When we named Mark Zuckerberg TIME’s 2010 Person of the Year Lev Grossman wrote, “Facebook has merged with the social fabric of American life, and not just American but human life: nearly half of all Americans have a Facebook account, but 70% of Facebook users live outside the U.S. It’s a permanent fact of our global social reality. We have entered the Facebook age, and Mark Zuckerberg is the man who brought us here.”
Lev revisits that cover story and notes what’s changed since then.
![theatlantic:
The Internet at the Dawn of Facebook
Facebook launched in 2004. Today, it has more users than the entire Internet had in 2004.
Before Facebook roamed the web, the digital world was dominated by big, bulky websites that assumed they’d stay big and bulky: Microsoft and its Hotmail, Time Warner and its AOL, Ask and its Jeeves. It’s striking how much the Internet has changed since Facebook sprinted onto the scene — and more striking still how Mark Zuckerberg’s production changed the course of that scene.
Back in 2004,
the web had some 50 million sites. (Today, it has more than 600 million.)
the most popular brand on the World Wide Web was Microsoft’s MSN.
Google was the fifth most popular brand on the World Wide Web, ranking below Yahoo and AOL.
people still talked about the “World Wide Web.”
”blog” — defined as “a Web site that contains an online personal journal with reflections, comments and often hyperlinks” — was chosen as Merriam-Webster’s word of the year.
Read more. [Image: Thefacebook, lol]](http://25.media.tumblr.com/tumblr_m46jn9glAz1qcokc4o1_500.png)
View Larger The Internet at the Dawn of Facebook
Facebook launched in 2004. Today, it has more users than the entire Internet had in 2004.
Before Facebook roamed the web, the digital world was dominated by big, bulky websites that assumed they’d stay big and bulky: Microsoft and its Hotmail, Time Warner and its AOL, Ask and its Jeeves. It’s striking how much the Internet has changed since Facebook sprinted onto the scene — and more striking still how Mark Zuckerberg’s production changed the course of that scene.
Back in 2004,
- the web had some 50 million sites. (Today, it has more than 600 million.)
- the most popular brand on the World Wide Web was Microsoft’s MSN.
- Google was the fifth most popular brand on the World Wide Web, ranking below Yahoo and AOL.
- people still talked about the “World Wide Web.”
- ”blog” — defined as “a Web site that contains an online personal journal with reflections, comments and often hyperlinks” — was chosen as Merriam-Webster’s word of the year.
Read more. [Image: Thefacebook, lol]
One of the more thought-provoking pieces on Instagram’s billion dollar sale to Facebook is Matt Webb’s Instagram as an island economy. In it, he thinks about Instagram as a closed economy:
What is the labour encoded in Instagram? It’s easy to see. Every “user” of Instagram is a worker. There…
Some readers were outraged by this. “I truly wish employers would stop using Facebook as a professional tool,” commented one. “That was never its intention! … Does it give employers a potential view into people’s somewhat personal lives? Yes! But truly what does that prove?”
Like it or not, Facebook and other sites like it are becoming the digital proxies for our real world selves. Our profiles on Facebook, Pinterest, Google+, Twitter, et. al. reflect our likes, dislikes, personalities, and best photo angles, and are likely more useful to employers in seeing what we might be like to work with than a short interview. If you don’t want employers (and love interests) to come snooping on your page to get a sense of who you are, set your privacy settings high; limit your content to “friends only.” If you are willing to let it hang out, here’s a sense of what employers will be asking themselves as they review your content. This is the sheet that the reviewers in the study used to rate the Facebooking college students on the “Five Big Qualities” that supposedly convey how good an employee will be. (High ratings are good for everything but “Neuroticism.”) After looking at publicly-available photos, status updates, conversations with friends, and Wall postings, the raters scored each candidate accordingly:
Potential love interests are probably asking the same questions, though they likely have a slightly different context for “openness to experience” and care more about how good you look in your photos.
While some readers were put off by the idea of being stalked by potential employers, others recognized the utility of tapping into all the information out there about a given candidate.
“If I’m an employer, and it’s legal, and I’m about to make a major investment in someone that I’ll have to work all day with, I’ll use it,” said “gugie.” Puneet Thiara agreed with her: “The costs associated with hiring and training a new employee far outweigh the risk of not doing ALL of your research. You could say it’s similar to me researching a company I am applying for and checking out members of its groups on Facebook to see what kind of people work for the company.”
But other readers want employers to stick to the social networks intended for professional use. “I — and I know many others are with me here — use ‘social networks’ (other than LinkedIn, that is) for just that. Networking SOCIALLY. In my opinion you have no more business examining my Facebook entries than you would crashing a private cocktail party,” wrote a person who spelled “anonymous” in a very eccentric way. “[S]ocial networks should not be used IN LIEU of face-to-face meetings.”
Brettb was of this opinion as well:
[J]udging the character of an individual with such heavy weight on their personal life, which nine times out of ten will never interfere with their professional life, is wrong. The practice of physically sitting down and going through the motions of an interview with a candidate and asking probing intellectual questions while vigorously researching reference data is a much better way to select a qualified candidate. So what if Johnny had a few too many beers one night in Cancun when he was in college and someone took a photo, or if Susie openly supports her local death metal band. Does that make them bad people? No – get to know the candidate if you want to make a judgment of character. See how they handle themselves in a professional atmosphere and if they are personable or rather, someone you feel you can work with.
In my opinion, those who don’t want employers looking them up on Facebook pages are fighting a losing battle.
Christian Miller won the comments section with this remark:
Any candidate worth considering should be smart enough to set their privacy settings in order to hide all content from any potential employer. Anything a competent HR staff can find via google search is fair game.
