Pockets $100 Billion Deep: Facebook’s Valuation and Liability

The Wall Street Journal recently (Thursday July 14, 2011) published an article in the Marketplace section where various analysts reported valuing the company at $100 billion and upwards. Redpoint Venures’ Geoff Yang notes that Facebook created a new ecosystem – the ‘social web’. His valuation was based on a $25BB market in online ad revenue with Facebook having a 27% share. In 2015 that $25BB will grow to $45BB and Facebook’s share translates to $7BB in revenue. Add in the local advertising market today estimated at $133BB and project that to the future for $150BB. With the Internet taking 20% and Facebook 20% of that, add $6BB in revenue. Add in international revenue and the estimated 2015 revenue goes to $19BB. With a P/E of 25, Facebook is worth $140BB in 2015. The high end of the scale in the report was $240BB valuation. Some of the higher P/Es are undoubtedly because Facebook is still a private company, lots of investor want in, and the law of supply and demand is active.

Going back to Geoff Yang’s comment about a new ecosystem, the thing about ecosystems is that they contain lots of niches, some beneficial and some not so beneficial. Looking at Facebook as a social media, people automatically assume that Facebook is about communications. This couldn’t be farther from the truth. In fact, Facebook has the ‘potential’ to be a communications tool but to be specific, one has to remember that, as Claude Shannon established, communications requires three elements: a sender, a channel and a receiver. Social media over the Internet is clearly the channel and the millions of members participating are senders. I am not so certain about the receivers.

Facebook is a means for participants to throw out to the world (dare I say ‘vomit’) pithy comments about life, mostly as a means to assuage their egos and establish that their thoughts are somehow worthy of publication. Admittedly, blog writers succumb to the same predisposition, as do contributors to refereed journals. In our case as well as the case with journals, we impose some sort of peer review.

The problem comes when participants believe and expect that Facebook is, in fact, a means of communication, when it typically is not. Personally, being inoculated by Inter-relay Chat (IRC) in earlier days, I know enough to not assess my self-worth by a post or response to a post that comes flying my way, and do not participate in “flame wars”. There are lots of people out there using Facebook with less unassailable egos, fragile personalities and low self-esteem. When these persons become involved in Facebook interactions; and the inevitable trolls and digital demagogues line up like sharks at a chumming, the potential for damage is high.

In verbal communications, most people learn quickly that a self-imposed delay between thinking and speaking is a survival trait. Facebook provides minimal feedback to reinforce an equivalent delay between thought and post. This is not a new concept – books have been written on email etiquette. What is new is that email did not have the potential to impact participants to the same degree. Technology has provided enablers: streams of friend’s posts requires bandwidth; computational power; and storage – all of which have made significant improvements over the last ten years. The result of which is a much more rapid and wider dissemination of accidental stupidity and intentional cruelty.

A 2009 report showed that 1 in 5 divorces are attributed to Facebook. Verbal bullying on Facebook has been reported and is increasing. Blackmail related to Facebook posting of photos is noted. Some interesting work on the phenomena is found here.

Returning to Facebook’s valuation, an infelicitous confluence of factors – high valuations, widespread usage and the potential for material damage (psychological – resulting in treatment costs; suicides, etc.) make Facebook an obvious target for tort lawyers. Expect novel theories of liability to emerge directly in proportion to Facebook’s rising valuation.

 

Statistics + Internet = Awesome!

The Economix blog over at the NYT turned me on to how the Midwest is the “Beer Belly” of America, where bars outnumber grocery stores. You see, the folks at floatingsheep.org have done all sorts of exciting things, such as the awesome “pizza map” which shows whether your region prefers pizza, guns, or strippers. I was very surprised by the small number of Southerners who liked strippers. But Angry Overeducated Catholic put me straight…

Angry Overeducated Catholic

Well, remember that this doesn’t really show that Southerners don’t like strippers…only that they like guns (or pizza) more.

