is a kind come-hither flirtation with Twitter users. But the implementation is just really odd. I can view my Twitter stream in Google+, but I don’t know why I would when I’ve got Twitter open in another tab like most people in the universe.

I was initially sceptical of the value of Google+. While I’ve thawed slightly towards it as it has been redesigned, it essentially feels deader and deader every time I log in. Things like this smack of poorly-executed desperation.

The other main thing Google seem to be trying to do is to use SEOs to market Google+. Links have been hit hard over the last week, and Google continue to expound the importance of activity on Google+ in every statement (and every time you speak directly to someone at Google). This is both clumsy and manipulative.

Social networks arise from the ground up because people like them, not because there’s some SEO benefit to the activity. Over the years, fads like directories and “social bookmarking” have been and gone because while there was residual SEO benefit to doing them, it was also like operating in dead space peopled by SEOs sockpuppets and automated tools. There can hardly have been a real, legitimate user of Mr Wong or Best Of The Web, just as today there are probably few real, legitimate ‘likes’ on Google+ (or Google+1, although the distinction gets less clear every day). Just a bunch of SEOs tinkering to see if they can get a kick in the SERPs by creating accounts to +1 things.

Google needs to develop a clear vision of what Google+ is supposed to offer people beyond “me too” or it will fail. That we’re still saying this 6 months after the launch is fairly damning of the marketing and ultimately, you have to presume, the very premise of the service.