With Google worth more than $200 billion based on nearly $29 billion in revenue last year, and Facebook worth $50 to $70 billion based on less then $2 billion in revenue last, it’s easy to call Facebook’s current valuation hype. Why then would so many investors be willing to purchase a stake in Facebook for so much? We take a look.
The Global Advertising Business
While it’s hard to find hard numbers on the total global advertising market, one report we found from 2009 pegged global ad spending at more than $440 billion. What does this have to do with Facebook and Google? Well, the primary revenue source for both businesses is advertising. One of the best ways to value a business is by analyzing the broad market that is involved in. While Facebook’s Credits business is growing rapidly thanks to the explosion in social games, it still accounts for a small portion of Facebook’s revenue (although it could definitely grow significantly).
While Facebook and Google will most likely never have the majority of all global advertising, this $440 billion figure is a great place to start.
Internet Advertising Growth
The next step is to take a look at internet advertising as a percentage of the total global advertising market. According to the IAB, the total Internet advertising market for the first half of 2010 was approximately $12 billion. If we were to project for the total year, we’d guess that the total Internet advertising market will be around $28 billion as revenue tends to pick up toward the fourth quarter.
That means Internet advertising still only accounts for less than 7 percent of the total global advertising market. Overall, we can make a reasonable prediction that this market will at a minimum double in size as consumers’ attention turns to Internet-powered devices. That would be extremely conservative. If we expect that Internet advertising is going to balloon, as most people in the industry believe, we could make a much more aggressive prediction that Internet advertising could potentially grow to 25 percent of the total advertising market, especially if consumer attention continues to shift in that direction.
That means there’s an additional $80 billion in annual advertising up for grabs on the high end, and an additional $28 billion on the low end.
The Lion’s Share
So who’s playing for that $28 billion? Right now Facebook and Google are the primary competitors in the space, with many other companies, like Twitter, looking to capture large portions of that market. If we were to look into the future and predict that at some point in the next five years, Facebook and Google combined will have 60 percent of that market (not unreasonable considering Google’s revenue is already greater than the entire internet advertising market), and it’s split 50/50, Facebook will be generating $7 billion a year in revenue.
However, if the market is going to grow to the size that we believe, Facebook could bring in $24 billion a year in advertising revenue, a figure which Google basically already has right now.
Marketing Budgets
While the IAB has its own measurement of online advertising, there is a portion of company budgets which falls into “marketing” and both Google and Facebook are also going after those budgets as well. This means there’s easily billions of dollars to be spent on alternative advertising solutions. Take Groupon and LivingSocial, for example. These companies, combined, could easily generate more than $5 billion in revenue this year alone.
As such, we’ll see both Google and Facebook try to get in on the action as the deals market explodes. Facebook has already launched its own deals product, based on Places, and Google has already attempted to acquire Groupon for more than $5 billion. If Facebook can get a piece of these budgets, you could easily see the company adding billions in additional revenue through such sources if successful. For the time being it’s not clear whether or not Facebook Deals will eventually become a new revenue channel on its own; however, we can just about guarantee Facebook will try to get a piece of this explosive market.
With this in mind, I’d say it’s somewhat reasonable to expect at least a few billion in annual revenue through new marketing products for small businesses within the next 5 years. This would bring Facebook up to $27 or $28 billion a year in revenue.
Sizing Things Up
With all this (theoretical) revenue, Facebook actually would have to be worth $200 billion, right? Well, if the market stays the same as it is today (which it of course won’t), Facebook would have a market cap of a little more than $200 billion if valued at a revenue multiple similar to Google’s (similar businesses, similar valuations). That’s awesome! So from the perspective that investors can purchase shares at a $50 billion to $70 billion valuation, and Facebook will have been a great buy!
Can you predict the global market?
Well, if all of the projections which I just laid out are accurate, it actually isn’t that unreasonable. However, there are a lot of things that need to take place in order for these projections to come true. One of those things is that the economy needs to continue to grow for the next five years or more. While things are on the up and up, there’s no guarantee that things will grow quickly. It could take 10 years for the Internet advertising market to grow to the size we projected (instead of five). If that happens, your annual return on a Facebook investment will suddenly be slashed. As such, global market trends will impact your investment.
Is Facebook just hype?
Another perspective is trying to predict where Facebook will be in 10 years. Given that the company has only been around for seven years or so, it’s hard to predict where a company like this will be in a decade. Ultimately, it’s very unlikely that Facebook will just disappear, however it’s definitely something that should be considered. If Facebook fails to perform as expected, and misses projections at any point during the next five to 10 years, Facebook’s valuation would be damaged.
More importantly, if Facebook doesn’t continue to expand or at least maintain its grip on the attention economy (where consumers are spending their time), Facebook’s value to advertisers would drop dramatically and suddenly a large portion of the aggressive market share predicted earlier, will be wiped out.
All things considered
With all of these things taken into consideration, the only remaining component of making the investment is determining what other opportunities you will have to do with that money over the next five years or more. If you think the Internet advertising market is going to definitely grow and that Facebook will simply dominate that market, expecting the company to be worth $100 billion to $200 billion is not completely illogical.
