10/11/07

The Sky is Falling (re Facebook)

Om Malik is very concerned because page views and unique users declined in the last month. He thinks they should have gone up because kids went back to school but a) the explosive growth in the Facebook audience comes from folks who don't go to school and b) hopefully most people use Facebook in their leisure time which they probably had more of in August. I think there is also a burn out period, when people first get into something they spend a lot of time setting up their profile and adding friends and then ease into a maintenance period where they spend less time at the site and primarily go there when they get a notice that someone wrote them a message, wrote on their wall, super poked them, blah, blah, blah.

When you're talking about such big numbers of unique users (rounding) the Compete data says 34 Million in August and 31 Million in September, it's not such a big variance. And to be fair Om calls it a small dip, but his headline says "Traffic Tanks". I would guess that they didn't have to turn any advertisers away and maybe people are just getting tired of Vampires, Zombies, gardens, fish tanks, and other free mini-applications that developers are lining up to get integrated onto the Facebook platform. I actually had one guy de-friend me because I had accepted an invitation to use the Vampire application and he was afraid I would bite him.

The relationship between internet development and the media is complicated. Internet development is fast but developing sustainable business models is slow. The media thrives on big dramatic developments that are basically just the frosting on the proverbial cupcake. Everyone loves a winner, especially in this case since most media and technology people turn up their noses at Myspace. Those who aren't in the tech bubble can get a critical mass of users on Myspace to listen to their music, buy their books, see their movies, etc.

Facebook is positioned as the grown ups Myspace which is ironic since it started our for college kids only. Basically fluctuations are expected, the sheer quantity of users does not a valuation make, numbers themselves can be sliced and diced and prove essentially whatever one wants to make of them. Facebook is fine. The interest group that we need to be most careful about panicking are the VC's. They are not engineers and rely on what media people say, i think before they read the coverage they should take a chill pill. Hopefully investors this time around are more conservative and in it for the long haul. Facebook is like a Television Network not a television program, Web 2.0 companies are building a strong foundation for the long haul and can't be as irrationally reactive as they were during Web 1.0 where essentially companies tried to become the VC's Flavor of the Week instead of focusing on their product.

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