Does Facebook Trash Talk Mean The End Of Social Media?

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Just before Facebook's IPO, GM announces they are taking their ball and going home, the game doesn't work and they are not going to play anymore. The next week the wealthiest investors, who don't seem to have any idea of what social media is all about, invest in the most anticipated IPO in recent history on a stock market that ironically has technical difficulties. Instead of doubling their money by day's end, they walk away with less cash...way less. By the next week, everybody is an expert and suggests they predicted the demise of Facebook. Really?! Now, as Facebook's stock continues its downward spiral it seems in vogue to declare that people are abandoning Facebook and that the brief era of social media is going the way of chat rooms and dodo birds.

Problem is, I don't think so. At least not for social media.

People intuitively desire to tell others what they are experiencing, and Facebook has been a great platform for doing that. I concede that Facebook traffic is down, but there is not another common platform just yet that the masses are willing to embrace. People migrated en masse from MySpace to Facebook in large part because Facebook was easier to use, and perhaps more socially acceptable for people who were not 16 year old girls. But it does not mean people have stopped using social media tools to get their experiences out.

Case in point, the other night we went as a family along with my wife's office coworkers and their families to see the Sacramento showing of Wicked. If you have not seen Wicked yet, GO...but I digress.  Perhaps because this group is mostly lawyers, accountants and financial planners, society has us on the balcony. Whatever the reason, it is a great place to observe people during the intermission, and observing others is something I love to do. As the break happens, the lights come on and all across the auditorium people are either making a bee-line for the restrooms, checking their cell phones, or in some cases, doing both! It was pretty impressive to see all of those little blue square screens light up across the crowd. People were tweeting, texting and checking messages. Some may have even been posting on Facebook, but I am not sure...no time to ask. The point is, they were all actively engaging in what is otherwise known as social media.

Whether or not it is appropriate to do this while your friends stand around you with their hands in their pockets will be the subject of another post.

Using technology to share experiences with others who are not physically present is social media. Chat rooms went the way of the dodo bird in part because they were too time bound to be a useful tool, and in part because there were too many people you didn't know inserting themselves into personal conversations. This was not good. However, as long as the population is highly mobile, people will embrace the technology that keeps them connected with the folks they care about the most. That is something I do not see changing any time soon.

Facebook Not Making The Wealthy Wealthier

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As the third day of trading gets underway, Facebook continues to not make the wealthy wealthier. By the end of trading the first day, fingers were being pointed. Close out the second and people are estimating where the bottom will be. Mark Z has said the business is driven by a social agenda and not investor's wealth. So far he is proving his point.

Other than the obvious over-valuation of the IPO, there is a fundamental difference in how Facebook operates compared to other Internet giants like Google. Companies want to be able to advertise in a way that makes sense to them, project a product in a manner that causes people to spend their money on it. Google can do that by target advertisements linked to search engine queries. As GM pointed out last week, Facebook was not effective in doing that, consequently they were pulling the plug on site advertising. From a return on investment evaluation, it was not working.

The adult majority population continues to see the Internet as a tool best utilized for disseminating information. Social networking sites however are not built on that, they are built on relationships. It is not the information a company wants me to know that matters, it is what my circle of 'friends' are experiencing that matters.

Facebook is a giant human web of relationships about 1 billion strong. Advertisers want to envision that as a giant crowd of people all staring at a screen as if they were waiting to buy something. TV did that - everyone watching experienced the same thing at the same time. A digital web of relationships does not operate simultaneously, it operates in waves. What is important is decided by the community, by the network, by the relationships.

Someday, somebody, somewhere will figure out how to make a boatload of money riding the waves of human relationships. Oh wait, somebody did...we call if Facebook.

Let me know, did you the think Facebook IPO would soar or tank? Gut feeling or valuation?