Also, we should always remember that one stripper can “service” a goodly number of customers, and strip club customers may not mind driving for 20-30 minutes to the club, since they plan to spend hours there….thus we should expect pizza places to be more numerous, because nobody wants to wait an extra half hour for pizza (except Chicagoans)…

The real apples to apples are strip clubs to gun shops, as:

• both have obsessive customer bases which love to spend hours and hours at the establishment and have a significant subset of “creepy” customers
• both cater to both the weekend regulars and the once-in-a-blue-moon customers
• the once-in-a-blue-moon customers usually need some handholding and instruction in the etiquette of the place
• both employ security…for obvious reasons
• both are subject to harassment and busybody cops
• both tend to be located on the sketchy outskirts of town (okay, that’s true for pizza places frequently too)
• both are defended vehemently by ideological purists who would, quite frankly, be horrified by a large subset of the actual customers

 

It Feels GOOD to be Right

[I have been gone for some time, and perhaps the loss of lackluster McCain and subsequent abandonment of “moderate” Barack Obama to the machinations of Pelosi, Reid, et. al., affected me more than I knew. But if so, Brown’s victory has revitalized me! Or, equally likely, I was just a lazy ass who got distracted and wandered off for no good reason and am now back, again for no good reason. Your choice, I guess. — AOC ]

Back in the summer of 2009, while celebrating a notable birthday of a good friend, I was chatting with two of the birthday boy’s very liberal, very activist friends. They were naturally overjoyed by Obama’s election (and, in fact, by Biden’s selection—being that rarest of things: Biden groupies), and were certain it was just the start of a sweeping demographic and electoral shift to a permanent progressive majority. Not unlike our own Angry New Mexican (well, except for ANM’s odd infatuation with Her Thighness and low opinion of our President).

Having had some of the same experience a certain number of years before (remember that coming permanent Republican majority?) I expressed skepticism. I told them that the Democrats had arrogantly assumed that the electorate’s mandate for reform and fiscal responsibility was a mandate for sweeping progressive changes, despite the massive evidence to the contrary. And the public was, I told them, becoming angry at this apparent disconnect and the apparent arrogant disregard for Main Street’s traditional center-right views.

They were scornful, and in the fullness of time we made a little bet. In our conversation, we had each agreed that the GOP would gain some seats in the House during 2010, but not enough to pick up a majority. But we disagreed on what would happen in the Senate in 2010. So I bet that the GOP would pick up enough seats to end the super-majority (but not retake the Senate) and my counterpart bet that the Democrats would pick up at least one additional net seat, increasing their super-majority. We agreed to a push if things remained 60-40.

I’m not going to assume victory just now, as there’s plenty of time for the GOP to screw up or for the Democrats to get their act together, but I have to say that my fine dinner at an excellent restaurant on my liberal acquaintance’s dime is looking pretty solid. And, even more gratifying, for the reason I mentioned: the sheer arrogance and incompetence of the Democratic leadership. (The mirror image, to be fair, of the Republican arrogance and incompetence that lost the GOP the whole shebang in 2008.)

Witness Brown, a moderate, country-club style republican in the mode of a McCain or Olympia Snow, become a rallying point for libertarian and Tea Party money. And doing it not by concealing who he is, but by emphasizing who he’s not. He is a moderate, center-right guy, he is not a progressive lackey of Pelosi and Reid. That was enough, even running for Ted Kennedy’s hereditary seat in Massachusetts, and it will be enough for lots of other folks in the elections to come. Unless the Democrats change course—which they won’t (as a party, at least—many of the reform-minded Dems who ran in 2008 may take action to remind folks why they got elected, and that’s a good thing).

Oddly, this could all actually end up working out well for Obama in 2012, if he sees the writing on the wall and, like Clinton before him, reinvents himself to be what folks like Angry Midwesterner assumed he was in 2008: a fiscally responsible reform minded candidate who wants to change a broken corrupt system. As I said at the time, he really did have an historic opportunity to accomplish great things, if indeed he was the moderate reformer he claimed to be.

