Thursday, May 24, 2012

Facebook Earnings, Employees Proxy for Expenses

I sometimes read Vox. I did some fact-checking, figured I might as well share it.
Also, disagreement. Solving it is important. So, let's. For example, any following disagreement probably cannot be resolved - yet. The necessary methods don't - yet - exist.

$4 sounds like not much.

Wikipedia lists earnings numbers.

Facebook earns 1.16 million dollars per employee.
Coca-cola earns 0.318 million dollars per employee.

La Wik does not list operating costs, but Coke is a physical product, plus it needs things like shipping; Facebook requires hard drives and bandwidth.

Hey, let's try Wal-Mart too.

Wal-Mart makes 0.203 million dollars per employee.

What else is wrong with the post? Nobody (almost) there has apparently heard how Facebook makes its money. Though they did get the users-as-livestock part right. (Heh, 'users.')

Wish I still had the link to the person who pointed this out to me. Facebook's customers are advertisers, to whom it sells nominally private information. Facebook takes the model of selling phone number lists to telemarketers, and generalizes it to everything its 'users' care to offer. The ads per se are kind of a side-show. This is why it has consistent privacy scandals - circumventing privacy norms maximizes yield. Facebook's actual users are advertisers, not individuals.

I must also conclude that it provides something that its livestock values. They keep coming back.
As a non-'user' I cannot help but suspect it is some form of anti-value, that 'users' keep coming back to avoid a negative rather than to achieve a positive. Nevertheless, Facebook provides. More optimistically, perhaps Facebook does allow otherwise impossible opportunities, opportunities which scale with user penetration, and I simply don't notice them because they're not things I personally care to achieve.

I agree that the IPO significantly increases the odds that Facebook will stop providing feed to its cattle. But if I disagreed, would it matter?

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