I run a small real estate business called http://www.BrokersPleaseExcuse.com. It’s less than a year old and it’s gone through several makeovers already. We started off saying let’s make this whole renting thing TOTALLY FREE. It’ll help us overcome marketing hurdles and we can always make money somewhere along the way. Totally in line with modern thinking on how to create scaleable business – get users to love your business and use it – monetising it is just a small thing that you can get to later in life.
And it worked. We got more clients than we could handle, we were bursting at the seams with work, our friends loved the concept of http://www.BrokersPleaseExcuse.com AND we were on our way. The only problem was – we weren’t in Silicon valley and we didn’t have enough funding to continue that way. Plus we were pissing off lots of clients. So we bit the bullet and decided to start charging clients a little bit for our services – just a wee bit. And behold – we ended up with loads of disgruntled clients who had basically come to us because we were FREE – Whee. And this was just a 3 month old business with less than a hundred users. The hundreds of clients who had already seen us till then DISAPPEARED. To them, it was unfair that we promised FREE and went back on our words. We went right back to square zero. And this time, we started building business the right way. Good quality customer service, choosing the right clients, serving them well for what they were paying – the usual things that make a good business in the long run. Since then, we’ve got significantly fewer new clients, significantly higher profitability (we’ve been profitable since the day we started charging) and signficantly better satisfied clients who refer us to their friends one at a time. Clearly, we’re going to take 3 years now to grow to where we would have grown to in the first 3 months. No 100 Billion dollar IPO for us either Sigh!
However, one thing is clear to me from this little experience. Facebook is well and good so long as investors are willing to keep paying for users to enjoy the wonderful free and fast experience that users enjoy. The moment that gig ends, facebook is in trouble. Serious trouble.
- How will FB make money ? 900 million users are not going to be happy about paying to use Facebook. Not happening. Free is not the same as Free *(Conditions apply) Never has been, never will be. This is a reset. There is no way to finesse this or do this gently. Not when you want to make Billions to even move the needle.
- Zuckerberg says Facebook is not a public company. Well, it is.
- The cream of programming talent at Facebook spent the day of the IPO designing a hack to link the opening button at NASDAQ to a phone that would automatically post a status update on FB. Sounds pretty lame to me if that’s all the best engineers in the world could do ?
- Mark is now married. No more late night programming and doing what he pleases. Now he’s got to spend time with his wife and buy groceries and visit the neighbours to see their lovely children
OK. So we agree that facebook is going to have trouble. Lots of trouble. And their stock is overvalued (EVERYONE seems to know that right ? ). But don’t you think $0 is a bit harsh. Surely there is something of value that has got created. So many users. So many people delighted. Surely this is not going to 0 $.
Well, I think it is. It wouldn’t be if it were not public and if Mark Zuckerberg was not the iconic messiah that he seems to have become. And if he did not have this many investors – institutions, retail and everthing in between. But he has. And regardless of whether he wears a hoodie or not – he has the same responsibility to them that every other CEO has to his investors. The more he denies it, the more I feel he’s pressurised by them. To paraphrase that lovely dialogue from Notting Hill,” After all, he’s just a young, immature guy standing in front of investors asking them to love him.” The coolth is just going to face the fire of real-life. It’s not just a bunch of super-rich venture capitalists confident of exiting in an IPO and hence willing to underwrite stupid business practices that he needs to answer to anymore. It’s regular investors who’ve put their dollars in and now would want profits. Regular, tiresome profits that make life inconvenient and force companies to ask users to pay for – just like Yahoo or Microsoft or any other.
Return from your second honeymoon soon Mark. It’s the last honeymoon you’ll take for a long while.
P.S. Friends, please LIKE this post on Facebook. It’s free for now but it soon might not be. Cheers !