Conspiratorial folks might even whisper he was always that and this was all a grand scheme to depose Witch Queen Pelosi and Crown Price Harry from their thrones…but I think that misses the true tragedy. Obama was always both a reform minded candidate and a progressive true believer. He was seduced into believing that the 2008 election had given him the historical opportunity to move beyond simple reform and enact the Second Bill of Rights of his hero, FDR. He thought he could follow through on Saul Alinsky’s goal to radically transform society without all the blood and revolution and slaughter of the enemies of the people. So he allowed himself to be used by Pelsoi (another true believer) and Reid (a corrupt bastard) in a shameless attempt to grab power over most of the American economy (by effectively nationalizing the financial, heavy industrial, and medical industries). For our own good, of course.

And now, the people have reminded him that that’s not really what America is all about. Perhaps now he can refocus on doing the things that really do need to be done and that he said should be done: bringing transparency and fiscal responsibility back to the Federal process, finding a way to keep health care affordable for the average American without breaking the economy, restoring America’s image around the world, and working with our international partners to help spread prosperity and rule of law wherever we can. Those are truly great goals, and worthy of real bipartisan effort.

Which we may now, finally, actually get.

 

The Future of Print Media

Hola muchachos! Angry New Mexican here again with some original work for a change. So it turns out that for conservatives, hatred of the New York Times is an article of faith, much like Bill Clinton’s assassination of Vince Foster or the fact that President Obama is actually a Muslim and for that matter wasn’t born in America. Hmm. Perhaps I should have added those to the Conservative’s Declaration of Faith. But I digress.

Evidently The Grey Lady is viewed as the personification of all that is wrong with the “liberal media.” Now, if they wielded that label on MSNBC, I would find it hard to complain, but this is the same party who’s current 10 Commandments are so exclusive that Ronald Regan qualifies as a RINO (and if the WSJ says so, can a Republican really argue). To expect Republicans to have any connection with reality is like expecting Paris Hilton to develop a set of morals. I mean, it’s technically possible, but it’s about as likely as winning the Triple Crown with a lame horse. Regardless, the relative decline of print media, especially the New York Times, had Angry Overeducated Catholic salivating at the thought of a conservative media ascendancy. I had to respond. You see, the truth does that sort of thing.

Anyway, as bad as things are for the Grey Lady, the NYT is still doing pretty damned well compared to the vast majority of major papers. It’s still America’s #3 newspaper, after all. WSJ and every hotel’s favorite USA Today (#2 and #1, respectively) are also holding up pretty well.

WaPo is fucked as a national paper, which is why they’ve closed all their domestic news offices outside of the Washington metro area. They’re not even trying for “national paper” status any more. The Chicago Tribune and LA Times fighting valiantly on their way down, but they’re doomed unless they can (a) off the NYT or WSJ or (b) take the WaPo route and surrender. They’ll either refocus themselves as local papers (WaPo’s plan), or die.

This of course has nothing whatsoever to do with “media bias.” Just because the conservative media fantasy-cum-conspiracy-theory happens to offer an explanation for an event doesn’t mean that it’s the correct explanation (witness the circulation slide of the Moonie-owned uber-conservative Washington Times).

The bitter truth is that that through the power of the internet, the paradox of choice is wielding it’s winnowing fan. The papers with a truly local (or truly niche) audience will survive. But they’ll be small because a niche, by definition, doesn’t have many people willing to pay for it. The big guys will survive too, because when people have too many options they pick what is popular. If for no other reason, they allow you to have a discussion with other people who have seen the same material. This is also why Twilight movies are guaranteed to be made in Hollywood. No matter how badly they suck, they will pack theaters because they are popular. And tons of people see popular movies, even very, very bad ones. This is what will save the WSJ and NYT. They’re the most popular. People will read them because plenty of other people do. Everyone else gets fucked. (See also the article, “A world of hits” in this week’s Economist).

I’m sure it warms Angry Overeducated Catholic’s heart to realize that the future of print national/international level news in America is WSJ vs. NYT (let’s be honest, if it weren’t for hotels, nobody would read USA Today). The polarization brought by Conservative Savior Rupert Murdoch via Fox News to television will now make it’s inexorable way to print news. Rupert versus the world. I’m sure he’s always looked at it this way. But it wasn’t until recently that a sane man would actually think he might be right.

