Personally, I think that Eduardo Saverin should go big and join the other fine, young soon-to-be-cannibals (that’s how it ends, right?) on Peter Thiel’s Reardon-steel-clad ship. But he’s not the only thing about the celebration of the Facebook IPO that bugs me. Demos has a pretty good analysis:
1. Growing Inequality
Facebook’s IPO will contribute to the extreme concentration of wealth. As a result of the IPO, CEO Mark Zuckerberg will have a net worth greater than the combined bottom fifth of all U.S. households. Facebook’s founders and investors have scored historic gains in recent years even as most U.S. households have been flat and their wealth assets have declined.2. Disconnect Between Corporate Success and Job Creation
Facebook has a far smaller number of employees than any company of comparable value. Facebook’s high valuation and relatively tiny labor force shows that building successful companies no longer necessarily means creating many jobs that grow the middle class.3. Insider Advantages
Beyond its founders, early employers, and family members, the biggest winners from Facebook’s IPO will be well-connected insider investors who parlayed their wealth and contacts into a piece of Facebook equity – a common story in today’s unequal economy. Ordinary investors have been largely excluded from this opportunity.
SatanicPanic
I can’t wait til that ship to be completed and we’ll all be one rogue wave away from deliverance from these tools.
redshirt
If God wanted you to be a Billionaire, you would be, right? That you’re not – that instead you slave away in cubicle Hell – shows how greatly you’ve displeased the Lord. And verily, He’s mightily displeased.
rlrr
@SatanicPanic:
Better yet, pirate attack. And they shouldn’t expect help from anyone’s navy or coast guard.
dr. luba
Got an e-mail from my senator (Levin) yesterday, pointing out another glaring tax loophole that this FB IPO highlights. To quote:
Forum Transmitted Disease
The good news is that anyone who’s dumping money into this Ponzi scheme, and who is not smart enough to unload it within a week, will be losing it all within a couple of years.
My company did some advertising on Facebook. To say it was a total and complete waste of every dime would be accurate. Ads are getting displayed, but nobody’s clicking. GM found that out, gotta give them some points for figuring out early on that the emperor had no clothes.
Mark S.
I like how I have an ad for “Invest in Facebook Now.”
rlrr
@Forum Transmitted Disease:
Considering any company can set up a Facebook page for free, why spend to advertise on Facebook?
Jennifer
Well, you know what to do, right?
Dump your Facebook account.
redshirt
I’m still sitting on my MySpace stock. One day… BOOM! Billions.
SatanicPanic
@rlrr: I’ll be ready with my eyepatch and wooden leg
wesosan
You win, DougJ.
Maybe my favorite headline eva!
Reference point (listening now at work):
http://www.youtube.com/watch?v=9nGsUbZpCKM
BGinCHI
People who buy stock in this shit enterprise can store it right next to their Groupon stock.
I hate the Book of Face. It’s like the Death Star: when someone figures out how to attack it, boom, there it goes.
Forum Transmitted Disease
@rlrr: The idea is that you can target demographics for your product. A great idea, I must admit. In our case we had the hottest product out there these days, a decent job with benefits. We needed US nationals (Facebook can’t help you there) with college degrees (Facebook is VERY helpful with that info) in a specific geographic area (SoCal).
Literally not one click.
I get the value in targeted advertising and understand why it’s worth money. Facebook advertises that ability – it’s the ONLY thing that they can sell, really – but cannot and does not deliver.
schrodinger's cat
Don’t have a FB account and don’t miss having one.
James E Powell
Velvet Underground reference. Me = impressed.
Brachiator
This is analysis?
How much should Zuckerberg earn? It’s not a zero sum game here. Unless Zuckerberg immediately sells all his shares, the valuation of his net worth doesn’t mean very much.
And what is the solution here? Should he be limited to x number of shares worth, say $100 million, and the remainder allocated at random to people in the bottom fifth of US households?
And if the bottom drops out from under Facebook (Myspace, anyone)?
And yes, the marginal tax rates should be higher. But the insanely high valuation of Facebook is not taking food out of poor people’s mouths.
Linnaeus
@rlrr:
That was GM’s reasoning. They’re going to set up a page instead.
Pathman
They created a website that people sign up for to have information about them sold to corporations. What. The. Fuck. There is no way this is sustainable. The scumbags at the top will make out like bandits and when it turns to shit everyone else is left holding the bag. Maybe there be some bailouts involved too! Right? That’s how it’s done in this country. Privatize the profits and socialize the losses. None of this ends well.
