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About Don Dingee

An experienced strategic marketer and editorial professional, and an engineer by education, Don is currently a blogger, speaker, and author on social computing topics, and a marketing strategy consultant. He's had previous gigs at Embedded Computing Design magazine, Motorola, and General Dynamics.

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Facebook, and Defining Return on Illiquation

Posted September 13, 2012 12:00 AM by dondingee

The debate is raging about the impending failure of Facebook, fueled by a rapidly declining stock price and uncertainty over future revenue, much less profitability. It's nonsense.

The unforgiving equity markets, demanding transparency and quarterly results, are very uncomfortable with the lack of guidance or even a story on revenue coming from Zuckerberg and his team. They are only briefly placated when insiders say they won't sell their shares. The chatter won't stop about the IPO being priced "wrong", and pundits equate the fall in share price with the company being doomed to #fail.

The purpose of the equity markets is for companies to raise capital. It seems we, with our lust for short term gratification and immediate ROI (return on investment) in nearly all things, have lost sight of that. If you ask an average person, an IPO is for 1) enriching the founders and employees, and 2) creating an immediate profit for the first wave of shareholders, who can liquidate shares to someone willing to pay even more.

BREAKING NEWS: Facebook raised cash via its IPO to fund operations well into the future, with a vision for redefining itself from a web-based social world to a mobile-based world of transactions. The issue at hand is nobody knows what the mobile-based transactions world ultimately looks like.

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#1

Re: Facebook, and Defining Return on Illiquation

09/13/2012 12:18 AM

"Illiquation"????

--Editor Crankshaft

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#2
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Re: Facebook, and Defining Return on Illiquation

09/13/2012 3:31 AM

The act of being illiquatized?

Yes - it's meaningless here too.

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#4
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Re: Facebook, and Defining Return on Illiquation

09/13/2012 6:56 AM
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#3

Re: Facebook, and Defining Return on Illiquation

09/13/2012 4:39 AM

a vision for redefining itself from a web-based social world to a mobile-based world of transactions. The issue at hand is nobody knows what the mobile-based transactions world ultimately looks like.

Sounds like a really solid plan.

"Peter Thiel, the company's first major investor, has sold 20 million shares . Dustin Moskovitz, Facebook co-founder, has also sold 7.5 million shares since August. So, is there light at the end the tunnel? Zuckerberg tried to answer that at Techcrunch Disrupt."

Sounds like Zuckerberg could be left holding a bunch of tulip bulbs . Que Cera. 'Timeline' was a jolly good idea, that seems to have gone down spiffingly with Facebooks membership.

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#5

Re: Facebook, and Defining Return on Illiquation

09/13/2012 7:08 AM

Facebook has come a long way from when it first started. It was originally a network for students from certain colleges and was later opened up to anyone with an edu address. Early features included a profile, the ability to write on a friend's "wall", and the ability to post photos. That's about it.

Now that everyone under the sun can have a Facebook profile and use it to do just about anything, younger people are turning away to alternatives. A colleague told me that his teenage daughter and her friends no longer use Facebook. They use Twitter to talk to one another and Instagram to share photos. Looks like they went back to the basics. Perhaps Facebook was too greedy to remember the old adage "if it's not broke..."

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#7
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Re: Facebook, and Defining Return on Illiquation

09/13/2012 7:57 AM

Perhaps Facebook was too greedy to remember the old adage "if it's not broke..."

Very true. They could have had another 5 or so years in them. They also fail to comprehend that their mass market is not portable in this day an age, at least not in the way they think. You can't turn a fish into a car. Social networking is here to stay, but they cannot move into the market areas they seem to have designs on. Their renoun for security hardly helps.

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#8
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Re: Facebook, and Defining Return on Illiquation

09/13/2012 11:25 AM

Yes, I agree that some networking is here to stay, but how it is networked will change.

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#10
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Re: Facebook, and Defining Return on Illiquation

09/13/2012 4:05 PM

I'm not so sure they can morph. Time will tell.

We live in a time when businesses can grow at an astronomic rate. Overly fast expansion is the historical killer of not just business but entire empires. Facebook has a huge potential (established global audience), but I simply don't see a specific direction they intend to go. Mr Z seems intent on retaining control. The whole show arose from a few geeks playing - fair comment if anybody points out that such is the history of internet success, but my take is that that particular card is played.

Facebook can spin some more money, but they have lost the plot. It's not a point worth labouring - in a fairly short time, their fate will become clearer. Targetted advertising works, but they seem to want a whole extra dimmension. To change would be as hard for the oil companies to sell electric - they have the network and connections, but not the mindset.

The 'how' is a very good point, though the question at issue is the goal/intent rather than the 'how' (?). The goal seems very unclear as yet. We'll not get to forecast this right, but it will be fun to revisit this thread in a years time.

Facebook is a Dutch tulip. I'll say no more because I can't afford the litigation fees !

It's a fascinating topic to ponder on.

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#6

Re: Facebook, and Defining Return on Illiquation

09/13/2012 7:55 AM

Illiquation..........

Yes, its is difficult when you have virtually nothing that generates capital to begin with.

Lets pull user/member information, that has value when we sell it, throw that into the pot,....... and smart phones, yes, smart phones, lets develop smart phones through that into the pot,....... what? its still bland........lets see now,,.... how 'bout we buy a company that actually has value, and throw that into the pot.,.... get Watson in here, he has some ideas too... Watson get in here.....

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#9
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Re: Facebook, and Defining Return on Illiquation

09/13/2012 1:38 PM

Had a chance to look up "illiquation" yet? I know, it's a big word and all, probably one that came up in chemistry class somewhere ...