I sure wish the Bancrofts’ had a pair of balls somewhere in the entire family and stood up to Murdoch. I’d rather see the future of news fought between then Bancrofts and the Sulzbergers than see the world’s second most offensive Australian (after Mel Gibson, the raging alcoholic anti-Semite, naturally). But sadly, the fallen state of the world is such that douchebags do sometimes get ahead.

 

Angry Man of the Week: John Brown

John Brown: Angry Man of the Week

This court acknowledges, as I suppose, the validity of the law of God. I see a book kissed here which I suppose to be the Bible, or at least the New Testament. That teaches me that all things whatsoever I would that men should do to me, I should do even so to them. It teaches me, further, to “remember them that are in bonds, as bound with them.” I endeavored to act up to that instruction. I say, I am yet too young to understand that God is any respecter of persons. I believe that to have interfered as I have done as I have always freely admitted I have done in behalf of His despised poor, was not wrong, but right. Now, if it is deemed necessary that I should forfeit my life for the furtherance of the ends of justice, and mingle my blood further with the blood of my children and with the blood of millions in this slave country whose rights are disregarded by wicked, cruel, and unjust enactments, I submit; so let it be done!”
-John Brown’s Last Speech, November 2nd, 1859

As men go, John Brown was sure Angry. And the source of his anger was a righteous one. The utter barbarism that the “civilization” of what would become the treasonous Confederacy was based on: Slavery. After the murder of Reverend Elijah Parish Lovejoy by a pro-slavery mob in Illinois in 1837, John Brown had found his cause and the meaning that would define his life. He is reported to have vowed publicly,
“Here, before God, in the presence of these witnesses, from this time, I consecrate my life to the destruction of slavery!” There are few purposes more noble for an Angry Man.

Yes, he committed treason in his raid on the federal armory at Harper’s Ferry. But a little thing like “treason” didn’t stop certain losers and douchebags from idolizing the Confederacy. And even if you have the stars and bars in your bedroom, you still have to admit John Brown was twice the man Jefferson Davis ever was. As this week commemorates the 150th anniversary of Brown’s raid, we have chosen to dub him Angry Man of the Week.

My good friend, and fellow hater of Confederate swine, Angry Overeducated Catholic, had a good comment to add to my rant. I reproduce it here in full:

John Brown was a wackjob murderous fundie, but he did have a point. And he did manage to inspire additions to a kick-ass song that provided a marching cadance as the farms and cities of millions of traitorous losers were deservedly burned to ashes. Hip, Hip, Hip, Hip, Hurrah!

(Best verse, though, has nothing to do with either John Brown:

They will hang Jeff Davis to a sour apple tree!
They will hang Jeff Davis to a sour apple tree!
They will hang Jeff Davis to a sour apple tree!
As they march along! )

Glory Hally Hallelujah!

 

All your Passwords are belong to Bozeman

For the geographically challenged, or (in the cast of Coasties) purposefully obtuse and arrogant, Bozeman isn’t a new computer virus, or a demon summoned from the 77th layer of the Abyss by Bill Gates. It’s a city in Montana, actually one of the largest in the state. Montana is normally a champion for personal liberties, but in a bizarre turn of events the city of Bozeman is asking all applicants for city jobs to turn over not just those sites on the internet for which they have accounts, but also the user names and passwords that go along with them.

City attorney Greg Sullivan had this to say about the decision:

“So, we have positions ranging from fire and police, which require people of high integrity for those positions, all the way down to the lifeguards and the folks that work in city hall here. So we do those types of investigations to make sure the people that we hire have the highest moral character and are a good fit for the City,”

While one can’t fault him for his motives, it certainly is important for the city to have a good reputation and it is reasonable for them to want folks of good repute representing them, they’re going to frightening and drastic measures to do so. In essence asking applicants to turn over all shreds of privacy to the city, allowing people from the city to read their e-mail, private sections of facebook, and even access their bank accounts. Now maybe my situation has been unique, but I’ve never had a potential employer ask for permission to read my mail or tap my phone before hiring me. If they did, I’d tell them to take a hike. That kind of invasion of privacy is unheard of, and is unconscionable.

The worst thing is, I don’t know which I find more absurd and frightening, that a US city would ask this of potential employees, or the fact that so far not a single employee has withdrawn their application in protest when asked to tender their accounts and passwords.