However, if you are conservative, think the market will take five years to double in size and that Facebook will have a smaller fraction of it than expected, other investments would look much more attractive. If you’re a gambler who’s extremely bullish on the Internet advertising business, a Facebook investment really isn’t a horrible bet. Best of all Facebook Credits, or an alternative revenue stream that we don’t know of yet, could prove explosive as the company marches toward 1 billion users.
This means Facebook jaw-dropping valuation of $50 billion (and upwards of $70 billion based on other private transactions), is not that ridiculous as long as Facebook continues to play its cards right, successfully capturing a growing fraction of internet advertising revenue. Keep in mind: All the cards must be played right.
In the world of entrepreneurship one of the most important forms of currency is information. If you aren’t on Quora, you probably don’t have that currency.
Listening To Customers
One of the hottest topics in Silicon Valley nowadays is the “Lean Startup Model”, a model in which quick iterations are superior to theoretically long, drawn out releases which have a significant potential of failure. The position of Lean Startup Model evangelists is a legitimate one: if you don’t listen to your customers then you are pretty much destined to fail because customers tell you what they want. To many of those individuals I would suggest that their single landing page site which is used to test an idea is often times completely misleading. One case and point comes from a story told on Quora by Michael Flaxman in response to the question “What is the best way to test an internet startup idea?”:
Unfortunately, the most reliable way to find out is to build the minimum viable product and see how people respond to it.The idea that you can scientifically determine whether or not a startup will work is a nice thought, but I think it’s unrealistic. If there were reliable tests you could take before launching a startup, wouldn’t startups fail at an exceptionally low rate?
I have a developer friend who wanted to build a cheaper email marketing software, but he didn’t want to make the investment in building a product only to find that it couldn’t make money. So, he found some of his competitors’ clients and asked them if they’d switch. When that seemed promising he setup a landing page that looked like it was for real email marketing software, only the software wasn’t yet built. He then bought traffic and carefully measured how expensive it was to get a “signup” on his landing page. Looking good so far. 6 months of building a clone product and he was ready to get it to some of those trial users.
Unfortunately, his users had lots of reasons why they now wouldn’t actually leave their current SaaS product and switch to his cheaper one. 6 more months of fixing bugs and adding features — including one that let you 1-click copy your account from one of his major competitors into his software — and the project had flopped. It turns out getting people to say yes to “are you interested in a better/cheaper product?” is much easier than getting them to actually make the change (and pay money for it).
Ouch! Take that lean startup people! Listening to the customer is definitely important to some extent, however I would suggest that customers don’t know what they want. That doesn’t mean that all hope should be lost though. That’s because there’s a much better indicator of what to build: the market.
Listening To The Market
While the customer doesn’t necessarily know what they want, the market is a very effective gauge of it. Successful companies are those who build products that resonate with their customers. Those customers in turn tell others about the product and eventually the product reaches a significant number of customers. So how on earth do you monitor the market? Read the news, extensively research the market, and most importantly (if you are in the Internet industry): read Quora! I have a quick story to illustrate the point of this.
I have an entrepreneur friend who is constantly asking me for advice and asking for help on raising funding. My single greatest complaint isn’t about his business (e.g. that it’s a bad idea … which it isn’t), but instead that he has no idea who the other players are in the market. How can you truly become a seriously player in a market that you are completely oblivious to? The answer: you can’t. There are tons of companies who are out there doing the research for you to find out what the market wants.
Unless you are a first mover, which is most often not the case, there is no excuse for not knowing who’s in your market, what they’re doing, and what works for them and what isn’t working. The bottom line: if entrepreneurship were a chess game, no chess player makes their moves without taking into consideration the other player’s moves. So pay attention to the market!
Quora As A Place To Gain Insight
While Quora is by no means the beat of the marketplace, there is plenty of insight to be gleaned from people who post on the site. There are great responses posted about many of the toughest challenges facing entrepreneurs. Clearly, if you spend too much time on the site you are doing yourself a disservice. Additionally, not all players in the marketplace are exactly transparent about their intentions, so the deepest insight comes from those who are sharing the moves they made weeks, months, or most often, years ago.
These anecdotes can prove to be extremely valuable. Business anecdotes are one of the reasons that incubators like YCombinator have become so successful. Aside from providing money, they provide unfiltered insight from business leaders in the community. While much of the information on Quora is clearly filtered (often times so much that it’s clear the person responding has intentionally left out chunks of a story), there are plenty of great insights to be gleaned from reading the site. Do you agree that Quora has become a critical resource for any serious internet entrepreneur? Do you use the site regularly?
benchcraft company scam
Jeddah: City with a survival instinct - Arab <b>News</b>
At no time will Arab News attempt to alter the core meaning of a comment. 3. Reject the message, edit the message when the moderators judge it to be a personal attack, defamatory (or potentially defamatory), abusive, incite hatred or ...
Be A Part of the Oscars Movie <b>News</b> & Movie Reviews | Geo Blog
Do you like reading movie news and movie reviews? All of us without exception love the movies. They allow us to escape into a fantasy world and get away from our everyday realities if only for a while. Sitting in front of the screen at ...
