Facebook Employees Don’t Deserve to Sell Their Stock
In August, it was reported that Facebook was preparing a plan that would allow its employees to sell some of their vested stock options at a $4 billion valuation. The plan made sense for Facebook. The company has an office building full of young paper millionaires but given the company’s valuation, an acquisition was all but ruled out a long time ago and given the company’s weak financials and the economic environment, a public offering in the foreseeable future was probably already known to be highly-unlikely.
A lot changed since August, of course, and the economic situation has only deteriorated to put it mildly. The public markets are all but closed to technology IPOs and even Silicon Valley titans like Apple and Google have not been able to escape the brutal deleveraging that is still taking place.
Given this, it’s no surprise that Mark Zuckerberg was forced to inform Facebook’s young turks that their paper fortunes will have to remain paper fortunes indefinitely as the company puts its stock sale plans on hold.
This isn’t good news for Facebook employees but frankly, who cares about Facebook’s employees? They don’t deserve to sell their stock.
After years of hype and the promise of a media revolution, Facebook is still just an unprofitable social network trying to pretend it’s the next Google. But Google it is most definitely not.
Last month, Allen Stern over at CenterNetworks set up an ad campaign on Facebook to promote his startup, CloudContacts, and the results mirror those reported by so many others: there are none.
A campaign targeted at “men and women from 25 to 53 with a college degree” generated 81,000 impressions and a paltry 6 clicks, most impressions and clicks coming in the first week. Those 6 useless clicks generated almost enough revenue for Facebook ($3.23) to supply an employee with a Starbucks latte.
The interesting thing about Stern’s experience is not the poor results but the amount of money that he was willing to spend. When he created his campaign, he set a $0.61 limit on his cost per click and a $10 daily spending limit. To take that $10 from Stern, Facebook only needed to produce 16 clicks per day. For a company that boasts about its 100+ million users, how hard could that be? I’ve run AdWords campaigns that have produced more than 16 clicks in a single hour!
While some might comment that Stern wasn’t advertising something of interest to Facebook users or wasn’t using the right copy, the results are still piss poor.
Stern notes that most of the ads served via Facebook’s self-serve advertising platform are not exactly inspiring. I’ve commented before on the lowest-common-denominator pork barrel bullshit that seems to dominate Facebook’s self-serve advertising system.
What does the prevalence of these ads tell us? “Legitimate” campaigns don’t work on Facebook. Unless you’re advertising something that’s generally useless (diet pills, a dating service, etc.), advertising on Facebook isn’t where you want to be. If it was, you’d see more legitimate campaigns. Logically, Stern won’t be continuing his campaign. How many others have left Facebook without Facebook giving a shit about the loss of a paying customer?
The situation is especially problematic for Facebook because it has promoted itself as an innovative technology company that’s creating revolutionary new advertising models. Note to Zuck: a self-serve advertising system that’s used to promote acai berry is not revolutionary.
Forget ROI for a minute. Willing advertisers like Stern aren’t able to even test the quality of Facebook’s traffic and whether or not it can produce an ROI because Facebook can’t even generate the clicks that drive traffic!
$300 was on the table for Mark Zuckerberg and friends. They left it there. I have no idea what these people have been working on for four years but clearly they haven’t been working on building an advertising platform that makes money.
If they haven’t been sitting around all day playing with their pricks, perhaps they’ve been focusing on those stock options, counting the days to cashout.
Well here’s a news flash for all the fucktards working at Facebook: find a way to take that $300 from Allen Stern and you’re far more likely to get your cashout.
well said my man (and thx for the linkup!)
sometimes i wonder just how much experience is up in the facebook hq – i never seem to see facebook photos of people with lots of experience – just lots of cyprus people
Allen: sometimes I wonder just how many people who really give a shit work at Facebook.
The lack of experience is a huge problem given where the company is today and where it’s trying to go but that’s not its biggest problem.
The bigger problem: I don’t see any indication that anybody at the company really “gives a shit.”
There’s no sense of urgency. Nobody seems to be saying, “How can we make money?” Instead, as per Sheryl Sandberg’s statements, they’re focused on building the company over the next 20 to 30 years.
Most new companies don’t have 20 to 30 years. You either develop a self-sustaining business, get bought out or build to the point where you have a viable IPO. I’m sure there were executives at Geocities who would have scoffed at the idea that their company would be acquired and gone within a decade.
Every day that goes by is another day in which Facebook has failed to develop a real business model. Every day that goes by is another day in which more questions are raised about Facebook’s ability to develop a real business model.
Time is the enemy of every new business. Managmement at Facebook seems to think the opposite. That needs to change. People who have a sense of urgency need to be brought in.
Unfortunately, the potential to recruit employees who kick ass and take names is diminishing week by week. Facebook’s stock isn’t even liquid and already, according to reports, investors interested in this private sale plan were asking for a valuation lower than the $4 billion floor Facebook was seeking.
Bottom line: unless you’re looking for a Silicon Valley salary, Facebook isn’t the type of place where young hungry cats are likely interested in working.
That leaves Facebook with a bunch of silver spoon 20-somethings who couldn’t sell a magazine subscription to save their lives.
I’d take a bunch of street thugs from Budapest or Delhi over them any day.
well said drama. well said.
too bad facebook doesn’t share revenue numbers.
wondering if the same could be said for digg – the site has the worst bottom of the barrel ads similar to fbook
Actually, the numbers from Allen’s campaign make a lot of sense and tell a story. In a very perverse way they explain what Facebook is REALLY all about.
Unless Facebook’s ad team is totally incompetent they are optimizing yield, as measured in effective CPM. Even if Allen is bidding the “suggested” amount, if his ad gets low clickthrough, Facebook is earning less money per impression than on the ads that we typically see, over and over. So his ads are not shown. Given that the bulk of Facebook population does not give a damn about stuff like CloudContacts, no wonder he would have to raise his bid to keep getting impressions.
Therein is the rub. Acai berry, diet pill and hot singles ads show what Facebook crowd really cares about – cares enough to click. Zuck would want us to believe that Facebook population is high-brow, high-class and high-quality, but the CPC marketplace tells the real story. Facebook’s clickers are horny, insecure and easily manipulated kids.
Of course a competent management team would have found alternative ways to separate Allen from his $300. Such team is nowhere to be found at Facebook.
They won’t click on an advertisement for a legitimate service but they don’t mind provocative ads that play on basic instincts.
It’s official! Facebook users have the same level of idiocy as Myspace users.
What was Zuckerburg waiting for anyway? He could have sold his shares and started a more profitable venture or have I given him too much credit?
Should the so called Social Media revolution happen and people generate their own content the way Tim Oreilly & co envision, who is to say that the users would use the ad ridden platforms these startups create?
internet marketer – how do we know they are clicking on akai berry and lesbian dating? since you can buy via cpc, these companies can up the bid to crazy amounts and push out everyone else, right?
Allen, you answered your own question.
There is a solid business case for lesbian dating, because clicks and conversion numbers make it profitable for both Facebook and advertisers to keep campaigns running. If there were not enough clicks, the yield would have fallen and Facebook would show different ads. But legit products and services cannot compete on eCPM basis due to low clickthrough, which is the direct result of low interest of Facebook crowd. Ironically, if Facebook would try to only allow ads in line with their puffed up image, their revenue would take a tumble.
On Google, long tail targeting by keyword works well to select valuable ads, because ads compete based on relevance to what user is looking for at the moment. On Facebook, the lowest common denominator (appeal to basest instincts) drives out everything else. If you would bid for something like “CloudContacts” on Google you do not have to worry about competing with lesbians or diet pills.