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Comment by kyro | Hacker News Reader

Often times, companies have no choice but to raise money up front. Tesla and Facebook had to, and both seem to be well on their way to changing the way we behave environmentally and socially.

Also, I really really really do not understand all the crap you guys give ad based websites/business models. Advert business has well and long been an established industry, dripping with cash. There are tons of websites out there generating millions of dollars for their owners. From POF to sleazy SEO blogs, these people generate enough money to live comfortably, and they're happy with that. And when I see DHH rail against ad based sites at conferences in his snarky ways, it's very disingenuous, as if he's completely blind to the world of those who are making bank from ads.

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"Tesla and Facebook had to"

Tesla makes physical products. They manufacture. They have inventory. They have a factory. Money is required because they have significant initial capital expenses.

I take issue with "Facebook had to". Facebook chose to, they didn't have to. Software companies don't have to. They choose to.

Facebook had to take money because they have server costs; Facebook has server costs because they are the largest photo webapp. But sure, you make a point. Facebook should have instead stayed small. Charged its customers money. Had a popular internet blog. Facebook should've built something people love.

I agree with your assertion that Facebook choose to. However, it seems like it was the right choice.

There are plenty of times where the companies (and consumers, and founders) best interests are served by taking early money and focusing on growth rather than profitability, especially if their VCs are open to helping those founders take money off the table as they hit milestones).

my .02

>Facebook had to

Facebook was started in some kid's dorm room, and I'm still not entirely clear on what they're selling.

Facebook sells highly targeted ad inventory. They may become the most effective advertising platform on the planet.

Not sure why you're being downvoted. I've read estimates that Facebook now shows 10% (!) of all U.S. display ad inventory on the internet.

How does that percentage translate in terms of clicks ? Is that also 10% ?

Of course they are lower than average quality impressions. Proportional representation of clicks isn't necessary with that kind of volume.

Do they profit? Or is Zuckerberg still buying his ramen with VC money?

Being able to target ads well doesn't do you any good if you don't have the ad inventory to make use of that advantage. That's Facebook's problem: their users aren't apt to click on ads while on the site, so they don't convert very well, hence a lot of advertisers don't bother and their inventory sucks.

I've never seen an ad on Facebook that highly targeted me. I think that beyond a few niches (like engagement rings) Facebook's targeting works out to be a wash. That's why despite having 300 million users and billions of page views they are only barely profitable.

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