Mall Cop Hoax! ABC <b>News</b> Sends Actor Posing as Security Guard to <b>...</b>
Furthermore, in the wake of the hysterics from left-wing media watchdog groups over the ACORN and Planned Parenthood undercover stings, it's pretty incredible to see ABC News employ the same tactics without any criticism. ...
bench craft company reviews
With Google worth more than $200 billion based on nearly $29 billion in revenue last year, and Facebook worth $50 to $70 billion based on less then $2 billion in revenue last, it’s easy to call Facebook’s current valuation hype. Why then would so many investors be willing to purchase a stake in Facebook for so much? We take a look.
The Global Advertising Business
While it’s hard to find hard numbers on the total global advertising market, one report we found from 2009 pegged global ad spending at more than $440 billion. What does this have to do with Facebook and Google? Well, the primary revenue source for both businesses is advertising. One of the best ways to value a business is by analyzing the broad market that is involved in. While Facebook’s Credits business is growing rapidly thanks to the explosion in social games, it still accounts for a small portion of Facebook’s revenue (although it could definitely grow significantly).
While Facebook and Google will most likely never have the majority of all global advertising, this $440 billion figure is a great place to start.
Internet Advertising Growth
The next step is to take a look at internet advertising as a percentage of the total global advertising market. According to the IAB, the total Internet advertising market for the first half of 2010 was approximately $12 billion. If we were to project for the total year, we’d guess that the total Internet advertising market will be around $28 billion as revenue tends to pick up toward the fourth quarter.
That means Internet advertising still only accounts for less than 7 percent of the total global advertising market. Overall, we can make a reasonable prediction that this market will at a minimum double in size as consumers’ attention turns to Internet-powered devices. That would be extremely conservative. If we expect that Internet advertising is going to balloon, as most people in the industry believe, we could make a much more aggressive prediction that Internet advertising could potentially grow to 25 percent of the total advertising market, especially if consumer attention continues to shift in that direction.
That means there’s an additional $80 billion in annual advertising up for grabs on the high end, and an additional $28 billion on the low end.
The Lion’s Share
So who’s playing for that $28 billion? Right now Facebook and Google are the primary competitors in the space, with many other companies, like Twitter, looking to capture large portions of that market. If we were to look into the future and predict that at some point in the next five years, Facebook and Google combined will have 60 percent of that market (not unreasonable considering Google’s revenue is already greater than the entire internet advertising market), and it’s split 50/50, Facebook will be generating $7 billion a year in revenue.
However, if the market is going to grow to the size that we believe, Facebook could bring in $24 billion a year in advertising revenue, a figure which Google basically already has right now.
Marketing Budgets
While the IAB has its own measurement of online advertising, there is a portion of company budgets which falls into “marketing” and both Google and Facebook are also going after those budgets as well. This means there’s easily billions of dollars to be spent on alternative advertising solutions. Take Groupon and LivingSocial, for example. These companies, combined, could easily generate more than $5 billion in revenue this year alone.
As such, we’ll see both Google and Facebook try to get in on the action as the deals market explodes. Facebook has already launched its own deals product, based on Places, and Google has already attempted to acquire Groupon for more than $5 billion. If Facebook can get a piece of these budgets, you could easily see the company adding billions in additional revenue through such sources if successful. For the time being it’s not clear whether or not Facebook Deals will eventually become a new revenue channel on its own; however, we can just about guarantee Facebook will try to get a piece of this explosive market.
With this in mind, I’d say it’s somewhat reasonable to expect at least a few billion in annual revenue through new marketing products for small businesses within the next 5 years. This would bring Facebook up to $27 or $28 billion a year in revenue.
Sizing Things Up
With all this (theoretical) revenue, Facebook actually would have to be worth $200 billion, right? Well, if the market stays the same as it is today (which it of course won’t), Facebook would have a market cap of a little more than $200 billion if valued at a revenue multiple similar to Google’s (similar businesses, similar valuations). That’s awesome! So from the perspective that investors can purchase shares at a $50 billion to $70 billion valuation, and Facebook will have been a great buy!
Can you predict the global market?
Well, if all of the projections which I just laid out are accurate, it actually isn’t that unreasonable. However, there are a lot of things that need to take place in order for these projections to come true. One of those things is that the economy needs to continue to grow for the next five years or more. While things are on the up and up, there’s no guarantee that things will grow quickly. It could take 10 years for the Internet advertising market to grow to the size we projected (instead of five). If that happens, your annual return on a Facebook investment will suddenly be slashed. As such, global market trends will impact your investment.
Is Facebook just hype?
Another perspective is trying to predict where Facebook will be in 10 years. Given that the company has only been around for seven years or so, it’s hard to predict where a company like this will be in a decade. Ultimately, it’s very unlikely that Facebook will just disappear, however it’s definitely something that should be considered. If Facebook fails to perform as expected, and misses projections at any point during the next five to 10 years, Facebook’s valuation would be damaged.
More importantly, if Facebook doesn’t continue to expand or at least maintain its grip on the attention economy (where consumers are spending their time), Facebook’s value to advertisers would drop dramatically and suddenly a large portion of the aggressive market share predicted earlier, will be wiped out.
