(For those who say I just don’t get it…get this!)
Over the years I’ve made note of how right before any earnings season begins in earnest, near without fail, suddenly they’ll appear to be a barrage of announcements that sound utterly “fantastic” (Tesla™ turned this into an art-form) yet, appear to be nothing more when all is said and done than some form of “headline” read that serves up the algorithmic, HFT, search and destroy programs to gorge themselves upon the poor souls daring to leave standing orders. Rinse, repeat.
Now with that said I was thoroughly amused and not disappointed when I read the following, especially when it also entailed another point I had just recently made, and in far more spectacular fashion for demonstrative purposes than even I could of imagined. One could say, “It’s a two-fer!” (Let me make clear before I move on – this is not “a shot” at the author, what I’m speaking directly too is the announcement by Facebook itself, this is just a reporting on that story.) To wit:
Sounds totally fantastic, yes? I would even garner Elon Musk and Jeff Bezos nodded in approval. But let me throw this into the mix, and is a point I made just the other day, again, to wit:
Business 101 was reduced to: Get an idea, Get funded, Get listed, Get out, rinse repeat. And if you didn’t “get out?” Then the only metric that mattered is “eyeballs for ads.” i.e., Spend (or lose) $100mm per quarter is perfectly acceptable, and even encouraged, as long as you can show 102 million eyeballs came for free. Why? “It’s different this time.”
Why is the above relevant? Fair point, and it is this: It sure is a nice thing to be able to bring access of the internet to – BILLIONS!
(Remember that “eye-balls for ads” model is the key, and this offers up the main course for the headline reading algo’s to feast upon. But, back to the headline.)
That’s just “FANTASTIC!” right? I mean all the ads for fresh eye-balls that have not only never had the opportunity to have a Facebook account, but never had access to the internet, and probably never even hear of it! Oh, the money they’ll spend and the profits to be made.
Did you just have a “Wait…What?” moment there? I hope you did. If not read that last line again only slower and let it sink in. I’ll come back in a moment.
Did it hit you? For those not sure of where I’m going re-read my earlier quote above, particularly the line: “Spend (or lose) $100mm per quarter is perfectly acceptable, and even encouraged, as long as you can show 102 million eyeballs came for free.”
It would seem (once again) Zuck and crew are again finding the time to spend who knows how much. This time it’s all in an effort to bring the internet to people who’ve probably never even seen it. It’s a great bit of charity work for sure, and honorable, but it is charity from a business perspective. Why?
Hint: How much disposable income does one think will be available to spend from people whom in 2017 haven’t access to the internet? Or better yet, forget “disposable” how much income in total?
Can we say without being raked over hot coals the obvious? As in – they’re probably poor, if not very poor? But hey – we’re talking “billions” here, right? That makes it all “so worth it” to spend more of Wall Street’s, or 401K holders money on it, right?
I mean, I guess, Facebook has all this free-time available (along with Mark’s apparent upcoming office seeking political tour) since the prior spending of $Billions upon $Billions of investor money is now shown to be thrown down a rat-hole with no foreseeable investment return forthcoming in the near future. (Think Oculus Rift™, WhatsApp™, and more.) Because, obviously, one would imagine from a business perspective that would (or should) be a main priority before any and all other undertakings, correct?
But hey, maybe there’s a bright side.
This appears to have only cost $10’s or maybe only $100’s of Millions.
Consider it a bargain.
© 2017 Mark St.Cyr
Footnote: These “FTWSIJDGIGT” articles came into being when many of the topics I had opined on over the years were being openly criticized for “having no clue”. Yet, over the years these insights came back around showing maybe I knew a little bit more than some were giving me credit for. It was my way of tongue-in-cheek as to not use the old “I told you so” analogy. I’m saying this purely for the benefit of those who may be new or reading here for the first time (and there are a great many of you and thank you too all). I never wanted or want to seem like I’m doing the “Nah, nah, nah, nah, nah” type of response to my detractors. I’d rather let the chips fall – good or bad – and let readers decide the credibility of either side. Occasionally however, there are, and have been times they do need to be pointed out which is why these now have taken on a life of their own. (i.e., something of significance per se that may have a direct impact on one’s business etc., etc.) And readers, colleagues, and others have requested their continuance.