Thursday, May 12, 2011

How a $50 billion company can evaporate overnight
















Facebook is supposedly worth $50 billion. I have to laugh at that because I know that it isn't worth even a small fraction of that price. At any given moment, another company could come along and completely eviscerate Facebook overnight. Let me give just one example of how simply and quickly it could happen.

There is a portion of the population that seems to love having their every movement and action traced, tracked, logged, recorded, and whatnot. Dumb as these people are, their numbers are growing, and they do present a wealth of new business opportunities. So let's say someone forms a new company, with a website called fbfriendsync.com.

Our hypothetical Friend Sync offers the following wonderful service: it tracks your location (via your phone) and compares that data with the location of all your facebook contacts (if they opt in of course). For example, if one of your facebook contacts is at the bar or club next door to where you are on a friday night, this wonderful service will let you know. But not only that, it can go back in time and tell you all the previous places you both just happened to be at at the same time. It would help find people with the same interests, based on the locations visited. So its as much a match.com as it is a facebook. But considering the fact that most people dont really know most of their facebook contacts, a service such as this is very valuable for providing conversation starters. It could also bring up a map that shows where all your contacts are, so you can arrange a quasi-spontaneous meeting if you happen to be going to that same place. "Quasi-spontaneity" is the key to any app like this. But that is a story for another time.

Ok but how does it actually destroy facebook? Because it is very easy to transfer your facebook data to another site. I mean very very easy. Like 1 button click easy. And once everyone does that, the value of facebook completely evaporates. Facebook has little control over its users data. Facebook cannot copyright your name, your favorite movie, your favorite color, your friend's names, or any information like that! (Though I am certain they will try once the time comes.) So Facebook really has no value at all. What of yours do they really own? They may claim to own it all but obviously that will not stand in court. So they have very little legal protection to prevent a competitor from coming in and overthrowing them overnight. Once a new site comes along that offers a service facebook doesnt, the whole userbase will migrate in an exponential move that will seem like it happened all at once. It WILL happen. It is only a matter of time.

Facebook is sort of like an apartment complex. They may own the walls. But they dont own whatever you put up on your walls. They may claim they do but like I said that is absurd and will never stand in any court. So if you want to take all your stuff off their wall and move it to someone else's wall, there really is nothing they can do. They can't even make you wait until your lease is up! If they somehow manage to keep their rights to your photos and media, then it is not too terribly difficult in today's world to generate new photos. At any rate, going back to the apartment analogy, even if the apartment complex did own the stuff on their walls, it would not prevent people from moving. That precarious right does not add any value to the property. So the question is, what value does facebook have? The obvious answer is very little. About as much as the Hindenberg, the day before it blew up.

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