-Angry Midwesterner

 

Microsoft gets off it’s Soapbox

So have you ever heard of Microsoft Soapbox? Yeah, me neither. Planned to be Microsoft’s answer to YouTube, this isn’t some flashy new service Microsoft is rolling out with Bing, but the stillborn project which first debuted over three years ago. Now, with the obvious market dominance of YouTube, Microsoft is going to be cutting the chaff from the wheat. In a market where the money is on the web, and not the OS, Microsoft has consistently failed to reinvent itself into something dynamic, new, or cutting edge.

The death of Soapbox isn’t important because of the failure itself. It instead represents a mental change at Microsoft, as they retreat from ground they had originally intended to fight for. Bing is likely their last stand for relevance in the internet world, and one which they will likely lose to Google.

-Angry Midwesterner

 

Obama’s first good decision: Cutting off California

The White House today rebuffed pleas from California for cash. California, as anyone not living under a rock knows by now, carries an estimated $24 billion deficit and is in dire economic peril. Now they expect the rest of us to bear the penalty of their excess for them, and pay for the irresponsible behavior for which they reaped all of the rewards. Something must have hit Obama in the head this morning because for once he made the right choice.

He told those lazy, good for nothing, deadbeat, pot smoking, California Hippie Losers to bug off. Three cheers for Obama!

California has the largest GDP in the US, at over $1.8 trillion, one of the highest levels of taxation in the country, an annual tax revenue of over $114 billion, and one of the highest levels of tax revenue per capita. They have all the resources necessary to solve their own problems. The reason they cannot pay their bill is that, much like a bunch of trailer trash Wal-mart shoppers, they’ve lived beyond their means and run up a debt funding ridiculous programs, propositions, and other such folly to a point that no one in the damnable state even knows where or how the money is being spent. A full 50% of their yearly tax revenue is earmarked for propositions even before the budget is set, that’s more revenue than the total taxes brought in by 48 of the 50 states. And yet visit California and you’ll find a third world nightmare of poorly paved roads, one of the worst school systems in the nation (ranked 48th of 50), no public transportation worthy of the name, scant police coverage, and a wash of crime and poverty that stretches 800 miles from north to south.

California isn’t too big to fail. It’s too irresponsible, stupid, and mismanaged to succeed. Its practices, culture, and above all the arrogance of its people make it one of the largest threats to the American way of life in the world. So now California, we’re cutting you off and it’s time for you to reap what you have sown. Obama should strip your state of its sovereignty and readmit it as a federal territory.

-Angry Midwesterner

 

Silver Lining in a Black Cloud 2: Good Public Education Makes a Comeback?

Part of an arbitrarily continuing, i.e., when I feel like it, series on education….

One of my favorite books I read as a graduate student taking an economics class was 1970 title by the economist Albert O. Hirschman, Exit, Voice, and Loyalty: Responses to Decline in Firms, Organizations, and States. This is a very nicely written book that examines two possible responses of consumers (broadly defined) to a perceived decline in products consumed (again, broadly defined). In a nutshell, the logic of exit says “Let’s blow this popsicle stand” while the logic of voice decries the fact that the popsicle stand in question that it is “all f$%@ed up!” Both mechanisms have their virtues. Over the last few decades, market-driven exit has been much favored over the politics-driven voice in American life, but as Hirschman notes, exit at best tells an organization that there is a problem—assuming they’re looking, and all too often too late—while voice has the potential of providing information for a solution.

I already noted that the Panic of 2008 may (hopefully) lead to a rebalancing of priorities of smart people who were tempted by big dinero working on Wall Street. A cover story in The Atlantic a few months back discusses the effect on cities. (Yes, I read The Atlantic heavily, in case you hadn’t figured that out by now.)

