Arash Christopher Eslami's Blog


Archive for the category “Social Media”

Is There Light at the End of the Tunnel?

The darkest hour is just before dawn I’m sure is what Facebook executives must be singing under their breath.  The stock dipped below $20 a share for the first time after its not too long May 18th IPO at $38 per share.  Not good.  More bad news heaped up when the company’s filings revealed Facebook has 8.7 million “fake accounts” out of its 955 million active users.  That is about an 8 ½ % dent on its original numbers.  Even though Facebook’s future is grim to many, they still nearly have 1 billion active users.

Linked, the professional networking site, was a whole other story today releasing its 2nd Quarter earnings.  They did $228 million in revenue and $.03 in earnings per share: both numbers beat guidance.  The co-founder, Reid Hoffman, now chairman of LinkedIn is smart and might have better business acumen than some of his rivals.  During this quarter bad news did strike after 6.5 million passwords came up missing.  It seems the company recovered without much harm.

Twitter is, in many eyes, an evolved RSS (really simple syndication) feed where many individuals and businesses forecast the latest and greatest throughout the day.  The site certainly has the fastest feed per 100 followers, friends, connections, etc., relative to the other networking sites.  It’s more real time.  So it makes sense they have a political index called the Twindex that aggregates millions upon millions of tweets and with a formula discerns the overall opinion of Twitter users about the candidates.  The 2012 Olympics may have already foreshadowed how significant this Twitter mechanism will play out during the presidential race.


Faceoff of the Three Musketeers: Google, Apple, and Facebook

After the Altair 8800 in 1975 ushered in the digital era because of its microprocessor, a lot of things have not only changed but they’ve been changing faster.  The growth of companies like Facebook, founded in 2004, in just eight years has over 845 million active users.  Having launched its IPO in 2004, Google’s search engine is the most used web site in the world.  Then you have Apple who has over $27 billion in free cash sitting on the side in case it wants to buy anything.

What’s at stake is how fast these three companies can position themselves in a rapidly developing social network market.  There’s no question Facebook has the potential to become a great company, but with its staggering stock price hitting an all time low today at $21.71, they have a long way to go.  And as a harbinger of trouble, the company had 2.14 billion outstanding shares last week and today they only have 1.88 billion shares outstanding.  Someone is buying that stock and it is because they’re scared.

Still, you cannot ignore the gargantuan threat Facebook offers in internet traffic.  Google responded today by buying Wildfire Interactive—a social media marketing software company—in the ballpark of $250 million.  This acquisition comes on the heels of its purchase of Sparrow, an email application, in hopes it can build the same success it had on the iOS.   A significant reason for Google’s success is its execution speed: the time it takes after it buys a company to assimilate and apply it in its own business model.

How will Apple react to Google?  They bought AuthenTec, a network security company, a little over two weeks ago for $356 million.  So you can expect the next iPhone to have the latest in integrated security.  Apple, though, is slower to act than its rival, Google, which is clearly demonstrated by its track record.  Since its IPO in 1980, the company has only made $1.62 billion in acquisitions compared to Google’s $21.4 billion.  One company Apple might have its eyes on is Twitter.  The social network recently passed the 500 million user plateau mark although this number is somewhat skewed.  That is, only 27% of those 500 million accounts are active users.  Still, Twitter would be the perfect platform for Apple to compete with Facebook and Google+.  The private company would cost Apple approximately $10 billion.

If you want to have a better idea of how fast the digital era is accelerating things around you, then take a look at print media verses digital.  There are those out there who fervently believe that printed books will never go out of style.  It wasn’t too long ago when the New York Times made major efforts to increase their online presence as a result of a fading print subscriber base.  The Financial Times, the historic British newspaper, now has more digital subscribers than it does in print.  That generation of young folks who haven’t ever read a physical book, but have read plenty of e-books, is already here. Hold on to your print because in the very near future they might be collector items.

Would Socrates Use the Internet?

I don’t think there is any arguing that the internet has changed everything about us.  I remember my first experiences with the internet was sending and receiving email.  Having already learned how to type while attending a relatively advanced elementary school in Garland, Texas, I also used Word for my prose.  Those good old days were all happening in the late 90s.  It is staggering to think how far we’ve come in the myriad ways the internet has impacted our lives.