All things considered
With all of these things taken into consideration, the only remaining component of making the investment is determining what other opportunities you will have to do with that money over the next five years or more. If you think the Internet advertising market is going to definitely grow and that Facebook will simply dominate that market, expecting the company to be worth $100 billion to $200 billion is not completely illogical.
However, if you are conservative, think the market will take five years to double in size and that Facebook will have a smaller fraction of it than expected, other investments would look much more attractive. If you’re a gambler who’s extremely bullish on the Internet advertising business, a Facebook investment really isn’t a horrible bet. Best of all Facebook Credits, or an alternative revenue stream that we don’t know of yet, could prove explosive as the company marches toward 1 billion users.
This means Facebook jaw-dropping valuation of $50 billion (and upwards of $70 billion based on other private transactions), is not that ridiculous as long as Facebook continues to play its cards right, successfully capturing a growing fraction of internet advertising revenue. Keep in mind: All the cards must be played right.
In the world of entrepreneurship one of the most important forms of currency is information. If you aren’t on Quora, you probably don’t have that currency.
Listening To Customers
One of the hottest topics in Silicon Valley nowadays is the “Lean Startup Model”, a model in which quick iterations are superior to theoretically long, drawn out releases which have a significant potential of failure. The position of Lean Startup Model evangelists is a legitimate one: if you don’t listen to your customers then you are pretty much destined to fail because customers tell you what they want. To many of those individuals I would suggest that their single landing page site which is used to test an idea is often times completely misleading. One case and point comes from a story told on Quora by Michael Flaxman in response to the question “What is the best way to test an internet startup idea?”:
Unfortunately, the most reliable way to find out is to build the minimum viable product and see how people respond to it.The idea that you can scientifically determine whether or not a startup will work is a nice thought, but I think it’s unrealistic. If there were reliable tests you could take before launching a startup, wouldn’t startups fail at an exceptionally low rate?
I have a developer friend who wanted to build a cheaper email marketing software, but he didn’t want to make the investment in building a product only to find that it couldn’t make money. So, he found some of his competitors’ clients and asked them if they’d switch. When that seemed promising he setup a landing page that looked like it was for real email marketing software, only the software wasn’t yet built. He then bought traffic and carefully measured how expensive it was to get a “signup” on his landing page. Looking good so far. 6 months of building a clone product and he was ready to get it to some of those trial users.
Unfortunately, his users had lots of reasons why they now wouldn’t actually leave their current SaaS product and switch to his cheaper one. 6 more months of fixing bugs and adding features — including one that let you 1-click copy your account from one of his major competitors into his software — and the project had flopped. It turns out getting people to say yes to “are you interested in a better/cheaper product?” is much easier than getting them to actually make the change (and pay money for it).
Ouch! Take that lean startup people! Listening to the customer is definitely important to some extent, however I would suggest that customers don’t know what they want. That doesn’t mean that all hope should be lost though. That’s because there’s a much better indicator of what to build: the market.
Listening To The Market
While the customer doesn’t necessarily know what they want, the market is a very effective gauge of it. Successful companies are those who build products that resonate with their customers. Those customers in turn tell others about the product and eventually the product reaches a significant number of customers. So how on earth do you monitor the market? Read the news, extensively research the market, and most importantly (if you are in the Internet industry): read Quora! I have a quick story to illustrate the point of this.
I have an entrepreneur friend who is constantly asking me for advice and asking for help on raising funding. My single greatest complaint isn’t about his business (e.g. that it’s a bad idea … which it isn’t), but instead that he has no idea who the other players are in the market. How can you truly become a seriously player in a market that you are completely oblivious to? The answer: you can’t. There are tons of companies who are out there doing the research for you to find out what the market wants.
Unless you are a first mover, which is most often not the case, there is no excuse for not knowing who’s in your market, what they’re doing, and what works for them and what isn’t working. The bottom line: if entrepreneurship were a chess game, no chess player makes their moves without taking into consideration the other player’s moves. So pay attention to the market!
Quora As A Place To Gain Insight
While Quora is by no means the beat of the marketplace, there is plenty of insight to be gleaned from people who post on the site. There are great responses posted about many of the toughest challenges facing entrepreneurs. Clearly, if you spend too much time on the site you are doing yourself a disservice. Additionally, not all players in the marketplace are exactly transparent about their intentions, so the deepest insight comes from those who are sharing the moves they made weeks, months, or most often, years ago.
These anecdotes can prove to be extremely valuable. Business anecdotes are one of the reasons that incubators like YCombinator have become so successful. Aside from providing money, they provide unfiltered insight from business leaders in the community. While much of the information on Quora is clearly filtered (often times so much that it’s clear the person responding has intentionally left out chunks of a story), there are plenty of great insights to be gleaned from reading the site. Do you agree that Quora has become a critical resource for any serious internet entrepreneur? Do you use the site regularly?
bench craft company reviews
Jeddah: City with a survival instinct - Arab <b>News</b>
At no time will Arab News attempt to alter the core meaning of a comment. 3. Reject the message, edit the message when the moderators judge it to be a personal attack, defamatory (or potentially defamatory), abusive, incite hatred or ...
