welcome to hip mojo show 26 I’m your host Ashley and Carver solution and I’m
host Ashley and Carver solution and I’m
host Ashley and Carver solution and I’m Rebecca Brayton all right so Rebecca how
Rebecca Brayton all right so Rebecca how
Rebecca Brayton all right so Rebecca how much time you spent on Facebook be
much time you spent on Facebook be
much time you spent on Facebook be honest as you’re my boss I don’t spend
honest as you’re my boss I don’t spend
honest as you’re my boss I don’t spend that much time on Facebook especially a
that much time on Facebook especially a
that much time on Facebook especially a word like it when you’re at home when
word like it when you’re at home when
word like it when you’re at home when you’re doing your own you know I tried
you’re doing your own you know I tried
you’re doing your own you know I tried wasting exercises really I I spend most
wasting exercises really I I spend most
wasting exercises really I I spend most of my time on Twitter to be honest yeah
of my time on Twitter to be honest yeah
of my time on Twitter to be honest yeah same year I’ve become quite the Twitter
same year I’ve become quite the Twitter
same year I’ve become quite the Twitter addict and a lot of my friends are
addict and a lot of my friends are
addict and a lot of my friends are pointing it out although I say it’s
pointing it out although I say it’s
pointing it out although I say it’s really more my newsroom that’s my excuse
really more my newsroom that’s my excuse
really more my newsroom that’s my excuse okay so I don’t spend much time on
okay so I don’t spend much time on
okay so I don’t spend much time on Facebook either but it is a rather
Facebook either but it is a rather
Facebook either but it is a rather popular site and this week they filed
popular site and this week they filed
popular site and this week they filed for an IPO so we just want to cover that
for an IPO so we just want to cover that
for an IPO so we just want to cover that a bit and I believe you have some
a bit and I believe you have some
a bit and I believe you have some questions yes so this led to a lot of
questions yes so this led to a lot of
questions yes so this led to a lot of questions from a lot of people so first
questions from a lot of people so first
questions from a lot of people so first things first how does fake ships yeah
things first how does fake ships yeah
things first how does fake ships yeah Facebook actually make money and how did
Facebook actually make money and how did
Facebook actually make money and how did how much do they generate times have
how much do they generate times have
how much do they generate times have changed even internet companies make
changed even internet companies make
changed even internet companies make money so Facebook generates largely
money so Facebook generates largely
money so Facebook generates largely money from advertising which is the
money from advertising which is the
money from advertising which is the number one way that internet businesses
number one way that internet businesses
number one way that internet businesses generate money but they also have been
generate money but they also have been
generate money but they also have been building up their credits or payments
building up their credits or payments
building up their credits or payments business they’re going to make a 1
business they’re going to make a 1
business they’re going to make a 1 billion dollars in net income basically
billion dollars in net income basically
billion dollars in net income basically profit off 3.7 billion in revenue of
profit off 3.7 billion in revenue of
profit off 3.7 billion in revenue of that 3.7 3.2 comes from advertising and
that 3.7 3.2 comes from advertising and
that 3.7 3.2 comes from advertising and the payments just to explain the
the payments just to explain the
the payments just to explain the payments credit side of things a few
payments credit side of things a few
payments credit side of things a few years ago video game makers Zynga was
years ago video game makers Zynga was
years ago video game makers Zynga was basically leveraging the facebook
basically leveraging the facebook
basically leveraging the facebook platform and monetizing that experience
platform and monetizing that experience
platform and monetizing that experience and facebook said timeout if you’re
and facebook said timeout if you’re
and facebook said timeout if you’re going to be charging people you can’t
going to be charging people you can’t
going to be charging people you can’t use your payment system you got to use
use your payment system you got to use
use your payment system you got to use ours so large a large portion of that
ours so large a large portion of that
ours so large a large portion of that growth has come from sorry of the
growth has come from sorry of the
growth has come from sorry of the Facebook credit payments growth has come
Facebook credit payments growth has come
Facebook credit payments growth has come from zynga and Zynga generates twelve
from zynga and Zynga generates twelve
from zynga and Zynga generates twelve percent of Facebook’s revenues okay so
percent of Facebook’s revenues okay so
percent of Facebook’s revenues okay so according to the IPO how much is
according to the IPO how much is
according to the IPO how much is Facebook raising and what is it worth
