MySpace just blew it. AOL was a safe walled garden for people who didn't know what the internet was. As the internet outside AOL increased in value, people had less use for their walled garden.
The same thing could happen to facebook if the rest of the internet gets more inherently social.
s/Facebook Fan page/AOL Keyword/
s/Facebook email/AOL email/
s/Facebook Games/AOL Games/
I hesitated before writing that. The reason I thought startup was the appropriate term is because as a business, facebook is still judged by what they might become/achieve.
Facebook's doing well now, but it would not be shocking if fewer people used it in 5 years.
Why wouldn't it be shocking? They've shown that they can ship and see through to maturity several revolutionary products. Stop thinking in the abstract: if a company employs teams who can build stuff, ship it, and bring it to maturity, that's what they'll keep doing. The tech industry isn't exactly lacking in revolutionary ideas to implement.
But, the chances are probably lower than Facebook failing. The chances of Google failing are much lower than the chances of Facebook growing its revenues (or prospects) 5X.
Price (ie working for shares) is an estimation of probability. I'm not saying Facebook is worthless. It's worth a lot. The reason Facebook's valuation isn't $100b already is because the road from here to there is an uncertain one. The two factors I would consider to be important are: (a) Facebook's revenue model is relatively immature.(b) Facebook might be a trend.
*I think Facebook might even have the potential rival Google in advertising. I'm not a Facebook pessimist.
Google could fail in this same period, but it is unlikely to go through a revenue and valuation growth spurt similar to the one it has had over the past decade. Google is now settled into its middle-age and it is no more likely to come up with another money-printing machine like search advertising than any other company. Facebook has a fraction of Google's revenue and it is possible that they will figure out how to monetize their assets in a manner similar to Google, but it is also possible that they screw up or are blocked by social/legal barriers and are unable to realize the potential that everyone is imagining them to be capable of.
The possibility of Facebook cratering is far greater than the possibility that Google will crater, but the possibility of Facebook reaching Google-like revenues is much more likely than the possibility that Google will double their revenue over a similar time period.
It can, but on the other hand they aren't telling new hires that Google could be a $2 trillion company and that would make their stock options worth an amazing amount (which would be the same amount of increase for Google that Facebook is suggesting). They're just handing out stock that's already worth a lot.
MySpace just blew it. AOL was a safe walled garden for people who didn't know what the internet was. As the internet outside AOL increased in value, people had less use for their walled garden.
The same thing could happen to facebook if the rest of the internet gets more inherently social.