Be A Part of the Oscars Movie <b>News</b> & Movie Reviews | Geo Blog
Do you like reading movie news and movie reviews? All of us without exception love the movies. They allow us to escape into a fantasy world and get away from our everyday realities if only for a while. Sitting in front of the screen at ...
Mall Cop Hoax! ABC <b>News</b> Sends Actor Posing as Security Guard to <b>...</b>
Furthermore, in the wake of the hysterics from left-wing media watchdog groups over the ACORN and Planned Parenthood undercover stings, it's pretty incredible to see ABC News employ the same tactics without any criticism. ...
benchcraft company scam
[reefeed]
benchcraft company scam
bench craft company reviews
Jeddah: City with a survival instinct - Arab <b>News</b>
At no time will Arab News attempt to alter the core meaning of a comment. 3. Reject the message, edit the message when the moderators judge it to be a personal attack, defamatory (or potentially defamatory), abusive, incite hatred or ...
Be A Part of the Oscars Movie <b>News</b> & Movie Reviews | Geo Blog
Do you like reading movie news and movie reviews? All of us without exception love the movies. They allow us to escape into a fantasy world and get away from our everyday realities if only for a while. Sitting in front of the screen at ...
Mall Cop Hoax! ABC <b>News</b> Sends Actor Posing as Security Guard to <b>...</b>
Furthermore, in the wake of the hysterics from left-wing media watchdog groups over the ACORN and Planned Parenthood undercover stings, it's pretty incredible to see ABC News employ the same tactics without any criticism. ...
bench craft company reviews
With Google worth more than $200 billion based on nearly $29 billion in revenue last year, and Facebook worth $50 to $70 billion based on less then $2 billion in revenue last, it’s easy to call Facebook’s current valuation hype. Why then would so many investors be willing to purchase a stake in Facebook for so much? We take a look.
The Global Advertising Business
While it’s hard to find hard numbers on the total global advertising market, one report we found from 2009 pegged global ad spending at more than $440 billion. What does this have to do with Facebook and Google? Well, the primary revenue source for both businesses is advertising. One of the best ways to value a business is by analyzing the broad market that is involved in. While Facebook’s Credits business is growing rapidly thanks to the explosion in social games, it still accounts for a small portion of Facebook’s revenue (although it could definitely grow significantly).
While Facebook and Google will most likely never have the majority of all global advertising, this $440 billion figure is a great place to start.
Internet Advertising Growth
The next step is to take a look at internet advertising as a percentage of the total global advertising market. According to the IAB, the total Internet advertising market for the first half of 2010 was approximately $12 billion. If we were to project for the total year, we’d guess that the total Internet advertising market will be around $28 billion as revenue tends to pick up toward the fourth quarter.
That means Internet advertising still only accounts for less than 7 percent of the total global advertising market. Overall, we can make a reasonable prediction that this market will at a minimum double in size as consumers’ attention turns to Internet-powered devices. That would be extremely conservative. If we expect that Internet advertising is going to balloon, as most people in the industry believe, we could make a much more aggressive prediction that Internet advertising could potentially grow to 25 percent of the total advertising market, especially if consumer attention continues to shift in that direction.
That means there’s an additional $80 billion in annual advertising up for grabs on the high end, and an additional $28 billion on the low end.
The Lion’s Share
So who’s playing for that $28 billion? Right now Facebook and Google are the primary competitors in the space, with many other companies, like Twitter, looking to capture large portions of that market. If we were to look into the future and predict that at some point in the next five years, Facebook and Google combined will have 60 percent of that market (not unreasonable considering Google’s revenue is already greater than the entire internet advertising market), and it’s split 50/50, Facebook will be generating $7 billion a year in revenue.
However, if the market is going to grow to the size that we believe, Facebook could bring in $24 billion a year in advertising revenue, a figure which Google basically already has right now.
Marketing Budgets
While the IAB has its own measurement of online advertising, there is a portion of company budgets which falls into “marketing” and both Google and Facebook are also going after those budgets as well. This means there’s easily billions of dollars to be spent on alternative advertising solutions. Take Groupon and LivingSocial, for example. These companies, combined, could easily generate more than $5 billion in revenue this year alone.
As such, we’ll see both Google and Facebook try to get in on the action as the deals market explodes. Facebook has already launched its own deals product, based on Places, and Google has already attempted to acquire Groupon for more than $5 billion. If Facebook can get a piece of these budgets, you could easily see the company adding billions in additional revenue through such sources if successful. For the time being it’s not clear whether or not Facebook Deals will eventually become a new revenue channel on its own; however, we can just about guarantee Facebook will try to get a piece of this explosive market.
With this in mind, I’d say it’s somewhat reasonable to expect at least a few billion in annual revenue through new marketing products for small businesses within the next 5 years. This would bring Facebook up to $27 or $28 billion a year in revenue.
