A VC - Latest Comments in When You Are A Public Company Without Being Public

Re: When You Are A Public Company Without Being Public

fredwilson — Mon, 20 Apr 2009 09:22:05 -0000

Its gotta start somewhere

Re: When You Are A Public Company Without Being Public

bernardlunn — Sun, 19 Apr 2009 21:12:31 -0000

Do you mean a currency that is convertible to US$ or other national currencies? That is a truly radical idea. Like a new nation state. I assume there are big regulatory hurdles, governments tend to like their role as guardians of currency.
If it is just a token to entertain people within FB, like playing poker with chips but no cash, it strikes me as a fad.

Re: When You Are A Public Company Without Being Public

Mark Essel — Sun, 19 Apr 2009 18:34:35 -0000

Always look forward to your comments Prokofy. I have big hopes for social media design companies that have strong value sharing with content developers. There are a couple of examples:
1)YouTube invites it's big movie posters into an ad hosting program.
2)squidoo starts from square one by giving developers 50% of affiliate money's earned (they negotiate a higher base rate from amazon as well)

I'd love to play in virtual economies, if it could earn me enough to play in real ones.

Re: When You Are A Public Company Without Being Public

fredwilson — Sun, 19 Apr 2009 09:21:17 -0000

I think we still need wall street but not all of the functions they have provided over the years

Re: When You Are A Public Company Without Being Public

Phanio — Sat, 18 Apr 2009 03:36:23 -0000

Given your thoughts here and Googles somewhat successful Dutch Aution - what is you opinion of the article "Why Wall Street is unnecessary" - http://articles.moneycentra...

Re: When You Are A Public Company Without Being Public

fredwilson — Fri, 17 Apr 2009 10:02:52 -0000

Facebook is barely profitable so for one dollar of revenue they get, they spend most of it.

But I suspect they do not spend as much on infrastructure as people think. They are also spending a lot on developers, product managers, bus dev, sales and marketing

That in its entirety is the infrastructure I was talking about.

Re: When You Are A Public Company Without Being Public

Prokofy — Fri, 17 Apr 2009 09:28:55 -0000

I was just thinking. You went from saying "they provide a huge infrastructure for us all" to saying in fact we only cost them a few pennies a year for all the iron and staff they need to hold our stuff. So which is it? If we cost only pennies, they don't provide us anything, as it only costs pennies. Still, their offering this for free, and our getting nothing out of it either, is a deadend.

Jeff Jarvis is wrong, links do not pay out except in the sense that they do with Ad Sense, and he himself with all his buzz stuff only made $4000 off his blog last year. Not an economic solution
http://www.youtube.com/watc...

Re: When You Are A Public Company Without Being Public

kidmercury — Fri, 17 Apr 2009 08:47:38 -0000

competition amongst virtual world will lead them to compete on the economic dimension -- paying participants in virtual currency, letting them shop in your virtual store, so that you have a full blown virtual economy. i think we'll even get to a point where certain positions in facebook/virtual worlds will be "elected" positions. zuck and sandberg might not have the job security they think they do! :)

we need more competition amongst virtual worlds. also, i think we will see facebook stagnate as a destination site unless they can start to embrace and develop a virtual economy. though facebook has enough users and user data where they have multiple business options, perhaps even too many.

Re: When You Are A Public Company Without Being Public

Prokofy — Fri, 17 Apr 2009 08:41:47 -0000

Here's the Second Life economy numbers, Linden Lab to their credit is the most transparent of these services:
https://blogs.secondlife.co...

even so you can see I drill on them in the comments as do others

But it's impressive, because it means that in this economy of 124 million user hours this quarter that generated $120 million dollars, you get paid $1 an hour while in this world, so to speak. Now, that's poverty-level wages, but when you think that I don't get paid to Twitter unless you count the ad sense I sell by driving followers to my blog, and I don't get paid on Facebook but FB is only a cost center to me for birthday gifts, it matters.

