The SC team has a very 'first principles' approach to business models which has always stood it in average stead. Facebook, which has a habit of making public, information about all and everything, except about itself, has been on our radar for a while now.
To figure out who pays facebook, we started with a more fundamental question - Who really benefits from facebook? The advertisers - surely not, nobody really even sees those facebook ads, leave alone buy anything off them. The users? - don't make us laugh now. Ever since the privacy options came in and all attractive women locked up their profiles, facebook doesn't really serve any purpose to the final customer. What about the standard answer - gaming sites? No one plays those crappy farmville types anymore either. That leaves us with an improbable but true answer (in Holmes style), facebook itself!
This is borne out by the revenue sources report we dug up.
Facebook : Total Revenue 3 gazillion dollars
Microsoft : 1 million dollars
Zynga : 50 dollars
Facebook : 2.99999... gazillion
Now facebook pays itself and books a small profit every year. The valuation multiple for social networking sites is 10^15 as of today. Which explains the valuation. Now facebook sells some stock, say to microsoft and has a few trillion, with which it can start actual businesses, like textiles, rubber plantations and porn and make real profits. Magnificently devious scheme- it takes one to know one as they say.
To figure out who pays facebook, we started with a more fundamental question - Who really benefits from facebook? The advertisers - surely not, nobody really even sees those facebook ads, leave alone buy anything off them. The users? - don't make us laugh now. Ever since the privacy options came in and all attractive women locked up their profiles, facebook doesn't really serve any purpose to the final customer. What about the standard answer - gaming sites? No one plays those crappy farmville types anymore either. That leaves us with an improbable but true answer (in Holmes style), facebook itself!
This is borne out by the revenue sources report we dug up.
Facebook : Total Revenue 3 gazillion dollars
Microsoft : 1 million dollars
Zynga : 50 dollars
Facebook : 2.99999... gazillion
Now facebook pays itself and books a small profit every year. The valuation multiple for social networking sites is 10^15 as of today. Which explains the valuation. Now facebook sells some stock, say to microsoft and has a few trillion, with which it can start actual businesses, like textiles, rubber plantations and porn and make real profits. Magnificently devious scheme- it takes one to know one as they say.
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