Sizing Things Up
With all this (theoretical) revenue, Facebook actually would have to be worth $200 billion, right? Well, if the market stays the same as it is today (which it of course won’t), Facebook would have a market cap of a little more than $200 billion if valued at a revenue multiple similar to Google’s (similar businesses, similar valuations). That’s awesome! So from the perspective that investors can purchase shares at a $50 billion to $70 billion valuation, and Facebook will have been a great buy!
Can you predict the global market?
Well, if all of the projections which I just laid out are accurate, it actually isn’t that unreasonable. However, there are a lot of things that need to take place in order for these projections to come true. One of those things is that the economy needs to continue to grow for the next five years or more. While things are on the up and up, there’s no guarantee that things will grow quickly. It could take 10 years for the Internet advertising market to grow to the size we projected (instead of five). If that happens, your annual return on a Facebook investment will suddenly be slashed. As such, global market trends will impact your investment.
Is Facebook just hype?
Another perspective is trying to predict where Facebook will be in 10 years. Given that the company has only been around for seven years or so, it’s hard to predict where a company like this will be in a decade. Ultimately, it’s very unlikely that Facebook will just disappear, however it’s definitely something that should be considered. If Facebook fails to perform as expected, and misses projections at any point during the next five to 10 years, Facebook’s valuation would be damaged.
More importantly, if Facebook doesn’t continue to expand or at least maintain its grip on the attention economy (where consumers are spending their time), Facebook’s value to advertisers would drop dramatically and suddenly a large portion of the aggressive market share predicted earlier, will be wiped out.
All things considered
With all of these things taken into consideration, the only remaining component of making the investment is determining what other opportunities you will have to do with that money over the next five years or more. If you think the Internet advertising market is going to definitely grow and that Facebook will simply dominate that market, expecting the company to be worth $100 billion to $200 billion is not completely illogical.
However, if you are conservative, think the market will take five years to double in size and that Facebook will have a smaller fraction of it than expected, other investments would look much more attractive. If you’re a gambler who’s extremely bullish on the Internet advertising business, a Facebook investment really isn’t a horrible bet. Best of all Facebook Credits, or an alternative revenue stream that we don’t know of yet, could prove explosive as the company marches toward 1 billion users.
This means Facebook jaw-dropping valuation of $50 billion (and upwards of $70 billion based on other private transactions), is not that ridiculous as long as Facebook continues to play its cards right, successfully capturing a growing fraction of internet advertising revenue. Keep in mind: All the cards must be played right.
In the world of entrepreneurship one of the most important forms of currency is information. If you aren’t on Quora, you probably don’t have that currency.
Listening To Customers
One of the hottest topics in Silicon Valley nowadays is the “Lean Startup Model”, a model in which quick iterations are superior to theoretically long, drawn out releases which have a significant potential of failure. The position of Lean Startup Model evangelists is a legitimate one: if you don’t listen to your customers then you are pretty much destined to fail because customers tell you what they want. To many of those individuals I would suggest that their single landing page site which is used to test an idea is often times completely misleading. One case and point comes from a story told on Quora by Michael Flaxman in response to the question “What is the best way to test an internet startup idea?”:
Unfortunately, the most reliable way to find out is to build the minimum viable product and see how people respond to it.The idea that you can scientifically determine whether or not a startup will work is a nice thought, but I think it’s unrealistic. If there were reliable tests you could take before launching a startup, wouldn’t startups fail at an exceptionally low rate?
I have a developer friend who wanted to build a cheaper email marketing software, but he didn’t want to make the investment in building a product only to find that it couldn’t make money. So, he found some of his competitors’ clients and asked them if they’d switch. When that seemed promising he setup a landing page that looked like it was for real email marketing software, only the software wasn’t yet built. He then bought traffic and carefully measured how expensive it was to get a “signup” on his landing page. Looking good so far. 6 months of building a clone product and he was ready to get it to some of those trial users.
Unfortunately, his users had lots of reasons why they now wouldn’t actually leave their current SaaS product and switch to his cheaper one. 6 more months of fixing bugs and adding features — including one that let you 1-click copy your account from one of his major competitors into his software — and the project had flopped. It turns out getting people to say yes to “are you interested in a better/cheaper product?” is much easier than getting them to actually make the change (and pay money for it).
Ouch! Take that lean startup people! Listening to the customer is definitely important to some extent, however I would suggest that customers don’t know what they want. That doesn’t mean that all hope should be lost though. That’s because there’s a much better indicator of what to build: the market.
Listening To The Market
While the customer doesn’t necessarily know what they want, the market is a very effective gauge of it. Successful companies are those who build products that resonate with their customers. Those customers in turn tell others about the product and eventually the product reaches a significant number of customers. So how on earth do you monitor the market? Read the news, extensively research the market, and most importantly (if you are in the Internet industry): read Quora! I have a quick story to illustrate the point of this.
I have an entrepreneur friend who is constantly asking me for advice and asking for help on raising funding. My single greatest complaint isn’t about his business (e.g. that it’s a bad idea … which it isn’t), but instead that he has no idea who the other players are in the market. How can you truly become a seriously player in a market that you are completely oblivious to? The answer: you can’t. There are tons of companies who are out there doing the research for you to find out what the market wants.