Facebook raising and what is it worth
Facebook raising and what is it worth and is it a deal is it a deal or no deal
and is it a deal is it a deal or no deal
and is it a deal is it a deal or no deal well Facebook originally was rumored to
well Facebook originally was rumored to
well Facebook originally was rumored to raise up to 10 billion dollars let’s
raise up to 10 billion dollars let’s
raise up to 10 billion dollars let’s actually go back what happens in an IPO
actually go back what happens in an IPO
actually go back what happens in an IPO or initial public offering is a company
or initial public offering is a company
or initial public offering is a company that previously was private basically
that previously was private basically
that previously was private basically says you know we might have some
says you know we might have some
says you know we might have some investors venture capital firms and
investors venture capital firms and
investors venture capital firms and private
private
private and employees but we’re now going to
and employees but we’re now going to
and employees but we’re now going to sell as a first offering to the public
sell as a first offering to the public
sell as a first offering to the public and you basically say let’s say if
and you basically say let’s say if
and you basically say let’s say if you’re worth a hundred billion dollars
you’re worth a hundred billion dollars
you’re worth a hundred billion dollars you then say if we’re going to sell ten
you then say if we’re going to sell ten
you then say if we’re going to sell ten percent to the public then we’re going
percent to the public then we’re going
percent to the public then we’re going to get ten percent of a billion ten
to get ten percent of a billion ten
to get ten percent of a billion ten billion dollars to go and hire more
billion dollars to go and hire more
billion dollars to go and hire more staff expand by other companies so it
staff expand by other companies so it
staff expand by other companies so it was rumored that Facebook was going to
was rumored that Facebook was going to
was rumored that Facebook was going to raise ten billion dollars by selling ten
raise ten billion dollars by selling ten
raise ten billion dollars by selling ten percent of its stock at a hundred
percent of its stock at a hundred
percent of its stock at a hundred billion dollar valuation that’s not
billion dollar valuation that’s not
billion dollar valuation that’s not actually what’s going to happen although
actually what’s going to happen although
actually what’s going to happen although it’s surprisingly close Facebook is only
it’s surprisingly close Facebook is only
it’s surprisingly close Facebook is only only going to raise five billion dollars
only going to raise five billion dollars
only going to raise five billion dollars and it’s still a lot of money it’s the
and it’s still a lot of money it’s the
and it’s still a lot of money it’s the biggest tech IPO in mark sacrifice yeah
biggest tech IPO in mark sacrifice yeah
biggest tech IPO in mark sacrifice yeah poor mark zuckerberg we’ll talk about
poor mark zuckerberg we’ll talk about
poor mark zuckerberg we’ll talk about Mark Zuckerberg in a bit but basically
Mark Zuckerberg in a bit but basically
Mark Zuckerberg in a bit but basically Facebook analysts are giving it a
Facebook analysts are giving it a
Facebook analysts are giving it a valuation of anywhere from 75 probably
valuation of anywhere from 75 probably
valuation of anywhere from 75 probably low range 85 billion to as high as a
low range 85 billion to as high as a
low range 85 billion to as high as a hundred billion and historically
hundred billion and historically
hundred billion and historically investment bankers usually price and IPO
investment bankers usually price and IPO
investment bankers usually price and IPO below its fair value so that the stock
below its fair value so that the stock
below its fair value so that the stock pops because that’s great for marketing
pops because that’s great for marketing
pops because that’s great for marketing so this being said Mark Zuckerberg who
so this being said Mark Zuckerberg who
so this being said Mark Zuckerberg who is one of the few founder young founder
is one of the few founder young founder
is one of the few founder young founder CEOs who stayed at his company as the
CEOs who stayed at his company as the
CEOs who stayed at his company as the CEO almost ten years eight years and
CEO almost ten years eight years and
CEO almost ten years eight years and he’ll be taking one of the biggest
he’ll be taking one of the biggest
he’ll be taking one of the biggest internet brands public so that hats off
internet brands public so that hats off
internet brands public so that hats off to mark and his team he holds twenty
to mark and his team he holds twenty
to mark and his team he holds twenty eight percent of the stock so he’s worth
eight percent of the stock so he’s worth
eight percent of the stock so he’s worth as little as 16 billion to as high as
as little as 16 billion to as high as
as little as 16 billion to as high as like 30 billion making him you know
like 30 billion making him you know
like 30 billion making him you know automatically overnight one of the
automatically overnight one of the
automatically overnight one of the richest men on earth and he deserves a
