Nearly three weeks ago, one of the biggest IPOs in the tech industry, hit the public market and many expected the company to create instant millionaires and be a rousing success. That company, Facebook, had so many people rooting for its success. Unfortunately as we know now, due to some transactional issues that occurred within the NASDAQ system, there were a few trades that didn’t get through, which spoiled the social network’s debut on the public market. On top of that, the overall price of Facebook fell dramatically and now it’s slowly trying to work its way back up to something where people will start to care about it.
Who knows what exactly is the reason for where Facebook is today–it could be a variety of factors including things like there being too much hype about Facebook going public that caused its unfortunate predicament it finds itself. Some might speculate that investors found themselves a bit “put off” at the lack of care given to them by Facebook founder & CEO Mark Zuckerberg during the IPO roadshow, or that Facebook is pursuing opportunities without concern for the shareholders (e.g. purchasing Instagram for $1 billion). Whatever it exactly was, no one will really know.
But if you disregard all of the media hype and speculation, what would be the right reasons for someone to purchase a share of the social network? Is Facebook even worth it? Sure, you have tons of analysts and pundits who hypothesize about Facebook’s worth and a bunch of could have, would have, should have, but is there any factual basis about the company that would lead people to invest their money? Historically, has Facebook become a company that has people jumping out of their seats eager to throw money at or has their actions over the past eight years been shoddy and while many people think Facebook is worth the quick sell, they don’t believe in its viability in the long term? What exactly makes Facebook so much damn better than all of the other social networks and its predecessors that shows its success?
A good backgrounder on Facebook
All of these types of questions and more are answered in the new publication “Buy This Book Before You Buy Facebook“, produced by PandoDaily with contributions from its editor-in-chief, Sarah Lacy and reporter Erin Griffith, along with coverage by former TechCrunch reporter and long-time Facebook user, Jason Kincaid, and NYU journalism professor Adam Penenberg. This 113 page book focuses on helping you, the reader, understand just how Facebook got to where it is today. The audience? Anyone who thinks that (a) Facebook has become an overnight success–it hasn’t, (b) they’d like to know how a simple 19-year-old kid created one of the “most respected companies on the planet”, (c) they want to understand how a simple social network has intergrated itself into the world so deeply that nearly 1 billion people constantly use it, and/or (d) they’re scared about how Facebook’s data can be used. If you subscribe to any of the above four thoughts, then you might want to purchase/download “Buy This Book Before You Buy Facebook”. It’s quite a read.
A quick read, “Buy This Book” offers some really thought-out and well-researched information that normally you probably wouldn’t find in a blog post. It examines the Facebook phenomenon from a variety of angles, but mostly it seems to heap quite a bit of praise upon this eight-year-old social network. There are lots of great anecdotes spread throughout this publication that helps you understand where Facebook is coming from–it’s much more than what you’ve seen in The Social Network and in order for you to get a better perspective on whether or not Facebook is worth purchasing, you need to understand the Hacker Way and get a better backdrop into how the company has become a huge success (hint, it wasn’t because it solved a problem overnight…).
Who was Facebook?
Mrs. Lacy dives deep into the background and the history of Facebook and Mark Zuckerberg like she did in her first book Once You’re Lucky, Twice You’re Good and explores some of the key people behind the juggernaut social network that work alongside Mr. Zuckerberg, including well-regarded and leadership role model Sheryl Sandberg, early investor Peter Thiel, Owen Van Natta, co-founder Dustin Moskovitz, former Facebook’er Matt Cohler, investor Marc Andreessen, and the Washington Post’s Don Graham, among others. In her section of the book, Mrs. Lacy examines how the company has been shaped by these figures, many of whom have become well-known names in the tech industry.
Facebook’s trump card over MySpace
But the fact that Facebook had a lot of powerhouse movers and shakers at its disposal doesn’t really help answer the question about how a simple social network surpassed its predecessors and still remain relevant eight years after its conception. Mr. Kincaid takes a closer look in his section from his experience both covering Facebook for TechCrunch and also for being an early adopter of the platform–he claims he’s the 37th user at UCLA to have ever signed up for the service. So what was one of the main features that led to a knock-out punch against MySpace? Simply put: the poke. Yes, that annoying little thing that everyone probably thinks is a bit awkward when you see that someone has done it to you…the poke, according to Mr. Kincaid, is “fundamentally a form of communication between two people…a way to show someone you care, without the baggage of having to think up an appropriate message.” But in addition to that, the wall and timeline help shape the way people interacted on the social network, but is only topped by the photo albums (each day, users upload 350 million photos and houses more images than all other sites combined, several times over). If you want to learn just how masterful the platform has become, then read Mr. Kincaid’s thoughts in “Buy This Book”.
Privacy? What privacy?
But while Mrs. Lacy and Mr. Kincaid show some pertinent information about what made Facebook so special, it’s not all rainbows and unicorns for the social network. With a service that has so much access to private data, one might hope that revealing information on Facebook will remain private–but unfortunately that’s not what Mr. Zuckerberg had intended…at least not 100% of the time. Mr. Penenberg takes a closer look at what he calls “the inconsequential outage over Facebook’s privacy scandals”. In his chapter, Mr. Penenberg states that Facebook is already logging everything that is being done on their platform by you…it knows your comments, your photos, what your interests are, music you listen to, events you like going to, and much more. And why? Because they want to be more targeted in their advertisement. It doesn’t help Facebook’s bottom line to have you receive a music ad for the latest Justin Beiber CD if your music interest is classical. There have been many privacy uproars over the past few years with millions proclaiming that they’re going to abandon Facebook and go elsewhere–but Mr. Penenberg says that few see to follow through. Remember Beacon? Facebook Places? Timeline? News Feed? Nearly all of these had uproars and rebellions that didn’t amount to anything–the features still stayed. But with Beacon, this was one that got to Mr. Zuckerberg and he penned a post stating that he made a “mistake”. Before you trust your investment to Facebook, make sure you read this chapter to understand the privacy concerns people have and whether Facebook is going to honor them.
How exactly did Facebook plan on making money?
In one of the key chapters to read before you invest your money into Facebook, follow Ms. Griffith’s examination of Facebook’s plan to run a business. Quite simply, it’s probably going to be through their advertising platform–in 2011, it earned nearly $4 billion with $3.15 billion coming from advertising and the rest from Zynga (another public company). Their advertising model is truly unique and something that it seems Google and other traditional search engines are struggling to come up with on their own. Facebook has perfected the concept of social advertising–they have all the information from you to share targeted ads that you will find more relevant than other people. In addition, through partnerships with Buddy Media and Wildfire Interactive, Facebook is giving businesses another opportunity to better market themselves instead of simply displaying ads on the social network’s side bar–that’s the way Google would have done it, and Facebook is going to try something different…and it’s working for them. But you’ll have to read more about Facebook’s business model in “Buy This” to learn more.
Overall, “Buy This” is a well thought-out publication with lots of great stories and facts to help educate someone on whether they should throw their money into the company. Obviously the IPO is over, but within the next few weeks, the SEC 90-day waiting period will be over and company insiders will be selling their shares. Maybe then, if you’re intrigued by the possibility of owning a piece of the largest social network in the world, “Buy This” will give you a better understanding of what you’re getting into so you don’t squander your money and can think intelligently enough to make out like a bandit.