Re: When You Are A Public Company Without Being Public

kidmercury — Fri, 17 Apr 2009 08:37:47 -0000

i agree with most of what you're saying, though i think data portability will be demanded by users, because that is in their best interests. right now facebook does not let me download any of my own data. lame.

i envision a government in which i can download my data from one virtual world, and because it shares standards with another virtual world (that is in the same government), i can easily download my data from one virtual world and import it to another, if i so chose. so i view data portability as what keeps virtual worlds honest; they know if they try to cheat you, you will just up and leave. of course, governance is always a tricky issue, which is why all governments -- online and offline -- are prone to death by corruption.

i agree that FB's efforts have been pretty lame on this front, but the issue is that anyone serious about this issue needs to be willing to break out of conventional ideas of law, nation, corporation. As FB is a product of silicon valley, i don't think they will have the mentality needed for the virtual world revolution -- which is the direction they need to go in, IMO, and why i'm a bit skeptical of them in the long-term (doubly so when considering macroeconomic factors)

Re: When You Are A Public Company Without Being Public

fredwilson — Fri, 17 Apr 2009 08:36:22 -0000

The other interesting sector where this is playing out is social gaming. Zynga's numbers are interesting too

Re: When You Are A Public Company Without Being Public

Prokofy — Fri, 17 Apr 2009 08:30:36 -0000

If it is only pennies for user, that apparently explains why they don't charge users even what World of Warcraft charges, which is $15.99 per month. But they will go nowhere due to the costs of scaling up unless they get some revenue in the door from subscriptions or sponsorships as indicated.

Second Life has about 8000 servers and 750,000 repeat log-ons last month, but because they have an interactive streaming 3-D world with a billion pieces of inventory dynamically user-generated, their costs are pretty intensive, I would think more like a dollar per user. And FB is going more in that direction of more interactivity, more applications, more videos, etc.

Re: When You Are A Public Company Without Being Public

Prokofy — Fri, 17 Apr 2009 08:16:48 -0000

Fred, what you are saying is foolish, because again, you are focusing on *oligarchs*.

1. Etsy is great, but it's a very niche sort of service for people who make crafts. Not everybody can make crafts as their content. There's a halo effect that takes place with these kinds of new services, too, where people enthusiastically buy and contribute more because they like the idea than because they need the craft. It takes the crafts sale in the parish hall and moves it online. It's a Tupperware party. It's not a solution for an entire modern, complex economy and I'm surprised that you keep touting it as some kind of magic bullet -- it's good for what it is, but can't save everybody. Do you want everybody to go on being like Third Worlders weaving and selling baskets?

2. Ashton Kutcher? Are you kidding? His "career" took off when he married Demi, and it is *old media* that is driving his attention factor -- if Yahoo news and everybody else didn't cover this clash of the titans, and if Larry King didn't use the power of old dinosaur CNN to draw attention to it, Twitter couldn't work its magic. It's like a ton of other one-off hypervents where old media made new media seem magic -- let me now try to get a million followers and uh, take my career in a new direction lol -- not something we all can do, even with brains : )

3. Social capital is an abstraction that social entrepreneurs/philanthrocapitalists love to invoke because it makes voluntarism and free labour sound like it is a repository of value. Well, it is, I'm all for it. But it isn't convertible. It's like the currency of Uzbekistan.

4. Robert Scoble's blog wouldn't have all those visitors if he didn't have "Microsoft" in front of his job title for years, so again, and old dinosaur helped a new dinosaur who is just copying the broadcast model win.

5. No, social media has to pay out within its own system, too. Otherwise, it will burn off and die. People become surprisingly casual about abandoning faddish social media in droves and droves and leaving it unattended. Social media is a tool to use in other careers, but then, let's not pretend that reputation on it and social capital feeds families, it's labour inside an organization or as a sole proprietor that then actually does the feeding. You seem to want social media to be a tool where things happen outside of it, but yet turn around and claim magical properties for it inside, too.

I'm actually all for magical properties. I earn hundreds of real US dollars off renting virtual space and selling crappy little content in the virtual world of Second Life, even being a dummy. So I push this model not because I have "no life" but because putting micropayments into systems of social media works to pay people.

The task is to see how you can replicate Etsy or SL or anything that is monetarized through social relationships and "social capital" -- and I think it's hard -- but it's especially hard with an attitude that says Mark Zuckerberg is doing me a damn favour just because he lets me put my rolladex and photo album on his damn servers. Meh.

