Thursday, September 27, 2007

Facebook End Game

I am a Big FAN of Facebook and like thousands of internet enthusiast I see Mark Zukerberg as a HERO . He has created a Giant distribution Platform called Social Graph . He did it on his vision of Internet and social media . Some of his moves like Newsfeed, Opening up the platform for Third party application developers , Not doing a revenue split deal with Application developers and finally Facebook Fund are nothing short of a Masterstroke .

He has turned down the deal from Yahoo and he insist to maintain FB as an independent company . Cyberspace is abuzz with the Fear,excitement and anticipation of next move of this Boy wizard . Most Frequently Asked Question is

How will he plan and time his Exit ? Will it be through IPO or through Acquisition ?

Most of the folks think that Facebook will go public at a valuation of some where between the range of 25-35 Billions USD . Thats a lot of money .IPO Advocate says that FB will go public because there is no one who can afford to buy them at the valuation FB team want .

I think it will not be a good move for FB to go public . They should sellout .

Why ?

Short and sweet answer is Due to unrealistic expectations . When Google decide to go public and filed S1 . Their earning details came as a pleasant surprise to many folks . This is not the case with FB . No matter what number they put as their revenue , it will always be a disappointment . In a hyped environment reaction to the same hype machine will work against him and it can spiral FB to doom . This is not to say that Mark and VCs who invested in FB will not get good ROI if they go public . they will , but Mark's vision of FB will be lost .

You may say that haven't we seen this before ? with Netscape ? YES . But Netscape was a pioneer and back than there was no history behind internet , things are different today we have a DOT COM Bust behind us . Netscape too got some MAD money valuation but they have a good revenue from their enterprise clients . This is not the case with FB .

Fact is that in spite of all his greatness ,Mark can't be exempted from the BIG question about viability of FB as a business and Once FB file for IPO they will have to face this Question every quarter .They have created a seemingly"Perpetual Motion Machine" . If they stay independent they will have to feed it with something . that "something" is not apparent as of now .

Why Sellout??

I think for FB ,biggest advantage of selling is that selling out would give them a reason [ Excuse ] for course correction .

FB is a Great distribution platform ,they have done a great job by separating application and Social graph . Now they control the social graph and you and I can write application to ride over it . thats all very good . but This was not something which could not be copied by My Space or Orkut . so in order to differentiate their offering Mark played a Brilliant move by opening API for free. Whole world was at their feet.

This limelight comes with its own price tag . There were many instances where a one man company made a popular service . FB user started to use it but it was hard for the programmer to sustain it , and company went bust . Leaving FB with an unsupported application and unhappy users. Our Hero made another master stroke "FB Fund" .

What worry me is that He is doing all this with VC money . not from FB Revenues . VC Funds will not last forever and in absences of a massive revenue these Question will haunt FB too . if not now than may be some years down the line .

Opening platform for free was good move but moving away from "Free" under Marks Leadership will take sheen from his image . so they need a scapegoat . and i feel impact of such policy shift are moderate if there is a change in ownership .

We have an example of GrandCentral , a startup which offered a telephone number for life , Once you have a Grand Central Number you need not to change it when you change service provider , move to a new city or whatever . They promised "One Number for One Life " very romantic .Grand Central got acquired by Google . with in few weeks of selling out . Google changed the policy and issued new numbers to existing GC users . There was a small outcry but Google silenced them by offering money for reprinting Biz cards .

Grand Shift in ideology , little flutter , little money and things are going on smoothly since , GC is still signing new users .

If Tomorrow FB wants to take a corrective action like say a 5-10% revenue split with its existing app developer or they want to sell Flash overlay adds on small widget based TV on every profile . Given his image , doing this will be hard for Mark. So he may collect the money and run to do next venture . but if some other company say Google or MSFT do it ?

Like grand central there will be little unrest and people will abuse MSFT for greed and FB will keep going . In my opinion that will be a Good End game for Facebook exit .

Extra :

Now that i am at Crystal Ball Gazing i can't resist temptation to talk about some thing else

Who will buy FB ?? Microsoft

at What valuation 16-18 Bill.

Why do i think so ? I don't think so its a guess .

These are my view and I admit that there is a possibility that I might be wrong and Mark and his team can come up with some new strategy to address these issues and stay independent . I will be a happy man if thats the case .

Whats your take on FaceBook Endgame ?

Wednesday, September 05, 2007

Observations,Patterns and Exception

I spend most of my free time reading books , blog , journals, newspaper etc. I had this hobby since my school days . I was never too good or keen with sports . only physically demanding activity I indulge in is Traveling . But most of the time my travels are a way to facilitate my thought process only . some kind of walking meditation .