richest men on earth and he deserves a
richest men on earth and he deserves a lot of praise despite what the cynics
lot of praise despite what the cynics
lot of praise despite what the cynics might say okay is it a deal well that’s
might say okay is it a deal well that’s
might say okay is it a deal well that’s the big question is it a deal yes and no
the big question is it a deal yes and no
the big question is it a deal yes and no Facebook is going to become the
Facebook is going to become the
Facebook is going to become the bellwether the the bellwether of the
bellwether the the bellwether of the
bellwether the the bellwether of the internet stock so if right now somebody
internet stock so if right now somebody
internet stock so if right now somebody has been investing in Google because
has been investing in Google because
has been investing in Google because they want to have exposure to the
they want to have exposure to the
they want to have exposure to the internet well Google’s like an 11 year
internet well Google’s like an 11 year
internet well Google’s like an 11 year old you know more like a 12 13 year old
old you know more like a 12 13 year old
old you know more like a 12 13 year old company it’s been public for almost a
company it’s been public for almost a
company it’s been public for almost a decade so Google is somewhat mature as a
decade so Google is somewhat mature as a
decade so Google is somewhat mature as a stock so if somebody really wants to
stock so if somebody really wants to
stock so if somebody really wants to pour money into Facebook even though
pour money into Facebook even though
pour money into Facebook even though Facebook is expensive from a price to
Facebook is expensive from a price to
Facebook is expensive from a price to revenue or price to earnings perspective
revenue or price to earnings perspective
revenue or price to earnings perspective it will get a lot of demand for its
it will get a lot of demand for its
it will get a lot of demand for its stock because people are willing to be
stock because people are willing to be
stock because people are willing to be patient so even if it’s going to be a
patient so even if it’s going to be a
patient so even if it’s going to be a very you know expensive stock relative
very you know expensive stock relative
very you know expensive stock relative to earnings investors won’t care because
to earnings investors won’t care because
to earnings investors won’t care because they’re like listen this company is
they’re like listen this company is
they’re like listen this company is going to
going to
going to a billion users this year so we’re
a billion users this year so we’re
a billion users this year so we’re willing to wait for the earnings to
willing to wait for the earnings to
willing to wait for the earnings to catch up to the price it’s a deal in
catch up to the price it’s a deal in
catch up to the price it’s a deal in that sense that demand will far outstrip
that sense that demand will far outstrip
that sense that demand will far outstrip supply of stock but it’s not a deal from
supply of stock but it’s not a deal from
supply of stock but it’s not a deal from a purely financial perspective but who
a purely financial perspective but who
a purely financial perspective but who cares about that it is Facebook really
cares about that it is Facebook really
cares about that it is Facebook really worth all the hype when are they going
worth all the hype when are they going
worth all the hype when are they going to keep up with the momentum um okay
to keep up with the momentum um okay
to keep up with the momentum um okay well they’re going to keep up i think
well they’re going to keep up i think
well they’re going to keep up i think with the momentum from a user
with the momentum from a user
with the momentum from a user perspective because i do think though
perspective because i do think though
perspective because i do think though that they were going to become the
that they were going to become the
that they were going to become the natural monopoly in terms of like
natural monopoly in terms of like
natural monopoly in terms of like profiles and all that is it worth the
profiles and all that is it worth the
profiles and all that is it worth the hype put at you this way their revenues
hype put at you this way their revenues
hype put at you this way their revenues grew from 2009 to 2010 by a hundred
grew from 2009 to 2010 by a hundred
grew from 2009 to 2010 by a hundred fifty percent but then from 2010 2 2011
fifty percent but then from 2010 2 2011
fifty percent but then from 2010 2 2011 they only grew by fifty percent the
they only grew by fifty percent the
they only grew by fifty percent the problem is as you get bigger and as your
problem is as you get bigger and as your
problem is as you get bigger and as your revenues get bigger the growth is harder
revenues get bigger the growth is harder
revenues get bigger the growth is harder to accomplish so even though at face
to accomplish so even though at face
to accomplish so even though at face value the relative percentage seems like
value the relative percentage seems like
value the relative percentage seems like it’s slowing down the absolute numbers
it’s slowing down the absolute numbers
it’s slowing down the absolute numbers are staggering 3.7 billion dollars in