Phineas Phang
@Brachiator: And in fairness to Zuckerberg, he made it pretty clear he would not have taken FB public at this time had he not been compelled to by SEC reg.
Villago Delenda Est
This is more virtual “property” that has no value in the real world. You can’t eat it, you can’t live in it, you can’t wear it, it cannot heal your wounds or treat your diseases.
This is fucking insane.
Jay S
@Forum Transmitted Disease: That’s interesting. I saw an online presentation about using facebook targeted ads for social awareness issues some time ago. I was wondering if that was still useful.
I have since have developed a theory of ad blindness, based on my own experience and the comments of others. There is only so much crap that you can tolerate before the filters kick it and you don’t see them any more, even the in your face pop-ups get clicked away before I register what they are. Unless there is some subliminal effect the ads are useless. When they do register, they are often annoying. The targeting sucks, usually lingering long after I have made a decision already.
ETA: Random ads would probably be more effective in my case. Stuff I already know about is crowding out stuff I may have an interest in.
jibeaux
I’ll never understand the inflated values of internet phenomena that don’t seem to me to have a traditional revenue stream that gets within the same universe as that “value”. What did instagram sell for, like eleven billionty dollars? I admit that I am not the most tech-savvy person on the planet, but I also have a strong sense of deja vu…
Brachiator
@Villago Delenda Est:
How about we abolish the Internet and ban all computer games? And programmers should only be allowed to work on projects that are tangible or have tangible benefits.
Not.
To suggest on the Intertubes that “virtual” property has no value is contradictory, to say the least.
BGinCHI
@Brachiator: Human beings have been fighting to the death over virtual property for thousands of years.
It’s called “heaven.”
geg6
Fuck Facebook and fuck Saverin. Fuck everyone today. I’m having one of those days where everywhere I look its assholes, nothing but assholes.
So O/T, the cutest photo you’ll see all day. GOS told me so and, dammit, it’s true:
http://www.telegraph.co.uk/news/picturegalleries/picturesoftheday/9274538/Pictures-of-the-day-18-May-2012.html?frame=2223075
And in other good news, I’m glad to see that the real story on the ssm vote in NC is coming out and it turns out that African Americans probably don’t hate gays getting married as much as the MSM would like to have you believe:
http://prospect.org/comment/13759
redshirt
Speaking of Lord Galtians, old Curt Schilling – Wingnut – wants more of that sweet sweet state money. Hypocrite.
Spaghetti Lee
My personal feeling is that I’ll help Saverin or whoever else build the Galtboat on the sole and immutable condition that they never attempt to return to the US. Swamped in a cyclone? Attacked by a foreign country? Ask the ghost of Ayn for help, not me.
Mark S.
@BGinCHI:
I watched a TED talk about that.
schrodinger's cat
@geg6: Aaawww that is sweet. Thanks for sharing.
Brachiator
@BGinCHI:
If religions were listed on the stock exchange, there might be less mischief and BS.
@geg6:
Also what a proctologist might say.
geg6
@schrodinger’s cat:
Other feel good news includes the fact that Obama is giving the commencement address at the Joplin high school that was decimated by a tornado last year. I bet the kids will love him; the parents not so much.
Villago Delenda Est
@Brachiator:
Don’t go into the false equivalency mode. It’s beneath you.
ReflectedSky
I’m not interested enough to go poke around for the answer, but I think someone clever here may know. From what little I’ve paid attention to re: this story, it sounds like Facebook is using its role in normal peoples’ lives to try to lure small investors back to Wall Street. Is there any evidence they’ll succeed to a significant degree? And anyone buying it priced at 38 has to be either a sucker or someone presuming there will be other suckers to unload it on soon, right?
If Facebook didn’t try so hard to shove ads at you and manipulate your interaction with the interface, the ads would probably penetrate better. But isn’t the data being sold with all sorts of untested claims for inappropriate uses the real story here? I have always assumed the ads themselves were a side show.
Brachiator
@Villago Delenda Est:
Fair enough. You should also drop untenable arguments about “virtual property” having no value.
Information always has value, and ultimately that is what Facebook is selling.
@ReflectedSky:
Don’t think so. If I were being super cynical, I might even think that the first investors in Facebook just want to be able to cash out. I can’t imagine anyone at the company itself much caring about small investors for any particular reason. And one company’s stock (with the exception of maybe Apple or Google) is not enough to move the financial markets on a significant level.
geg6
And this is, simply, Doug J. bait:
http://www.esquire.com/blogs/politics/david-brooks-age-of-innocence-8950471
If there is an essential writer on our side, it’s gotta be Charlie.
Mark S.