There is a grasping for value in the billion-ish Facebook users versus what advertisers will pay for. Part of the problem is the things that sorta work on the desktop - display ads - don't work nearly the same way on the phone.

That set off another battle - the YouTube app (not) on iOS6. Apple originally declined on the YouTube app, instead writing their own which didn't allow playing the videos with the introductory ads (like most major label music vids). Suddenly, the YouTube app disappeared from the iOS6 home screen shown yesterday, presumably because "Apple hates Google". In fact, Google has rewritten a YouTube app for iOS6 which will be more like the one on other platforms and allow the pre-ads to play.

As for the smartphone thing, go back and find Zuck's comments this week. He said, again and again even when Arrington said he didn't believe him, that he's not interested in smartphones. 10 or 20M phones don't make the radar. What he wants is Facebook integrated into every mobile device.

Facebook has a reach far exceeding any TV network, newspaper, or magazine, and that alone makes it valuable.

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#13
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Re: Facebook, and Defining Return on Illiquation

09/14/2012 2:55 AM

How does Zuck plan to 'integrate' FB on Android phones? Surely he knows Google isn't simply going to roll over meanwhile and play dead.

Having reach is fine, but only if it can grasp that for which it reaches, and there are other hands reaching for that cookie jar.

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Re: Facebook, and Defining Return on Illiquation

09/14/2012 8:05 AM

Yes, I followed Savvy's link thank savvy.

And yes, you can have a far reach on allot,

But how long can they do it when the investment/returns ratios are so low.

Facebook reminds me that it is nothing more than a hybred dot com bubble, and the hybred, is that it does have a social use, but they need to show that they can generate capital, and not just from stock offerings.

So can be looked as a tool, the tool may be social entertainment, imo, for Facebook to survive, it has to have a sound way to generate capital, and a wrong decision can really hurt the company, because its value is its stock, and its stock valued is based on ???????? socializing at the water cooler?

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#11
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Re: Facebook, and Defining Return on Illiquation

09/14/2012 12:06 AM

If it don't taste right, add garlic...

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#12

Re: Facebook, and Defining Return on Illiquation

09/14/2012 12:47 AM

I hear about it, read about it, and see folk enamored with it but for the life of me I still have no idea what Facebook's attraction is.

How can anything without form, substance or utility illiquate into anything?

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#15
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Re: Facebook, and Defining Return on Illiquation

09/14/2012 8:10 AM

'no idea what Facebook's attraction is.'

watercooler chatter, keeping up with family, Bullying, political b.s. ??????

But this:

"How can anything without form, substance or utility illiquate into anything?"

is a GA

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#16
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Re: Facebook, and Defining Return on Illiquation

09/14/2012 8:59 AM

That was totally unexpected. I'm not worthy......

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#20
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Re: Facebook, and Defining Return on Illiquation

09/14/2012 6:47 PM

You asked, "How can anything without form, substance or utility illiquate into anything?"

Reminds me of a story from back in the early decades of the Space Program.

Seems this grizzled payload master was computing the net launch weight of a certain communications satellite. Frustrated that no one from the Systems Division would return his calls, he angrily went into the director's office and demanded the information in-person.

"How much does the software weigh?"

"What? Sir, the software doesn't weigh anything at all."

"Bullshit. Everything weighs something. I'm talkin' about these" and he produces a folded punch-card from his pocket. "How much do these weigh?"

"Those?! Ah, those! I think I see the problem now," he smiled. "Sir, those are not the 'software.' Heavens no! No, the software isn't the cards, sir, it's the holes."

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#17

Re: Facebook, and Defining Return on Illiquation

09/14/2012 9:03 AM
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#18
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Re: Facebook, and Defining Return on Illiquation

09/14/2012 9:46 AM

I havta give you another GA.

not because you made me laugh, But only because I have to make room for next years 2013 GA models....

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#19
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Re: Facebook, and Defining Return on Illiquation

09/14/2012 10:18 AM

This is a great chance for the missing 'like' button. People often use OT to bitch, and GA is often abused (liking something does not equate to GA) .

C'mon admin, don't be coy. There's no harm in people voting for a 'read this, it's interesting/funny post'. (you may need to abbreviate that). If you get time to do it, I'd also like to see a FB style thing where you could see who voted. It would stop any naughtyness, and seems fair game that members stand by their vote. No need for a post that is nothing more than a smiley or whatever.

FB has the 'thumbs up' thing, but the WoW blog gal works real fine for me. It has 'oomph'

<scurries away to hide>

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#21
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Re: Facebook, and Defining Return on Illiquation

09/14/2012 10:12 PM

Crikey! Another GA... for something I nicked no less.

Attribution is in order BUT this image came from a poster on a Facebook thread that didn't attribute his/her source.

I arrived at that thread looking for something, an image, to go along with my "I'm not worthy" statement in #16 on a Google image search. No connection really, so not sure how that connects. Must be tagged somehow....

Anyhwo...I clicked on the image's original website just to see where it came from and it landed me on Facebook.

So, what can we glean from this? For one, Facebook just might be full of content without citation or attribution. I guess that says something in itself.

My conscience is clearer now. How can Facebookers (that's what they're called right?) live with themselves? Plagiarizing bussturds!

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#22

Re: Facebook, and Defining Return on Illiquation

09/15/2012 12:10 AM

eli·quate

verb \ēˈlīˌkwāt, ə̇ˈ-; ˈeləˌk-\-ed/-ing/-s

Definition of ELIQUATE

transitive verb

1 obs : to cause to flow freely : liquefy

2 a : liquate, smelt

b : to part by liquefaction

Origin of ELIQUATE

L eliquatus, past part. of eliquare to strain, clarify, cause to flow freely, fr. e- + liquare to strain, liquefy, melt - more at liquate

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