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FAQ: Why Mark Zuckerberg wants Facebook to be just like TV

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Facebook founder and CEO Mark Zuckerberg speaks during a news conference at Facebook headquarters. The company announced third quarter 2012 earnings today.

Facebook's adjusted net income has been on the loss column, but losses have slowed.

Meanwhile, Facebook's headcount has remained modest, even as it's acquired a billion users.


Facebook has announced third quarter earnings, and they beat what Wall Street was expecting. Analysts were looking for 11 cents a share and they got 12. Jump back! That penny is adjusted to a 2-cent loss once proper accounting protocols are followed. But a beat is indeed a beat. And as you can see in the first chart in the slide show above, Facebook lost less - on a GAAP-adjusted basis, a lot less - than it did last quarter. 

The next chart is even more interesting. As you can see, Facebook has acquired a billion users worldwide (not all of them active, however) with a headcount of just 4,331 employees. If you divide Facebook's quarterly revenue of $1.26 billion by total users, you get a per-user worth of $1.26. 

Viewed another way, every employee at Facebook is worth 230,894 users — or $290,926 in revenue. Now, you could argue that a lot of Facebook employees are costing the company more than $291,926, because they're getting stock. But you also have to consider that although Facebook pays its well, not that many of them make nearly $300,000 per quarter, or $1.2 million per year.

Anyway, those are the financials. Facebook is obviously doing a phenomenal job with a very lean staff structure and the donated labor of a billion users (as I've angrily pointed out) to make its money. But what does the company ultimately want to be?

Glad you asked...

Q: So what DOES Facebook ultimately want to be?

A: On the Q3 earnings call, the Facebook Big Three again ran the show. CEO Mark Zuckerberg talked vision, COO Sheryl Sandberg talked advertising, and CFO David Ebersman dug his way a little further out of the IPO hole (even with an after-hours bump of 10 percent, Facebook is still down about $18 a share from its offering price) that FB has found itself in. As far as thr future goes, though, it's all about mobile. Along those lines, Zuckerberg made the most telling comment. He said that ads on Facebook mobile will end up being more like ads on TV, not crummy little text or micro-banner ads that people currently find annoying. It reminded me of something ungenerous I wrote last year:

[U]sing Facebook has become something I don't get much out of in my free time. I like to post photos using the mobile app. But the actual website has become a sloppy visual salad for me, as Facebook crams more and more features onto the page. What was appealing about it in the beginning, lo those many years ago (2004, a misty time...), was its clean-ness, absence of clutter and simple premise. It now seems to be pitching itself as a parallel Web, based on relationships and sharing rather than content (the value is in the connections). This is driving me back to email, which still has that refreshing 1996 look.

 This has got me wondering if what Facebook is really doing is creating a form of social television. I'm no TV hater, but I can see what TV has also contributed to making people miserable. In fact, when I ponder what TV's biggest future competitor might be, Facebook pops pretty quickly to mind.

Facebook + mobile = social TV. Hey, Zuck said it. I just predicted it.

Q: Why would Facebook want to be TV?

A: Two words: Platform and advertising. Zuckerberg is always going on about Facebook being a platform for other people to build stuff on, and if you take him at his word, you can see the connections with TV. TV is a platform for entertainment, news, education, sports. In the post-cable, digital, content-on-demand age, a platform for delivering many different kinds of content. That's what Zuckerberg wants for Facebook. To old school Internet folks, this is sickening. The Internet is supposed to be the anti-TV. But there's definitely a sense that Facebook has succeeded where the likes of MySpace have failed because it took all the good stuff from the Internet while leaving the bad stuff from the 'Net behind.

What about advertising? That's easier to explain. Even though print, online, radio, billboards, and pro baseball stadiums can all deliver ads, TV is still the master medium, the place where advertisers will invariably choose to advertise if they need to make a choice. I think Sandberg knows this and is going all in on making Facebook as much like TV, ad-wise, as possible.

Q: Does mobile help or hurt Facebook if it wants to be social TV?

A: Helps. Right now, mobile is Facebook's big challenge. But if it can reinvent itself, as it appears to be slowly doing, then a cleaner, simpler Facebook mobile could be very compelling as a definitive form of mobile TV.

Q: This doesn't sound terribly visionary. Is it?

A: One more word: Payments. It doesn't get as much press as advertising, but Facebook generated revenue from processing in-Facebook payments — acting as a financial go-between when game players want to buy something in a game, or, down the road, if Facebook users want to buy and send each other virtual "gifts." If you combine mobile, social TV, and payments, you get an pretty slick end-to-end way for companies to use their favorite ad medium (TV) to reach a billion consumers in a targeted way and be able to sell them stuff easily through an embedded payments system. 

It's all a little scary if you think about it. But this could be the way Facebook goes from being an IPO also-ran to the biggest Internet company of all time.

Follow Matthew DeBord and the DeBord Report on Twitter. And ask Matt questions at Quora.

 

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