Good luck, job seekers. And along with polishing your resume, dry-cleaning your interview suit, and researching the companies you’re interviewing with, do pay a visit to your Facebook privacy settings page.
By Paul R. La Monica @lamonicabuzz
Facebook’s profits turned to losses five years after the company launched. Click here for an illustrated look at Facebook’s financial growth.NEW YORK (CNNMoney) — Facebook is a great company. It proved that in its IPO filing. A billion dollar annual profit and $3.9 billion in cash for something that didn’t even exist 10 years ago? That’s impressive.
But it’s not impressive enough to justify a $100 billion market value right out of the gate.
Sure, we don’t yet know what Facebook will be worth once it starts trading in a few months.
The company said Wednesday that it had determined that the fair value of a Facebook share stands at $29.73, as of December 31. That would value founder and CEO Mark Zuckerberg’s stake at about $16 billion.
Based on Facebook’s current share count, you could come up with a rough estimate of about $60 billion for the company’s market value.
But it seems highly likely that Facebook will price its offering above its most recent fair value estimate. As such, some experts have thrown out the $100 billion number as a possible market value.
I fail to see how that makes sense. Yes, Facebook is growing rapidly. It deserves a premium compared to companies like Microsoft (MSFT,Fortune 500) and Google (GOOG, Fortune 500), which are the only two publicly traded firms that Facebook listed as “significant competition.”
But let’s do the math. Microsoft is trading at only 11 times its net income for fiscal 2011. Google is valued at about 20 times its 2011 profits. If Facebook were to fetch a $100 billion market value, that would give it a price-to-earnings ratio of 100.
The $100 billion number is even crazier when you look at revenue. Google trades for just 5 times trailing sales. Apple (AAPL, Fortune 500) trades at only 4 times last year’s sales.
Sure, Apple may not be a direct rival to Facebook. But I’d argue that it’s fair to look at Apple’s valuations as a benchmark since Apple is the best example of a large company that is continuing to grow as if it were just a start-up.
At $100 billion, Facebook would trade at 27 times last year’s sales. That might have worked in 1999. Not now.
Yes, I realize that investors are betting on the next few years, not the past few.
“There is no way you can justify the current valuation with $3.7 billion in revenue,” said Espen Robak, president of Pluris Valuation Advisors in New York. “But the promise of the company is enormous. You are buying the future.”
Still, let’s assume that Facebook’s profits increase 65% in 2012, like they did in 2011. That’s probably optimistic, since Facebook conceded in its filing that it expects growth to slow for both new users and revenue. But for the sake of argument, let’s forecast net income of $1.65 billion for 2012.
A $100 billion market value would imply a P/E of about 60 on 2012 earnings forecasts. That’s still pretty lofty — especially if growth is already starting to slow.
“Think about Google. Right now it’s trading at around 20 times earnings. That’s a modest multiple and that’s ultimately where Facebook may deserve to be,” Robak said.
A P/E of 20 times my back of the envelope 2012 earnings forecast gives you a market value of $33 billion. But even if we give Facebook a fat premium of say, 40 times earnings, you still only get to a value of $66 billion.
That seems a little more reasonable. Facebook needs to play catch-up with its valuation. If it eventually is going to command a more sizeable premium than Google, it will need to prove to Wall Street that it can grow at a healthy clip for several more years.
That won’t be easy.
Don’t get me wrong: What Facebook has achieved in a few years is spectacular. It deserves some sort of premium. Facebook’s operating margins last year were 47%. That’s phenomenal. Google, by way of comparison, had operating margins of 31%.
“We can recognize that Facebook has built a successful global brand with great scale,” said Lorraine Monick, managing director with Harris myCFO Investment Advisory Services, a money manager in Palo Alto, Calif.
That’s true. But scale isn’t enough to justify a bubble-like valuation. Yahoo (YHOO, Fortune 500) always enjoyed the benefits of great scale. It still does.
While Facebook is clearly in much much much better shape than Yahoo, it’s not far-fetched to think that in a few years, Facebook may face some similar problems.
Facebook already has 845 million users. There isn’t that much more room to grow that number. The challenge will be squeezing more profits from these users.
“If Facebook can make more money from their existing platform, they are golden,” said Tim Loughran, a finance professor at University of Notre Dame. “But Facebook is much more mature than Google was in 2004. Where’s the user growth going to come from?”
China is a logical answer — but that’s fraught territory.
“We do not know if we will be able to find an approach to managing content and information that will be acceptable to us and to the Chinese government,” Facebook said in its filing.
Of course, none of my skepticism will make a difference when Facebook starts trading. The demand for the Facebook IPO will probably be so hot that investors will buy first and ask questions later. The $5 billion worth of stock Facebook plans to sell is a tiny amount.
“Given the small float and scarcity factor, everybody will want a piece of the action,” Loughran said.
But mark my words: Valuations still matter. Eventually, Facebook will have to trade at a price that’s more in line with its peers.
Best of StockTwits. Not enough on Facebook? I didn’t think so.
A_F: $FB is the new $YHOO in that it has ‘reach’ - but $GOOG ads still monetize better for advertisers imo
JoshPritchard: $FB core product captures users’ time, $GOOG core captures intent; former better for demand generation, latter demand fulfillment
Agreed. I continue to think Google’s model makes mores sense because their ads should have more value.
divtastic: If there’s any one stock to trade $FB it’s $ZNGA
Correct. And Zynga (ZNGA), which accounted for about 12% of Facebook’s sales, is up sharply Thursday. I’ve been surprised by how poorly Zynga has done since its IPO given how closely aligned with Facebook it is.
margbrennan: Bono’s venture capital firm Elevation Partners paid $120M for a stake in facebook in ‘10. It is now worth ~$1.5B. $FB #beautifulday
But will Facebook shares move in mysterious ways?
