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Comment by jrockway | Hacker News Reader

I can't believe anyone would buy that, though. Facebook makes almost no money. That's not going to change. People are leaving the platform. There is constant negative publicity.

Facebook is not a sure bet, so if you want to work there, do it because you like the project you're going to be working on. If you want to get rich quick, start buying lottery tickets.

(If you want to get rich slowly, then take Google's $500,000 stock offer! While Google's growth may be slowing, they still have a solid product that makes them a shit-ton of money.)

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"Facebook makes almost no money. That's not going to change."

I doubt that you honestly believe that, but if you do -- want to make a longbet? I bet Facebook will 5x their revenues in the next 2 years. Loser pays $5,000 to a charity of the winner's choice. I'm 100% serious.

What's any multiple of revenue have to do with making money? Revenue is easy, profit's hard.

That's so unbelievably not true. Both can be difficult in their own right.

Making a lot of revenue is certainly not easy. Not a lot of business models scale up to making hundreds of millions or billions of dollars of revenue per year. Achieving that part is ridiculously difficult.

Making profit, on the other hand, is relatively simple: just control costs. We're making many millions of profit per year because we have a high profit margin. Making profit, relatively speaking, is easy.

For us to grow to hundreds of millions of dollars a year in revenue, that will be hard.

The idea behind valuing "top line" revenue is that the leverage there is unbelievable. If you increase your efficiency by 1%, you've instantly made tens of millions of dollars per year in profit. In the meantime, most companies voluntarily choose to pour all of their profits into growth, like hiring ahead of the curve.

It's only hard for you to grow to hundreds of millions of dollars in revenue because of your profit margin. Start selling stuff for a loss and you'll have tons of revenue (given that your goods are in demand and you are selling them for less than everyone else). They're are tons of businesses with plenty of revenue but shit to show for it. The auto industry comes to mind...

Facebook is not selling physical goods at a loss, and the comparison is not apt.

Facebook is making a bet that if it hires a bunch of really talented people while they are available, those people will eventually make more money for Facebook than they cost them.

Don't confuse that bet with an inability to make profit should they so choose.

You don't need profit if you're too big to fail.

I agree with the parent. Facebook recently announced Facebook Deals (which allows advertisers to advertise based on check-in triggers from facebook's location platform) and the facebook location check-in platform I'm sure will soon dwarf foursquare and gowalla combined. That combination is just as compelling if not more so to advertising as advertising when people are searching. Facebook deals could very easily be the new adsense.

Google may have a stranglehold on web advertising but Facebook is in a very good position to get a stranglehold on local advertising.

Facebook deals could very easily be the new adsense.

How? I don't have a Facebook account. I do need to search the web, though.

Google's advertising platform is strong because they put their ads where I need to be. Facebook is not as strong because I don't need to check-in with Facebook when I go somewhere. Some people think it's fun, but what I've noticed is that most people stop using Foursquare after the first week or so. Is Facebook any different?

    >Is Facebook any different?

Network effect, and not much else. They have the userbase to persuade businesses to give better deals than 4sq or Gowalla, and that will in turn entice users to use it.

So Facebook's business model is paying people to use it? OK. Can I sell my shares now?

Facebook doesn't have to pay anyone for that to work. Same model as Foursquare, with a userbase orders of magnitude larger

  Facebook is not as strong because I don't need to check-in
  with Facebook when I go somewhere.

You know, there are way more people than you in the world.

And they are not prevented from entering the store if they don't "check-in" on Facebook. It's something extra to do if you feel like it.

Compare this to Google search ... how else are you going to find stuff on the Internet?

  Compare this to Google search ... how else are you going to
  find stuff on the Internet?

A lot of interesting stuff on the internet I find in my FB news feed where my friends are posting it or liking it. For shopping it has even more weight: I am more likely to look at what my friends recommend vs. some random stuff out of search.

Bling!

What sort of device are they going to use to "check in" when they're moving about?

This guy seems legit

(p.s. - my charity of choice gets 30% of your winnings for being a moral backer)

People are leaving the platform?

Do you mean like someone deactivated their account?

Or do you mean more people leave facebook every month than sign up?

If the latter, can you provide a source?

Facebook makes almost no money? You're insane. Facebook is making a billion of profits a year, and that's a 3-5-fold increase on last year. They're not shouting about it on the rooftops (why should they?), but they're clearly on their way to having a business that makes just as much money as Google (however it is they're doing it) and so will probably command similar valuations.

This reminds me of the few years before Google IPOed, when Google were deliberately keeping quiet about their profits so as to not generate lots of competition for themselves, but were quietly putting away hundreds of millions a year and multiplying that each year.

Facebook is making a billion of profits a year, and that's a 3-5-fold increase on last year.

The most we know is that their profits are in the "tens of millions", their revenues are in the billions.

I wonder what the ratio of new people signing up to people leaving facebook is.

I personally think it's more than just slightly higher than 1 to 1.

It's clearly not. When they state user numbers, they only ever state active user numbers. And it's growing like a bat out of hell.

Let that sink in for a minute. Almost 600 million people use Facebook every single month. That's not the number that's signed up, and left. It's the number that is still actively using Facebook.

> they only ever state active user numbers

Yeeeeeessss...? just as anyone else, amirite?

The derivative of that ratio is far more interesting than the ratio itself.

There is no way to possibly find this out.

What you 'personally think' this number is should suffice.

Facebook makes almost no money.

Not only you have no way of knowing that (unless of course you work there, in which case please let me know), but you grossly underestimate their capacity to take a revenue of hundreds of billions and turn it into a profit. No matter what their management is smoking, I doubt they're complete idiots or are squandering it.

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