Being a Classics major, I had a lot of time to study Socrates depicted by Plato.  That is, Socrates didn’t write at all so everything we know about him was passed down by other authors, though mainly Plato.  Socrates thought and relied solely on his memory when entering debates with other interlocutors.

It wasn’t just Socrates who used his memory to the fullest.  Marcus Tullius Cicero, about three hundred years after Socrates, was part of the era where if you were educated that implied you knew how to speak and write in Latin, of course—his native language—and Greek, Socrates’ language.  He knew Greek well.  Even more, it was the status quo in the 16th and 17th century—if you were noble, affluent, or at least expecting to be considered educated—to know how to write in Latin.  Issac Newton wrote his magnum opus, Principia Mathematica, entirely in Latin.  Coming from a guy who was defining what gravity was to the human race is not bad.  Immanuel Kant and Friedrich Hegel who wrote the Critique of Pure Reason and Phenomenology of Spirit, respectively, wrote eloquent Latin.  And there are many more, these are just some of my favorites.

The point I’m making is that the immediacy of the internet dissuades us from using our memories.  Why remember anything when I can go to Wikipedia for some fact or ask Google’s search engine “how do I make Bulgarian Goulash,” which by the way gives 1.5 million results.

Our identities are more and more merging into social internet networks like Facebook, Twitter, LinkedIn, and others.  I have so many friends “out there” that I’ve never even met, but definitely feel a bond with.  I feel the need to increase my internet friends, followers, circles, connections, etc. so I don’t look like a loser among my peers, visitors, potential employers, and all others.  I know, ideally I should be like these numbers and metrics are meaningless and could never define me because “I know who I am!”  But what can I say, I am human who’s affected by these numbers, in fact, I believe it’s affecting more people every day.  What we are, as people, is becoming more linked to our representation over the WWW.

Twitter Cuts Off LinkedIn

Is Twitter making a good decision by cutting off its updates on the profiles of LinkedIn users?  For these different internet social platforms—Facebook, Twitter, LinkedIn, etc.—everything boils down to monetization.  These companies are all chasing the dream of monetizing the internet the way Google did with AdSense.

Twitter is far more likely to remain impervious by cutting off its ties with LinkedIn than vice versa for a couple of reasons.  Twitter is a constant feed of tweets where if you turn your head for one second, you have 5 or 10 new tweets waiting.  People are obviously more engaged this way and are prone to “checking in” more often.  Twitter has over 500 million users while LinkedIn has around 100 million users.  Twitter’s platform is very compatible on mobiles getting the most out of smartphone users which is also growing quick.

Why did Twitter snub LinkedIn?  It could have been that LinkedIn denied Twitter ads showing up on their user’s profile.  Let me reiterate, it is all about monetizing your audience.  LinkedIn might have been better off by letting Twitter do what it wants.  Yet this may turn out to be what LinkedIn needs in creating new ways to produce revenue with its user base.

LinkedIn handled the snub well though by allowing users to share updates on their Twitter accounts.  It’s a smart business move that takes into account the needs of their users.

A Tech Startup’s Dream

What would it be like to start a business project and two years later sell it for $1 billion?  That is exactly what Instagram did when Facebook bought it in April of 2012.

Tech startups are burgeoning in cities like New York and San Francisco.  San Francisco’s Silicon Valley has been procuring the lion’s share of venture capital ever since the silicon chip makers set-up shop there.  New York’s success was ironically a silver lining its 2008 financial collapse left when a lot of software experts were out of jobs.  These bright techies, in many cases, went off to start their own company.

If you’re a startup, do you have anything to lose by selling for the big bucks?  It depends on the passion of your vision.  That is, you could be bought out and have the buyer change your idea on a whim.  It has happened and it will continue to happen.  On the other extreme Groupon held out by rejecting Google’s $6 billion offer in 2010.  They closed at a $4.57 billion market cap today.

Startups might have better odds focusing on the things Facebook and Google are buying.  Facebook has already hired top engineers who formerly worked on Apple’s iPhone.  Google’s highest acquisition by far was the $12.5 billion purchase of Motorola since they used its Android operating system.  So this may suggests that startups focusing on smartphones in general are on a more lucrative path.