@geg6:
Ugh, now I remember why I hate Bobo so much. God he’s a condescending prick.
handy
Anyone wanna help out with the title? I’m having trouble figuring it out.
Steve
@Brachiator: The contrarian schtick occasionally contains insights, but I can’t help feeling like it’s Friday and you sort of mailed this one in.
giltay
@Brachiator: Up until fairly recently, I thought “information economy” meant selling things like music, books, films, or computer programmes. I’ve since realized that “information economy” means selling interests, hobbies, buying patterns, social connections, personal information. Facebook has hit the motherlode: a site where people just give away this intel for free. I wonder how long it will last? How much longer until we start charging Facebook to know what movie we saw light night?
ThatLeftTurnInABQ
Is this is a new Gilded Age? Let’s check in and see:
__
Jay Gould, 1886: I can hire one-half of the working class to kill the other half.
Mark Zuckerberg, 2012: I can fool one-half of the working class into ‘defriending’ the other half.
__
Hey, look on the bright side, at least we aren’t using real bullets anymore.
Pope Bandar bin Turtle
@wesosan:
I should have figured that someone is this bunch would beat me to DougJ’s reference, but … Wow! That headline sent me trippin’. Definitely, in a field of top-notch snark & parody & erudition, this gets my vote for headline of the year.
On this site.
Or maybe any sites I’ve visited recently.
(Not that any of you care, of course!)
Now, if you’ll excuse me, I am tired, I am weary, & my shiny, shiny boots of leather are in need of polishing.
(Don’t ask.)
Finally, DougJ, may I say that, compared to you, I am as yet unborn & live in my shoes.
[DougJ or any of you other BJers, do you get this reference? I think that many of you will.]
Keep on truckin’
burnspbesq
@Villago Delenda Est:
Seriously? No value? That’s a value-loaded (pun intended) view. The notion that there is a disconnect between price and some abstract notion of “value” of property that can be bought or sold on an organized market is deeply silly. And the notion that something can only have value if you can hold it in your hand is equally silly.
“Can’t heal your wounds?” I think somebody like arguingwithsignposts, who has acknowledged the value of the support he/she got from folks on this blog when he/she was having a hard time, might dispute that.
Man, on your off days, you are really off.
burnspbesq
@geg6:
Another steaming pile from Pierce. At least when he writes for Grantland he stays within shouting distance of reality.
SectarianSofa
@DougJ Finally, a song reference I can hum. Even if Saverin didn’t spell his name right.
SectarianSofa
@burnspbesq:
Are steaming piles common from him? I only read him when he’s quoted here, and he usually seems pretty good. (And by good, I guess I mean he makes me chuckle. Or snortle. Whichever.)
SectarianSofa
@rlrr:
I await the Terry Gilliam film.
Brachiator
@Steve:
Actually, no. I realize that some days people just like to pile on the anti-rich scorn. Most time I just ignore it. There are good points to be made aobout progressive income taxation and other topics. But there is nothing really much to be made about FB’s stock offering or whether or not the company represents anything valuable.
So I am not being “contrarian” about the ideas expressed here. I am being scornful about the absence of ideas being presented here. Yeah, high horses, and who am I and all that. But usually, even on Fridays, Balloon Juicers get up to good discussions. This ain’t one of them.
But see below.
@giltay:
Here’s the weird thing, and what Facebook has tapped into. Some people absolutely love social media. And they love being monetized. So, instead of critics or even anonymous ratings, people want to know what their friends eat, what music they listen to, what movies they see, and they want to turn this into an instant feedback loop. And Facebook caters to this and intensifies it.
Facebook and other social media users eagerly turn themselves into a demographic group. An easily identifiable and defined group, whose interests and purchasing habits are summarized, quantified, hashtagged. And then FB delivers this info to advertisers on a silver platter.
And you have tech gurus like Robert Scoble, Leo Laporte and others championing what Facebook does, because they are convinced that selling your privacy and your very lives to advertisers keeps the Internet “free” and available as a geek playground.
Bago
@Brachiator: So they get some klout?
geg6
@burnspbesq:
So you’re saying Bobo isn’t full of shit in every way?
Sorry to say, but Pierce writes rings around that asshole.
hells littlest angel
Mm, I guess “Saverin, your servant,” wasn’t quite appropriate.
Steve
@Brachiator: I think there’s a big gap between “Zuckerberg’s payday is nothing to celebrate” and “we need to enact laws to keep Zuckerberg from making so much money,” which is where you went with it.
