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IMLobby Review by Anik Singal Released

SFGate
May 19, 2012 04:00 AM
Copyright SFGate. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Saturday, May 19, 2012

Article source: http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2012/05/19/prweb9525702.DTL

Why some Facebook employees may quit after IPO

SAN FRANCISCO: As the first day of trading in one of the biggest initial public offerings (IPOs) wound down on Friday, the frenzy around Facebook is expected to have a ripple effect on start-up activity in Silicon Valley.

“I believe that Facebook employees, emboldened by their company’s success, will venture out themselves to do extraordinary things,” Timothy Draper, one of Silicon Valley’s top venture capitalists and founder and managing director of Draper Fisher Juvertson (DFJ), told ET.

Facebook, valued at $104 billion, is the largest technology IPO in the US history. The feeling in the Valley is that, armed with their new IPO wealth, many Facebook employees may eventually leave Facebook and spawn off even more start-up activity in Silicon Valley by either starting companies or investing in them.
“We have backed an extraordinary number of leavers. Years ago, they spun off from companies like HP and Intel. Then they spun off from Microsoft, then Yahoo!, and more recently from Google. Facebook will likely be a good source of entrepreneurs,” said Draper.

Valley veterans, including serial entrepreneurs and fellow venture capitalists, concur with him. “Facebook is a psychological boost to the extent that the likes of Zuck (Facebook founder Mark Zuckerberg) may now allocate their funds even towards high-risk investments, as long as there is an exit strategy,” says Mark A Fauci, a serial healthcare entrepreneur.

“I’m sure there are ideas cooking up inside Facebook right now!” adds Canice Wu, angel investor and president of Plug and Play, Silicon Valley’s largest incubator that is home to over 300 start-ups. “We are extremely excited to see these new entrepreneurs come out and hope to see many of them at Plug and Play.”

When this new wave of entrepreneurship happens, experts feel they will most likely be in mobile, big data, social networks and the next generation of cloud infrastructure. “These are all billion-dollar markets in their own rights and Facebookers have seen these first-hand from the inside walls of Facebook. We are likely to see more activity in these areas,” says Tim Guleri, MD of Sierra Ventures.

“Facebook employees are likely to start or invest in companies that leverage their domain experience in Facebook; and these are not necessarily in social media,” says Ankur Jain, vice-president at Blumberg Capital, an early-stage VC firm with a nearly $200-million fund focused mostly on Web 2.0, software and mobile.

To illustrate, he points to one of his firm’s portfolio companies, Nutanix. Founded by an ex-Googler, Nutanix, which does not use Google’s core business, enables datacenter virtualisation without using network storage.

Employees leaving companies after they go public for entrepreneurial pursuits is almost a part of Silicon Valley’s culture. It happened during the dot com boom, when hundreds of companies had rapidly rushed to the market. But it was arguably felt the most with the Google IPO. Several of its former employees turned into angel investors and now run a start-up incubator called Angelpad.

Guleri shares how one of his firm’s portfolio companies Ooyala – a Mountain View, CA-based video infrastructure company – was founded by product managers for AdSense (once Google’s main product) who had left the internet giant soon after its IPO.

Vibhu Mittal, who was a senior scientist at Google and one of its early employees, too left soon after the Google IPO. He had earned several millions of dollars, which he invested in pursuing his lifelong passion: revolutionising education.

“When I had joined Google, there were 100 people and by the time I left, there were 20,000 people. It was a very different company. I wanted to make a real impact through education, which is not something I could pursue at Google,” says Mittal.

Today, his start-up Root-1 is making neuroscience-based games that make learning languages for elementary school students a lot of fun. “In such cases, it’s essentially the second and third tier of management who tend to leave. They have done a lot of groundwork, feel empowered and want to replicate the success,” says Raj Jaswa, a serial entrepreneur who had earlier worked at Intel.