Well this one is about the kiddies, or, more particularly, their parents. Aspiring parents have, over the last few decades, decided to exit the public schools, either by sending Junior to a private school or moving to a different town (which amounts to sending Junior to a private school, where tuition is known as “property tax”). This has left behind the parents least willing or able to say “all f$%@ed up!” and do something about it. In fact the school example is one in Hirschman’s book. Hirschman was a bright guy to have thought of all this forty years ago when exit, aka “white flight,” was at its peak and the consequences were not yet clear (as they would be ten years later in places like New York). Obviously proposals such as charter schools and vouchers are designed to make exit easier for all, not just those wealthy enough to afford to move to the district with, e.g., New Trier, where cities feeding the district have per capita incomes on par with pre-crash Manhattan(!). Like Hirschman, I muse whether more exit is really the right way to go, but I’ll leave that debate to some other rant.

Last year, before the scope of the Panic of 2008 had, the perspicacious and always a bit acerbic writer Sandra Tsing Loh, a fortysomething mom in Los Angeles, contributed this little piece to The Atlantic about how she stopped paying attention to Jonathan “Savage Inequalities” Kozol and got down to work, when she realized she couldn’t afford to live in LA and send her kids to private school. (I’m still bitter I was forced to read Kozol as an undergrad. Whatever the merits of his case, the writing is the non-fiction equivalent of a Lifetime made-for-TV movie.)

Well recently I noticed this about parents in Manhattan in the New York Times. Maybe, just maybe, the Panic of 2008 will lead to a regeneration of the public schools, when caring, reasonably affluent, and ever so obnoxious parents like Loh—the kind unwilling to take no for an answer when their kids have to use decrepit materials and facilities, taught by staff lorded over all too often by ossified bureaucracies—make a return, where they will rapidly realize that the problems now faced by Avery, Brock and Caleb are pretty much the same as those DeShawn, Esmerelda, and Frankie have been facing for quite some time now, and then start exercising some voice. Because, let’s face it, you don’t care so much about things in the abstract as you do when you’re being confronted by it on a day to day basis and have a personal stake in it….

 

(Un)Professional Behavior and Geeks

What is it about Science, Technology, Engineering and Mathematics that attracts the socially inept? I’m not just talking about the lack of hygiene issues some dorks have, the tendency of geeks not to bathe, or even the very disturbing lack of respect for personal space some open source weenies display. Specifically I’m talking about the inability of many dweebs, especially in technology, to understand when and where certain types of jokes or behaviours are appropriate. It has lately come to my attention that the cadre of foul smelling basement trolls, behind the (incredibly useful) open source plotting tool gnuplot, have decided it’s perfectly professional to throw up a pornographic picture on their tool’s manual. Sure it’s “just a line drawing”, but it’s the kind of line drawing that if you used as your background at work would get you sued for sexual harassment, and rightly so.

Evidently the nerds behind gnuplot don’t get out of their filth ridden cave very often, or if they do, rarely see beyond their bristly neck beards, because otherwise you’d think they would realize that this sort of objectification of women, *especially* in a field where women are under represented, and often intimidated by the chauvinistic exclusionism which pervades the field, is not cool in a professional context. I’ve talked to many people who are angry about this particular infantile prank, and the worst part is, it seems the folks at gnuplot have been asked several times to take down the image, or move it off of the professional portion of the site. A quick Google search turns up a lot of irate messages from people who have been trying to get the gnuplot folks to have shred of adult conscience with no avail.

I’d like to ask our readers to write to the gnuplot dev team (gnuplot-beta@lists.sourceforge.net), and ask them to move this image off of their tool’s site. It’s degrading to women, disrespectful to professionals in the field, and utterly unprofessional. I’ve sent my own message, and if I don’t see some change, will likely be reporting their behaviour to the IEEE and ACM, both of which have codes of conduct which prohibit this sort of behaviour in professional contexts.

Hopefully this is a very poor representation of the men in the field. I’d like to believe professionals in technology have grown up a bit, but displays like this one make me doubt the maturity of anyone who works with computers. Left unanswered, stunts like this reinforce the unfortunate opinion that behavior like this acceptable in a professional context. Its no secret that the field of CS is currently lacking in raw talent, there simply aren’t enough Computer Scientists at the present as evidenced by the current trend of outsourcing amongst top companies. The field needs more creativity, diversity, and skilled professionals. By behaving in a way that excludes women, the socially ept, and men with an adult sense of humor these bozos are pretty much ensuring CS won’t be recruiting the kinds of people it needs.