If you think there’s an absence of policy proposals here, maybe take a look at comment #4 and the $16 billion stock option deduction. Now there’s a substantive idea you could sink your razor-sharp teeth into, if you’re up for more than just plucking the low-hanging fruit.
Maude
The IPO didn’t go well. Let’s see what the stock does Monday. It closed today at about $38. I’m not interested enough to check Bloomberg online.
kc
What opportunity, to buy some crappy overvalued FB stock?
mai naem
@BGinCHI: I don’t get the value of facebook beyond the collection of data. I don’t see people paying even five bucks a month to maintain an account and I think Google circle will get some of those people. Groupon was a good idea in the beginning but everybody’s doing deals now. I always figured Groupon was an advertising deal, I never knew that Groupon got a chunk of the money when you buy from them until my sister who has a business called them to set up a deal(BTW this was about 2 yrs ago and they never even followed up with her.) I’ve used Groupon but what’s happened to me a few times is that the business owner will tell you not to buy the groupon deal, that they will give you the deal – that way they don’t have to give Groupon their piece of the pie. You can’t blame them – its BS that Groupon gets money for the ads and then more money from the actual sale.
Nutella
Your three points? Features, not bugs, of the MOTU system. It’s their world and we have to live in it, fighting over scraps.
Brachiator
@Steve:
I apologize for being unclear. I think all the hubub over Facebook is much ado about nothing. And one of the quotes about Facebook’s IPO contributing significantly to income inequality is nonsense.
Comment number 4 is uninformed about the economic impact of the Facebook IPO and even it’s tax situation.
For example, Congress passed, and President Obama signed into law, rules liberaling the Net Operating Loss rules. For a senator to whine about it is absurd. And no one knows what Facebook’s future earnings will be. Hell, if Zuckerberg had not seriouslu locked up control of the board of directors, he might be out on his ass for paying $1 billion for Instagram, a seriously stupid play.
There is also this bit of oddity in the story about this loophole that Facebook is exploiting.
Increase in value is not the same thing as increase in profits, or even an increase in revenues.
It’s not as though that Facebook is magically or specially exploiting double secret loopholes. And while I guess it’s good that the light is being shined on standard practices that upset a lot of people, Congress is working on more generous rules regarding corporations, and even Democrats are going along with much of this.
And as sexy a story as this is, something like this is far more typical:
Everyone was wondering if former Apple marketing exec Ron Johnson could work some magic at JCP. Early signs are worrisome. A continued drop in value could result in store closures and many people losing their jobs.
And while Facebook investors have made out like bandits, it still remains to be seen whether FB itself has any staying power as a company, and whether all the deductions and net operating losses they have stocked up will do anything for them.
Bill Murray
@SectarianSofa: Pierce probably once said something “bad” about Duke or Coach K. Pierce also doesn’t particularly care for the big money boys burns venerates, so that likely accounts for most of it.
eemom
Jeez, thread’s all pissy before I even got here.
@Brachiator:
I’m with you that this is bullshit.
And fer fuck’s sake, we don’t have to be equal opportunity billionaire bashers. Zuckyboy and his playmates may have lucked out undeservedly, but they’re not the fucking Koch brothers. Hell, they don’t even exploit Chinese workers.
Brachiator
So a lot of Facebook stock changed hands, but overall nothing to “like” about.
chopper
man, i’ve been waiting for one of you shmucks to make that song reference. jesus, what took so long?
Another Halocene Human
And it’s all driven by corporate advertising cash, chasing clicks that may well be overvalued.
Connections are nothing without a dearth of scruples. At Facebook, you are the product being sold.
Another Halocene Human
@Brachiator: Hmm, sounds like the speculators were “all in” but there was no there there with actual demand… or the short sellers got punk’d.
Another Halocene Human
@Brachiator:
Sears was the bellweather for the loss of the middle class. JCP maybe hung on longer than others. As the middle class goes away, so do middle class retailers.
PIGL
@burnspbesq: Did you have some specific criticism buried in this little burp of bile? WTF is your problem?
Another Halocene Human
Yes, and that would be both easy and shallow.
The issue here (and I think the OP does cover this) is the state of our economy, the lottery or roulette economy, with accelerating advantages to fewer and fewer lucky players, while true wealth escalates out of reach.
This is a direct result of our tax policies. It also makes for weak/stagnant economic growth, high unemployment, and broad misery.
Zuckerman isn’t really to blame. He just attracts our scorn for being a smug punk whom we resent for getting rich of our data. That is also the result of US law–other countries have privacy laws with some teeth, while the US other than HIPAA and some other exception and some good restraint on governments, has just about nil.