A great example of this is Gokul Rajaram, once known as the godfather of Google AdSense” who had left Google post IPO to start Chai Labs, which he then sold to Facebook. Earlier this month, just days before Facebook’s big day, the company’s Vice-president of Technical Operations Jonathan Helliger quit Facebook to join venture capital firm North Bridge Venture Partners (NBVP). His LinkedIn profile now lists him as “entrepreneur, investor, rebel”.

But Christopher Nguyen, a former Googler who has founded a social network called YaTown, feels that there are only so many similarities between Google then and Facebook now and therefore, the impacts on entrepreneurship will tend to vary greatly as well.

“Along with financial benefits, Google’s culture gave many employees the benefits of being at a startup without having to jump out and take the risk themselves. So the flood of startups by Googlers took off only about four to five years after the Google IPO,” says Nguyen.

“But Facebook’s culture has had three generations of employees — the college kids working in dorms, a bunch of developers and people managers and lastly, engineering strength at all levels, which has only happened in the last two-three years. So people might be more willing to leave Facebook for entrepreneurial pursuits, even if like Helliger, they continue to be beneficial to Facebook.”

Facebook fizzles in debut
Facebook shares fizzled on their first day of trade on the Nasdaq, erasing early gains of as much as 18% to trade close to their IPO price. The stock opened 11% higher and rose to $45 before rapidly heading south in frenzied trade, touching its initial public offering price of $38.

The No. 1 online social network raised as much as $18.4 billion in one of the biggest IPO in US history. After a delay in the opening print that drove up anxiety levels among traders and onlookers outside the Nasdaq, the company’s closely watched stock began trading at $42.05, compared with an IPO price of $38.

Article source: http://timesofindia.indiatimes.com/tech/news/internet/Why-some-Facebook-employees-may-quit-after-IPO/articleshow/13295249.cms

GM ad move followed failed Facebook pitch-sources

Thu May 17, 2012 10:07pm EDT

* Facebook fails to sell GM on benefits of paid ads

* Sales meeting took place in past month-sources

* Facebook paid ads look ‘meager’ – source

* GM could run ads on Facebook again in future-sources

By Ben Klayman and Bernie Woodall

DETROIT/NEW YORK, May 17 (Reuters) – Facebook may
only have itself to blame for why General Motors rained
on its IPO parade this week.

GM announced the decision to drop Facebook paid ads on
Tuesday in what was the first highly visible crack in Facebook’s
strategy and illustrated doubts about its perceived advantage
over traditional media.

GM’s decision followed Facebook officials’ failure to
convince top marketing executives at the U.S. automaker of the
benefits of Facebook’s paid ads at a meeting that took place in
the past few weeks, people familiar with the meeting said on
Thursday.

That was after Facebook officials focused more on touting
the social networking website’s free pages, the sources said.

“It kind of backfires on them in a funny way,” said one of
the sources, who asked not to be identified, of the emphasis on
the free pages.

News of the meeting, which sources said took place at
Facebook’s Menlo Park, California, headquarters, comes on the
eve of its much-anticipated market debut. The company on
Thursday priced its initial public offering at the top of its
target range and is set to raise up to $18.4 billion.

Facebook and GM declined to comment about the meeting or
their relationship.

GM dropped its Facebook ads because they were less effective
than other options such as Google’s AdSense, the
sources said. Facebook’s ads garner about half the clicks per
page view, a measure of effectiveness, compared with the average
website.

Moreover, Facebook’s ad prices were expected to rise after
the company’s IPO. Ad prices are set in auction and vary
depending on the target audience.

Some investors fear Facebook has not yet determined how to
make money from the growing number of users who access the
website from their smart phones. Further, revenue growth from
its ad business has slowed in recent months.

However, Facebook boosted the price and the size of the
offering earlier this week, underscoring investor enthusiasm for
the company’s shares despite ongoing questions about its
long-term money-making capabilities.

During the meeting with GM, Facebook officials emphasized
the lure of free posted content on their website, the sources
said. By contrast, the ads looked “kind of meager and perhaps
expensive by comparison,” one source said.