If you ask me to name something in which I consider my self "Gifted" . I would say its my penchant for reading on wide range of subjects , and My more than ordinary memory for things which interest me . Somehow I am always able to remember trivial things from past . This is a funny and strange combination . This cocktail of Reading ,Remembering and Analysis sometime gives me some funny insights . they are mostly not earth shaking but they are amusing .

I had one such observation yesterday . Funny thing is that I observed something , [i thought ] i discovered a strange pattern , I was amused and inflated at my personal discovery and with in few hours an exception of that pattern was staring me in my face .

I rarely share these discoveries with anyone . My Girlfriend is very bored with my sudden shouts of Eureka!! Eureka!! Poor Girl :( .

so I decided to spare her and tell you my weird observation . Here I go ,Keep an Aspirin handy ,

Biographies :

I read biographies of a lot of Famous and successful people from different field. overtime i Noticed a strange thing in most of them . Successful and famous people somehow know each other long before they became famous .you may ask Whats the big deal in it ? Well see it like this

Statistically Only 10% of people try to do something which has a potential of morphing in to something big and more than half of them will fail. out of these remaining 5% , only 1-2% of people will be BIG enough to attract public attention. Attention of ordinary people like me . now my Question is "What do you think is the probability of the scenario where these 2% of folks know each other or are associated with each other in childhood or long before they werer famous ? " I think instincitve answer is very little or almost coincdential . well i notice these co incedencec too many times . see this facts .

  • Steve Ballmer and Scott McNealy were childhood buddy as they grew up in same neighborhood .One of them is CEO of Microsoft and other is Founder and [until recently ] CEO of SUN Microsystem . What was the probability of having two Key figures of PC and Computing Era coming out of same neighborhood ?

  • Dhiru Bhai Ambani got his first Institutional loan of INR 80 Lakh from a Banker named K V Kammth , who was just a simple Bank Manager at that time . Today K V Kammth is Heading ICICI Bank , a leading private sector bank of India . and Dhiru Bhai Ambani created Reliance Empire . Kammth was main person in resolving dispute between Anil and Mukesh Ambani . What was the ODDS that a regular banker and Trader who did a transaction and end up as Key person in their fields ?

  • As a KID ShahRukh Khan was friend with a girl [daughter of a family friends ] who used to accompany him to movies and they used to enact movie scene after ward . Name of the girl was Amrita Singh . She became a popular actress and SRK became King Of Bollywood .

  • While ShahRukh Khan was in school , He took part in a play where he has to sing a song. Teacher thought that SRK is good with acting but it might not be a good idea to make him sing too. so He asked another guy from school to be his playback singer . Name of the guy was Palash Sen ,Lead Singer of Euphoria .

  • SRK was part of a Theater group called TAG . His first movie was an experimental film , where he played a cameo role of a gay . screen play of this movie was written by Arundhati Roy .Arundhati won Booker prize for her debut novel "The God Of Small Things ".

  • SRK's Father -In-Law Mr.Chiiba was a close associate of Dr. Zakir Hussain, Former President of India .

  • SRK's first TV Serial "Fauji " was produced by Retd.Col. Raj Kapoor . Col.Raj was classmate of Shammi Kapoor , Raj Kapoor,Shashi Kapoor.

  • SRK's ancestral house in Peshawar was only few blocks away from house of Prithviraj Kapoor .

  • During his stint in politics Amitabh Bacchan bought a house in Delhi , which was few block away from SRK's Place .

  • Hollywood actor Rusell Crow is a Relative of Martin Crow who was Captain of Newzeland Cricket Team .

  • John F. Kennedy was Chief Guest at convocation ceremony of Bill Clinton.

I noticed few more points about few more famous personalities but i think these example are adequate to convey a point . Enuff said

Exception :

So once I knew all these facts I was feeling very insightful.As if I have accidentally stumbled upon some secret formula .After few hours of this cloud walk I noticed something in news paper about Geetanjali Nagpal, . An erstwhile model who once shared ramp with Sushmita sen. News paper story said she was living a life of poverty . my theory was proven wrong . or is it ?


So this was my little story of the day , I am still wondering if all these were some random occurrence or it has a hidden meaning . I am not sure . what do you think ??

PS: BTW I share my birthday (24th of March ) with Steve Ballmer and Imran Hashmi . Now i am wondering if it is a sign of things to come .:)

Thanks for reading my rants.

UPDATE: Recently I came to know another supporting evidence. Before joining Microsoft, Steve Ballmer worked at P&G . He used to sell Brownies and Cake mix . During his sting at P&G Ballmer has some co worker .One of them was Jeff Immelt , He is CEO of GE Today. Other was Steve Case , who Founded America On Line [ AoL] . if that's not enough there was a third guy too. His name was Scott Cook who started a hugely successful financial software company called Intuit .Microsoft tried to buy that company but some legal technicality forced them to give up the idea. Now you tell me is it strange that i smell something here