are staggering 3.7 billion dollars in
are staggering 3.7 billion dollars in revenue for a billion dollars of profit
revenue for a billion dollars of profit
revenue for a billion dollars of profit is a profit machine and it’s true that
is a profit machine and it’s true that
is a profit machine and it’s true that today Facebook as it goes IPO is
today Facebook as it goes IPO is
today Facebook as it goes IPO is generating more income it’s generally
generating more income it’s generally
generating more income it’s generally more profit than Google was generating
more profit than Google was generating
more profit than Google was generating revenue top line when Google and private
revenue top line when Google and private
revenue top line when Google and private public there is a difference the overall
public there is a difference the overall
public there is a difference the overall size of the advertising market online is
size of the advertising market online is
size of the advertising market online is so much bigger today that you are
so much bigger today that you are
so much bigger today that you are comparing apples to oranges my guess is
comparing apples to oranges my guess is
comparing apples to oranges my guess is that a lot of companies i want IPO that
that a lot of companies i want IPO that
that a lot of companies i want IPO that were internet companies like linkedin
were internet companies like linkedin
were internet companies like linkedin like Groupon and even Zynga which is
like Groupon and even Zynga which is
like Groupon and even Zynga which is more of a video game but let’s say you
more of a video game but let’s say you
more of a video game but let’s say you know it’s still a tech new media ish
know it’s still a tech new media ish
know it’s still a tech new media ish stock I think most of those flopped and
stock I think most of those flopped and
stock I think most of those flopped and investors will probably take whatever
investors will probably take whatever
investors will probably take whatever money that they would have put in those
money that they would have put in those
money that they would have put in those assets as well as Google and they’re
assets as well as Google and they’re
assets as well as Google and they’re going to put it in in facebook so I
going to put it in in facebook so I
going to put it in in facebook so I think it’s going to be a massive company
think it’s going to be a massive company
think it’s going to be a massive company from a consumer adoption perspective as
from a consumer adoption perspective as
from a consumer adoption perspective as it already is but that will continue
it already is but that will continue
it already is but that will continue financially I don’t think it’s going to
financially I don’t think it’s going to
financially I don’t think it’s going to put up the numbers that people see in
put up the numbers that people see in
put up the numbers that people see in the apple and Google’s even though
the apple and Google’s even though
the apple and Google’s even though you’re comparing apples to oranges but
you’re comparing apples to oranges but
you’re comparing apples to oranges but from a purely stock perspective it’ll be
from a purely stock perspective it’ll be
from a purely stock perspective it’ll be very well because people will want to
very well because people will want to
very well because people will want to put money in there everybody knows
put money in there everybody knows
put money in there everybody knows facebook even if they don’t spend time
facebook even if they don’t spend time
facebook even if they don’t spend time on it right so I mean we’ve talked about
on it right so I mean we’ve talked about
on it right so I mean we’ve talked about Google already but everyone is comparing
Google already but everyone is comparing
Google already but everyone is comparing this IPO to Google’s so is that kind of
this IPO to Google’s so is that kind of
this IPO to Google’s so is that kind of a fair comparison and out of the
a fair comparison and out of the
a fair comparison and out of the okay I mean it’s fair in the sense that
okay I mean it’s fair in the sense that
okay I mean it’s fair in the sense that you have to internet companies who lead
you have to internet companies who lead
you have to internet companies who lead there there’s respective industry
there there’s respective industry
there there’s respective industry respectively search and our social
respectively search and our social
respectively search and our social network it’s fair to say well how much
network it’s fair to say well how much
network it’s fair to say well how much money were they generating again Google
money were they generating again Google
money were they generating again Google was generating 960 million in revenue
was generating 960 million in revenue
was generating 960 million in revenue and 100 million in profit when I went
and 100 million in profit when I went
and 100 million in profit when I went IPO Facebook is generating three billion
IPO Facebook is generating three billion
IPO Facebook is generating three billion or you know 3.7 billion in revenue and a
or you know 3.7 billion in revenue and a
or you know 3.7 billion in revenue and a billion in profit so Facebook wins there
billion in profit so Facebook wins there
billion in profit so Facebook wins there however I think search is a much easier