‘SEE IF IT WORKS’

GM, the third-largest U.S. advertiser, will still maintain
Facebook pages, which cost nothing to create and for which it
pays no fees, to market its vehicles.

Sources said GM’s decision was not permanent and the Detroit
automaker could buy Facebook ads in the future.

“They’re just going to try not doing it for a while and see
how it goes; just make content and if it works, it works,” one
source said.

Facebook founder Mark Zuckerberg has said in the run-up to
the IPO that the company was built to accomplish a “social
mission,” but has also ranked creating a “transformative”
advertising experience as a top priority.

But so far, Facebook’s “click-through rate”, also known as
“clicks per page view,” is half the average for ads on the
Internet, according to Larry Kim, founder and chief technology
officer of Internet ad consultant Wordstream.

The average targeted ad on the Internet is “clicked” on by a
consumer once every 1,000 times it is viewed, Kim said.
Facebook’s rate is half that, while Google’s is 4 in 1,000.

“Facebook is good in that an advertiser can target based on
age and gender by measuring certain ‘likes,’ but is not
connecting with the right audience at the right time,” he said,
calling the website’s banner ads staid and uninspiring.

Google’s banner ads are more targeted, even following a
consumer from website to website, Kim said.

GM, which ranks behind Procter Gamble Co and ATT
Inc in U.S. advertising spending, spent $1.1 billion on
U.S. ads last year, according to ad-tracking firm Kantar Media.
It spent about $271 million on online display and search ads
excluding Facebook advertising.

Article source: http://www.reuters.com/article/2012/05/18/gm-facebook-idUSL1E8GHFAE20120518

Why I’d bet my retirement on Facebook stock today

Disclaimer: I’m not actually investing my entire retirement savings in Facebook, nor would I suggest anyone, anywhere ever invest a large part of their savings in one stock. That said, if I weren’t trained in the art of diversification, I probably would. Here’s why:

Google isn’t afraid of Facebook ads on Facebook, they’re afraid of Facebook eating Adsense. And they should be.

Google makes just under $10 billion a year (over a quarter of their revenue) from Adsense – ads they place on other Web sites. Google can make these ads effective because they can combine their understanding of what is on the page with your recent searches to put an advertisement on the page you are highly likely to click on.

Look at their overall growth and their growth specific to Adsense. I’ll throw in last year’s Facebook revenues for kicks (more than 2X Google’s pre-IPO revenues). Google’s growth is truly astounding:

Facebook has no competing product because, at this moment in time, they can’t make as much on a given ad as Google can and adsense is a winner-take-all game: if your ads make a publisher 5 percent less, no publisher will run your ads.

Google only has to be marginally better at monetizing ads to entirely dominate the market – and they are significantly better right now.

But think of all the ways Facebook has begun learning about you and specifically your shopping habits in the last 12 to 18 months: Facebook’s Like button on every page means Facebook knows the products you are looking at. Think of the race by publishers to volunteer information about you to Facebook – this is going to be huge.

Even if you didn’t click on the Like button, Facebook probably has a pretty good idea of what your next purchase will be.

Up to this point Facebook hasn’t done much with that information besides litter your feed with it. They have 2x more pageviews than Google, leaving them with so much ad inventory that they can hardly fill it all. You can be sure Facebook’s engineering teams are working hard to monetize that data:

The naysaysers look at Facebook and complain that they monetize horribly, but they don’t understand that a perfect ad network requires data, tons of pageviews, and advertiser familiarity. The success of Adsense is in part ecosystem development: advertisers have spent a lot of effort and money to make high performing ads, meaning they can afford to spend more on every ad.

Facebook is one of the only companies that has both the data AND the pageviews to threaten Google’s stranglehold on remnant ads.

Here’s why:

Estately’s Galen Ward

As Facebook gets better at targeting, advertisers will spend more money on Facebook ads. Facebook doesn’t have to monetize as well as Google at the start – they only have to help advertisers convert at all and advertisers will throw more money at their ads.

As a result, Facebook will be responsible for more purchases and will justify moving more advertiser dollars to Facebook. A nasty side effect of this for Google: advertisers will reduce their spend on Google ads.