The fact is you really don’t know when you’re going to hit the goldmine.  You could be a company minding your own business that, for whatever reason, has a catchy domain name.  The American Farm Bureau Federation happened to have as their domain name that compelled Facebook to fork them over $8.5 million for exclusive rights.

Social Currency Value

The game has changed, folks.  If you thought you could remain an anonymous user of the internet, well things are getting much harder with companies like Klout.  There is a Cambrian explosion taking place on the World Wide Web that has everything to do with influence.

There are already 900 million users on Facebook averaging 20 minutes a day on the site.  Twitter, Google+, and LinkedIn are on its coattails with thousands of people joining every day.  One thing these social sites have in common is the way they can gage your popularity.  Facebook shows how many friends if you don’t privatize.  You can also gage someone’s popularity by seeing how many people comment on their post.  Twitter and Google+ show your followers and circles, respectively, and LinkedIn divulges your connections.

Klout comes into this story in the way it measures your influence based on your reach, amplification, and impact over the internet.  You can check the score of anyone in your network.  It’s sort of a popularity contest that is quite addicting once you start doing it.

What is the bigger picture here?  This obviously has an impact on your chances of landing a job.  Think about it, if I’m an employer who is evaluating you for a position, then I will more than likely check out your internet profile.  I can gather a considerable amount of information about you as long as I have your name.  Being the judgmental creatures we are naturally makes someone, for example, who has 5000 followers on Twitter, 500+ connections on LinkedIn, 1000s of friends on Facebook and Google+  look a lot better than someone on the low end of these stats.

The point is that getting on top of your internet reputation might be the reason you get the job or don’t.  Don’t be intimidated by those who have stellar stats.  Klout basically educates you in how to increase your network.  A few tricks like mentioning other handles (@) within your tweet can immediately jump start your engagement with others and raise your score.

Good luck on your influence.

Who Can Compete with Facebook?

So what about all the social media websites springing up left and right?  Where does it stop and how should I go about this?  Facebook was founded in 2004 and in just over 8 years, the company launched an estimated $104 billion IPO.  That’s the third largest in US history.  They have 900 million users and have yet to solve their monetizing inadequacies.  Once they get that issue better addressed—which they will—then, my god, they are going to be bigger than big.

Do they even have a competitor?  Well I can tell you who’s out there: Twitter, LinkedIn, MySpace, Pinterest, Flickr, etc.  We could categorize these sites, with broad strokes, all fitting into the social networking internet group.  Facebook only generated $2 billion 2010 and a little over $4 billion 2011 in revenue, yet they managed to garner over a $100 billion market cap.  If you’re scratching your head wondering why would all these people buy the company with such marginal sales, the answer is simple.  The potential, the hype, this is how Wall Street works.

Twitter is a different animal though.  The company was launched in 2006.  In 2010, its first full-year of selling advertisement, the company produced $45 million in revenue.  It did $140 million last year in ad revenues.  With its pace, Twitter is projected to pull in $260 million by the end of this year!

Let’s try to put things in perspective.  Facebook’s market cap today is $60 billion while Twitter’s estimated market cap—remember, they’re still private—is between $8 and $10 billion.  Growing 100% in one year is something Facebook can be proud of.  But what about Twitter growing 213% in its second year of selling ads and an expected 85% growth in 2012?

We could theoretically say that Twitter goes public next year at $20 a share at a generous $20 billion market cap.  As an investor, you can definitely argue the safer investment is Twitter verses Facebook.  Even though Facebook’s ad revenue is expected to reach $6.1 billion in 2012, Twitter’s growth percentage wise is basically identical.  The difference is that Twitter’s market cap relative to its revenues is reasonable compared to Facebook’s whopping $60 to $80 billion market cap, depending on what day it is.

Still, Twitter is not the real “enemy” of Facebook.  Google+ was ranked top on a customer-service index of social-media websites by the American Customer Satisfaction Index.  Google+ debuted in June 2011 on the platform of the largest search engine in the world—Google.  Yes, they had a head start.  They already have 250 million users and we know that number is growing fast.

By the way, LinkedIn and Pinterest received better scores than Facebook in customer service.  If you ask me, Facebook will outperform Google+ in the long run and Twitter will provide the best value for your buck.

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