Re: When You Are A Public Company Without Being Public

fredwilson — Fri, 17 Apr 2009 08:01:19 -0000

That's not true. Social capital can feed your family. But you gotta do more than participate in social media. It's not the end. It’s a means to an end. Etsy sellers, for example, get most of their traffic and purchases from social media. Google only drives about 20% of the visits to Etsy. Robert Scoble is who he is because of his blog. Ashton Kutcher just took his career in a new direction because of twitter. I could go on and on. You monetize social media with what you do outside of social media.

Re: When You Are A Public Company Without Being Public

Prokofy — Fri, 17 Apr 2009 07:55:42 -0000

Social capital doesn't buy groceries for my family. Its an abstraction favoured by philanthrocapitalists.

I work hard on social media, all day long. I get paid peanuts, not even subsistence wages.

Your confusing the actors here, Fred. You VCs pump money into their infrastructure, and they provide an interesting tech start-up that you see as useful *for you*.

The rest of us downstream are working in the long tail, supply the overwhelming bulk of content, and for nothing. At least on Predictify I could earn virtual points. At least they have real money in Second Life! On FB, I even have to shell out to send someone a birthday gift!

Zoom out, Fred. 300 million people using something is a collossal, available, needful work force producing great gobs of content, and the infrastructure that you paid for and they coded simply does not offset it.

It's social media. It has people in it. They want to get paid, too.

Trust me, this is the key to monetarizing this stuff, when you can stop thinking you all are doing us a favour by providing infrastructure. When you can start thinking about how we get paid, *too*.

Here is the communists' motto:

"We pretend to work. They pretend to pay us." As soon as you can pay a living wage throughout the system at least for the 10 percent in the power curve that produce high quality content, then people will stop pretending to work, too, and they won't leave these services in droves.

Re: When You Are A Public Company Without Being Public

Mo Koyfman — Fri, 17 Apr 2009 07:39:12 -0000

A shame you don't feel you get enough back from the service itself. Go get em!

Re: When You Are A Public Company Without Being Public

fredwilson — Fri, 17 Apr 2009 07:23:11 -0000

What we get is social capital in return. Howard Lindzon has been the ace on that concept.

Re: When You Are A Public Company Without Being Public

fredwilson — Fri, 17 Apr 2009 07:18:15 -0000

That's not right. They are providing a huge infrastructure for all of us. To suggest that their infrastructure for our content is not a fair trade strikes me as nonsense.

Re: When You Are A Public Company Without Being Public

Prokofy — Fri, 17 Apr 2009 07:16:10 -0000

Nope, I work hard, providing all those pictures of my cat and updates on my relationship and interesting clips and stuff. I also keep lots of widgeteers in business. So I deserve to be let in on the deal of the century.

We who put our sweat equity into social media are not venture capitalists, but adventure capitalists, and our hours and the currency of our attention matter, and they have value. We deserve stock. P.S. We also deserve some seats on the board.

Re: When You Are A Public Company Without Being Public

fredwilson — Fri, 17 Apr 2009 07:15:14 -0000

The skepticism I cited on "tech blogs" was not aimed at you Eric. I should have been more clear about that.

Re: When You Are A Public Company Without Being Public

fredwilson — Fri, 17 Apr 2009 07:13:12 -0000

Cool idea. I've thought of that a bit too over the years.

I like how you drill down into ARPU. I know how much it costs to operate some of our social media companies and its pennies per user per month.

So all these people claiming that facebook is going to get killed by server and bandwidth costs may be barking up the wrong tree.

Hosting images and video may change that equation for facebook, I don't know by how much, but I am fairly sure that if you can make an ARPU of $1/month, you can make money hand over fist

fred

Re: When You Are A Public Company Without Being Public

fredwilson — Fri, 17 Apr 2009 07:09:14 -0000

I love that last line

Re: When You Are A Public Company Without Being Public

fredwilson — Fri, 17 Apr 2009 07:09:10 -0000

yup

Re: When You Are A Public Company Without Being Public

fredwilson — Fri, 17 Apr 2009 07:04:14 -0000

Second Market (that's a company in NYC) makes a market "by appointment" in facebook stock. There are several others as well. My friend Martin, who passed away recently, was a very active participant/broker in the facebook secondary market.

Re: When You Are A Public Company Without Being Public

Mo Koyfman — Fri, 17 Apr 2009 07:02:12 -0000

Employees have to work for stock my friend. It aint free. You provide content in exchange for their service - it's a pretty fair deal.