And here is the double whammy: Once advertisers start moving to Facebook, they will get better at targeting Facebook’s platform and as they get better, they will increase their spend per click. Wash, rinse and repeat through enough cycles and Facebook stands a high chance of creating better performing ads – for 3rd party website consumption – than Google.

The day Facebook ads monetize even 1 percent better than Google ads, the biggest publishers will pull Adsense and it’s a matter of time before Adsense is dead.

Do the math on this: instead of growing it organically, we wake up one day and Facebook has taken over Google’s Adsense business. That’s $10B in revenues alone. On top of that, Facebook monetizes advertisements on Facebook proper equally well. This is Facebook, with 2x the impressions today – at the time of their IPO! – of Google. That’s a much higher margin business.

As they say in Hollywood, this is the bad version of the story. Facebook has bigger and better opportunities than replicating and killing Adsense. But if the bad version ads up to $10 billion a year, the better versions will add up to even more. How much more? We’ll see in a few years.

Editor’s note: We’ve added a disclaimer at the top of the post from Galen Ward to make it clear that he’s not investing his retirement savings in Facebook. The original headline was written tongue-in-cheek, and we’ve altered it to better reflect his thoughts. 

Galen Ward is CEO of Seattle online real estate startup Estately and a mentor at 500 Startups. You can follow him on Twitter @GalenWard. 

Previous Facebook coverage on GeekWire: Open Letter to New Facebook Millionaires: Pay off mom’s mortgage! (And 5 other tips)… A little piece of Facebook: Would you invest in Zuck’s big IPO?… After all-night hackathon, Facebook rings opening bell

Article source: http://www.geekwire.com/2012/betting-retirement-facebook-stock-today/

Facebook IPO Finally Here, Is Facebook’s Version of AdSense On The Way?

Two years ago, we asked if Google’s AdSense could be in trouble because of Facebook. The premise of this article was essentially: What if Facebook launches its own AdSense-like ad network? Why wouldn’t it? It makes too much sense.

Today, of course, Facebook finally went public, and there’s a whole lot of talk about what Facebook might do in the future. How can it bring in more revenue? It’s got a long way to go to get to Google-like revenue. Could an AdSense-like network be on the way? Are we getting closer to this being a reality? Some seem to think so.

TechCrunch’s Josh Constine speculated about this, saying, “Facebook’s ad network [would] essentially turn ad real estate on any website into places to serve the campaigns that advertisers buy for display on Facebook.com. Anyone currently logged into Facebook who visits one of these sites would be shown ads targeted by their Facebook information, such as age, gender, location, work and education history, interests, app usage, and friends. Facebook and the site hosting an ad would then split the money made on clicks or impressions.”

Again, it just makes too much sense. How could this possibly not happen? This seems even more likely than Facebook getting into search. It already has the ads and the massive amount of highly personalized data to make this a very attractive offering for publishers who already have various Facebook integrations on their sites. It could only help Facebook cement its place around the web at large even more (making it far less likely to become the next MySpace).

Constine also points to an interesting nugget of information about Facebook’s privacy policy, which could make it easier for Facebook to launch such a network.

“Facebook has denied this product is in the works whenever it’s been asked, but last week it revised its privacy policy to expand its ability to serve ads to its user[s] while they’re outside of Facebook.com,” says Constine. “There’d be little reason to do this if something wasn’t in the works. The march across the web of its other social plugins such as the Like button have also paved the way for an ad network plugin. It might need to develop or acquire a company with expertise in analyzing site content so it could serve somewhat relevant ads to site visitors who aren’t logged in to Facebook.”

Sure, people will freak out about privacy like they always do, but ultimately, Facebook is already showing you things on other sites. It might as well monetize that.

Would you participate in a Facebook-based AdSense-like program? Let us know in the comments.

Article source: http://www.webpronews.com/facebook-ipo-finally-here-is-facebooks-version-of-adsense-on-the-way-2012-05