PS–the user paying for FB is absurd. FB pays users by providing the service, which entices users to give up more and more data, which is ostensibly valuable, for basically free… (or free plus the service).
Another Halocene Human
hmm, wonder why my comment got moderated–was it:
p.u.n.k.?
H.I.P.A.A. (probably got the acronym wrong, anyway) ?
or, mayhap, w.h.o.m.?
Another Halocene Human
@Brachiator:
Like free corporate television, there was still a cost.
Older_Wiser
Could someone tell me why Facebook is worth so much? Is the phenomenon of social media going public going to be a repeat of the dot com crash eventually? The valuation of the initial offering, read elsewhere, stated that each FB acct was worth around $120. I truly find that hard to believe. Another little gem in this article says that 1 out 3 employees at FB will become millionaires. Why? Where did all this “value” come from? http://www.politico.com/news/stories/0512/76504.html
Is this just another example of “gaming the system?”
Older_Wiser
@dr. luba: Holy crap. Just. Holy. Crap.
I’m wondering if Zuckerhead would peel off $20K so I could replace my ailing 15 yr old Saturn? : )
magurakurin
@Forum Transmitted Disease:
no kidding. Who clicks Facebook ads? Shit, Facebook is supposed to be run by these awesome computer gurus who are able to tell all about us by sophisticated formulas and what not. But all the adds on my FB page are always in Japanese, since that’s where my IP address is. But I can’t read them for shit. Facebook is a hoax, I think. The big company ad men who are paying big money for Zuckerfuck or whatever his name is to data mine all the absolutely mindless posting on Facebook are rubes.
Google ads on the other hand are fucking spot on. I often see an ad for something I have been looking to buy and I have, in fact, gone and bought something that popped up in a Google ad because it was just what I was looking for and at the price I wanted to pay. That’s pretty damn successful. It also offers me, a tiny business owner, the chance to run ads as well. I can target small adds in just my little area and while the click rate might not be super high, the exposure has been as much as 10,000 impressions a day. That’s a lot of places to have my company placed for free, since you only pay for a click. A big part of advertising is just eyeballs anyway.
I like FB, it’s a useful tool for keeping up with friends and all, but no way it is worth the money of its IPO. Google on the other hand probably is.
Mnemosyne
@Brachiator:
I’ll be curious to see what happens at JCP. I’ve been wandering into the store more often since they made the change, but unfortunately so far they’ve only changed their pricing — they’re still selling the same cheap, ugly crap they did before.
If they have new products in the pipeline, they can still recover, but right now they don’t seem to have anything I can’t buy down at 21 Forever or Wal-Mart.
mclaren
And of course the most remarkable aspect of Facebook’s IPO is that this crap company doesn’t even produce a product. It’s just a website where gullible suckers do the kinds of things that they could and should do without belonging to Facebook — send messages to one another over the net (outside of Facebook we call that “Instant messaging”), share photos with one another (there’s already a place to do that: it’s called flickr), rate things with “like” or “don’t like” (there’s already a place to do that, it’s called delicio.us), friend or defriend people (there are already a ton of sites out there to do that, you don’t need to belong to Facebook).
So Facebook is a crap site pushing junk products that no one needs and duplicate what already exists elsewhere. Yet it’s worth billions.
Perfect example of everything that’s wrong with the American economy. It’s as though that crap company edible arrangements that sells fucking fruit baskets were to have a bigger market cap than General Motors. It’s insane.
Enhanced Voting Techniques
@Brachiator:
Sure, but Facebook is sounding more and more like the hype about Second Life. One of these days, we can’t tell you when, it will be the Matrix so it should be worth billions today! So you better sign up now, and no, don’t ask any questions.
More like an over-hyped engineering product.
Roy G
@mclaren: Websites and web apps are not eternal and the existence of a site doesn’t equate with future success. While I partially agree with some of the criticism, it is also true that Facebook does these things better than the competition. The sites you reference are now also rans, and according to your logic, we don’t need Facebook because MySpace exists.
Also, for anybody who thinks Facebook doesn’t have a product, ask Zynga. Not that I’m a fan of theirs, but they make real money off of, and for, FB. Sure it may not last, but buggy whips didn’t either.
Ron
@Roy G: That one just baffles me. Sure, I play some games run by Zynga (Words/Scramble/Hanging with friends and Draw Something) but I’ve never actually spent money on it. Do people really pour money into improving their farms or whatnot?
Roy G.
@Ron: I think teh kids do. Zynga is just down the road from me, and it’s booming. It’s not my thing at all, and I even refused to interview there, but I don’t believe in harrumphing what’s going on today. The times they are a’changin.