Unless you are a first mover, which is most often not the case, there is no excuse for not knowing who’s in your market, what they’re doing, and what works for them and what isn’t working. The bottom line: if entrepreneurship were a chess game, no chess player makes their moves without taking into consideration the other player’s moves. So pay attention to the market!
Quora As A Place To Gain Insight
While Quora is by no means the beat of the marketplace, there is plenty of insight to be gleaned from people who post on the site. There are great responses posted about many of the toughest challenges facing entrepreneurs. Clearly, if you spend too much time on the site you are doing yourself a disservice. Additionally, not all players in the marketplace are exactly transparent about their intentions, so the deepest insight comes from those who are sharing the moves they made weeks, months, or most often, years ago.
These anecdotes can prove to be extremely valuable. Business anecdotes are one of the reasons that incubators like YCombinator have become so successful. Aside from providing money, they provide unfiltered insight from business leaders in the community. While much of the information on Quora is clearly filtered (often times so much that it’s clear the person responding has intentionally left out chunks of a story), there are plenty of great insights to be gleaned from reading the site. Do you agree that Quora has become a critical resource for any serious internet entrepreneur? Do you use the site regularly?
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Jeddah: City with a survival instinct - Arab <b>News</b>
At no time will Arab News attempt to alter the core meaning of a comment. 3. Reject the message, edit the message when the moderators judge it to be a personal attack, defamatory (or potentially defamatory), abusive, incite hatred or ...
Be A Part of the Oscars Movie <b>News</b> & Movie Reviews | Geo Blog
Do you like reading movie news and movie reviews? All of us without exception love the movies. They allow us to escape into a fantasy world and get away from our everyday realities if only for a while. Sitting in front of the screen at ...
Mall Cop Hoax! ABC <b>News</b> Sends Actor Posing as Security Guard to <b>...</b>
Furthermore, in the wake of the hysterics from left-wing media watchdog groups over the ACORN and Planned Parenthood undercover stings, it's pretty incredible to see ABC News employ the same tactics without any criticism. ...
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Jeddah: City with a survival instinct - Arab <b>News</b>
At no time will Arab News attempt to alter the core meaning of a comment. 3. Reject the message, edit the message when the moderators judge it to be a personal attack, defamatory (or potentially defamatory), abusive, incite hatred or ...
Be A Part of the Oscars Movie <b>News</b> & Movie Reviews | Geo Blog
Do you like reading movie news and movie reviews? All of us without exception love the movies. They allow us to escape into a fantasy world and get away from our everyday realities if only for a while. Sitting in front of the screen at ...
Mall Cop Hoax! ABC <b>News</b> Sends Actor Posing as Security Guard to <b>...</b>
Furthermore, in the wake of the hysterics from left-wing media watchdog groups over the ACORN and Planned Parenthood undercover stings, it's pretty incredible to see ABC News employ the same tactics without any criticism. ...
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Jeddah: City with a survival instinct - Arab <b>News</b>
At no time will Arab News attempt to alter the core meaning of a comment. 3. Reject the message, edit the message when the moderators judge it to be a personal attack, defamatory (or potentially defamatory), abusive, incite hatred or ...
Be A Part of the Oscars Movie <b>News</b> & Movie Reviews | Geo Blog
Do you like reading movie news and movie reviews? All of us without exception love the movies. They allow us to escape into a fantasy world and get away from our everyday realities if only for a while. Sitting in front of the screen at ...
Mall Cop Hoax! ABC <b>News</b> Sends Actor Posing as Security Guard to <b>...</b>
Furthermore, in the wake of the hysterics from left-wing media watchdog groups over the ACORN and Planned Parenthood undercover stings, it's pretty incredible to see ABC News employ the same tactics without any criticism. ...
benchcraft company portland or
Jeddah: City with a survival instinct - Arab <b>News</b>
At no time will Arab News attempt to alter the core meaning of a comment. 3. Reject the message, edit the message when the moderators judge it to be a personal attack, defamatory (or potentially defamatory), abusive, incite hatred or ...
Be A Part of the Oscars Movie <b>News</b> & Movie Reviews | Geo Blog
Do you like reading movie news and movie reviews? All of us without exception love the movies. They allow us to escape into a fantasy world and get away from our everyday realities if only for a while. Sitting in front of the screen at ...
Mall Cop Hoax! ABC <b>News</b> Sends Actor Posing as Security Guard to <b>...</b>
Furthermore, in the wake of the hysterics from left-wing media watchdog groups over the ACORN and Planned Parenthood undercover stings, it's pretty incredible to see ABC News employ the same tactics without any criticism. ...
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Jeddah: City with a survival instinct - Arab <b>News</b>
At no time will Arab News attempt to alter the core meaning of a comment. 3. Reject the message, edit the message when the moderators judge it to be a personal attack, defamatory (or potentially defamatory), abusive, incite hatred or ...
Be A Part of the Oscars Movie <b>News</b> & Movie Reviews | Geo Blog
Do you like reading movie news and movie reviews? All of us without exception love the movies. They allow us to escape into a fantasy world and get away from our everyday realities if only for a while. Sitting in front of the screen at ...
Mall Cop Hoax! ABC <b>News</b> Sends Actor Posing as Security Guard to <b>...</b>
Furthermore, in the wake of the hysterics from left-wing media watchdog groups over the ACORN and Planned Parenthood undercover stings, it's pretty incredible to see ABC News employ the same tactics without any criticism. ...
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Internet Marketing - Ye or Nay ... is it right for your business? This is a hard question to answer since there are so many variables that must be taken into consideration. The individual techniques you use in your web based marketing campaigns as well as how well you implement the techniques can determine whether or not Internet marketing will work in your business. Also you must estimate your target clients use of the Internet and the probability of a response from your marketing. We will try and outline the steps necessary to insure success for your campaign.
Before deciding on an Internet marketing campaign carefully evaluate your target audience. Although the Internet is daily becoming more pervasive in everyday life around the world, not everyone uses the internet for product searches or product purchases, this may also include your product. Why is this important? You will be investing a great deal of money, effort and time into your Internet marketing campaign. This will all be wasted if your target audience does not respond to your efforts.
Your first step in setting up your Internet marketing campaign is to conduct market research on your product. This step will help immensely in determining whether you should or should not invest in an Internet marketing campaign for your business. This step critical because it will give you the necessary insight to even begin marketing your product or business on the Internet. If additional funds are available, hiring a marketing consultant specializing in market research for your area of business is recommended since they can conduct this research both quickly and efficiently. Based on their recommendations, determine if your business can benefit from an Internet marketing campaign. Then and only then is it time to start preparing your plan on how to advertise your business online.
Purchasing the help of professional marketing consultants can be an extremely worthwhile investment. If this is your first attempt at marketing your business using Internet marketing, hiring firms with a extensive background and industry expertise can be very helpful. The marketing consultants can help you by recommending which marketing strategies will be most effective, helping you design targeted ads for your campaign, and overall helping you to manage the Internet marketing campaign and helping you evaluate the results of your marketing efforts to determine which strategies are most effective.
The sky is the limit for a well thought and implemented Internet marketing campaign. Success is only tempered by your ability to promote your products, services and execute effective marketing strategies. The internet marketing strategies you may want to employ include optimizing your website for relevant search terms (SEO), linking to your website from other websites, writing articles, publishing e-newsletters and utilizing web 2.0 traffic building techniques.
Search engine optimization (SEO) is and continues to be one of the most important aspects of any Internet marketing campaign. SEO is important since it helps determine the rank of your website by popular search engines. Internet users place higher value on the higher ranking sites consequently lower valued sites are not as likely to be visited. High ranking websites enjoy increased website traffic as a result of these higher rankings.
Inbound links (other websites linking to your website)are becoming an increasing important in Internet marketing. Inbound links are links on other websites which direct users to your website. These inbound links are extremely important in your Internet marketing campaign. Why is this important? Many search engines include inbound links into their ranking algorithms which translates into higher search engines rankings. Additionally these incoming links can be used directly by website users to access your website. This consequently means more direct traffic directly from these links to your website.
The final step in a successful Internet marketing campaign is to implement an affiliate marketing campaign. Affiliates are essentially website owners who are willing to promote your business or product by placing advertising on their website to direct traffic to your website. Affiliate marketing can be extremely effective in addition to being cost effective since you only pay when the affiliates produce sales.
So these are the steps necessary, if you take them. Internet Marketing - Ye or Nay?
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Jeddah: City with a survival instinct - Arab <b>News</b>
At no time will Arab News attempt to alter the core meaning of a comment. 3. Reject the message, edit the message when the moderators judge it to be a personal attack, defamatory (or potentially defamatory), abusive, incite hatred or ...
Be A Part of the Oscars Movie <b>News</b> & Movie Reviews | Geo Blog
Do you like reading movie news and movie reviews? All of us without exception love the movies. They allow us to escape into a fantasy world and get away from our everyday realities if only for a while. Sitting in front of the screen at ...
Mall Cop Hoax! ABC <b>News</b> Sends Actor Posing as Security Guard to <b>...</b>
Furthermore, in the wake of the hysterics from left-wing media watchdog groups over the ACORN and Planned Parenthood undercover stings, it's pretty incredible to see ABC News employ the same tactics without any criticism. ...
big seminar 14
Jeddah: City with a survival instinct - Arab <b>News</b>
At no time will Arab News attempt to alter the core meaning of a comment. 3. Reject the message, edit the message when the moderators judge it to be a personal attack, defamatory (or potentially defamatory), abusive, incite hatred or ...
Be A Part of the Oscars Movie <b>News</b> & Movie Reviews | Geo Blog
Do you like reading movie news and movie reviews? All of us without exception love the movies. They allow us to escape into a fantasy world and get away from our everyday realities if only for a while. Sitting in front of the screen at ...
Mall Cop Hoax! ABC <b>News</b> Sends Actor Posing as Security Guard to <b>...</b>
Furthermore, in the wake of the hysterics from left-wing media watchdog groups over the ACORN and Planned Parenthood undercover stings, it's pretty incredible to see ABC News employ the same tactics without any criticism. ...
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