however I think search is a much easier
however I think search is a much easier industry to monetize somebody searches
industry to monetize somebody searches
industry to monetize somebody searches for Madrid you got a result for hotels
for Madrid you got a result for hotels
for Madrid you got a result for hotels in Madrid that’s easy to monetize I’ve
in Madrid that’s easy to monetize I’ve
in Madrid that’s easy to monetize I’ve never even looked at ads on Facebook let
never even looked at ads on Facebook let
never even looked at ads on Facebook let alone clicked on an ad on facebook even
alone clicked on an ad on facebook even
alone clicked on an ad on facebook even though Facebook claims in their
though Facebook claims in their
though Facebook claims in their perspectives in the s-1 that they helped
perspectives in the s-1 that they helped
perspectives in the s-1 that they helped Procter & Gamble sell nine percent more
Procter & Gamble sell nine percent more
Procter & Gamble sell nine percent more deodorant you know I can tell you that
deodorant you know I can tell you that
deodorant you know I can tell you that you know watchmojo has helped Procter
you know watchmojo has helped Procter
you know watchmojo has helped Procter and Gamble’s so whatever it doesn’t
and Gamble’s so whatever it doesn’t
and Gamble’s so whatever it doesn’t necessarily mean you could spin the
necessarily mean you could spin the
necessarily mean you could spin the facts is what i’m getting at not being
facts is what i’m getting at not being
facts is what i’m getting at not being too cynical there the point i want to
too cynical there the point i want to
too cynical there the point i want to make is it’s it’s fair to compare to
make is it’s it’s fair to compare to
make is it’s it’s fair to compare to google in terms of where google was but
google in terms of where google was but
google in terms of where google was but it’s actually unfair in the broad macro
it’s actually unfair in the broad macro
it’s actually unfair in the broad macro space google basically brought back the
space google basically brought back the
space google basically brought back the internet from the you know disaster it
internet from the you know disaster it
internet from the you know disaster it rose from the ashes of the Nasdaq
rose from the ashes of the Nasdaq
rose from the ashes of the Nasdaq meltdown and the dot-com bubble bursting
meltdown and the dot-com bubble bursting
meltdown and the dot-com bubble bursting so when Google IPO in made investors
so when Google IPO in made investors
so when Google IPO in made investors realize that hey the internet is
realize that hey the internet is
realize that hey the internet is actually coming back Facebook you could
actually coming back Facebook you could
actually coming back Facebook you could almost argue is like in the middle to
almost argue is like in the middle to
almost argue is like in the middle to late stages of a bull run in internet
late stages of a bull run in internet
late stages of a bull run in internet assets already so from that perspective
assets already so from that perspective
assets already so from that perspective it’s really very very different but in
it’s really very very different but in
it’s really very very different but in terms of headlines in terms of like from
terms of headlines in terms of like from
terms of headlines in terms of like from an outsider you look at it it’s the
an outsider you look at it it’s the
an outsider you look at it it’s the first big it’s the biggest IPO since
first big it’s the biggest IPO since
first big it’s the biggest IPO since Google without a doubt okay is there
Google without a doubt okay is there
Google without a doubt okay is there anything surprising about the s-1 yeah I
anything surprising about the s-1 yeah I
anything surprising about the s-1 yeah I mean Zynga generating twelve percent of
mean Zynga generating twelve percent of
mean Zynga generating twelve percent of Facebook’s revenues is surprising this
Facebook’s revenues is surprising this
Facebook’s revenues is surprising this is what was most surprising half of the
is what was most surprising half of the
is what was most surprising half of the people who are users on facebook visit
people who are users on facebook visit
people who are users on facebook visit the site every day that’s not bad but
the site every day that’s not bad but
the site every day that’s not bad but what’s more interesting is like half of
what’s more interesting is like half of
what’s more interesting is like half of the users on facebook visit the site on
the users on facebook visit the site on
the users on facebook visit the site on their mobile devices their iPhones or
their mobile devices their iPhones or
their mobile devices their iPhones or blackberries there whatever windows
blackberries there whatever windows
blackberries there whatever windows seven phones so what’s interesting
seven phones so what’s interesting
seven phones so what’s interesting though is that Facebook is yet to make
though is that Facebook is yet to make
though is that Facebook is yet to make any money from the removal because
any money from the removal because
any money from the removal because they’re not putting any at so that was
they’re not putting any at so that was
they’re not putting any at so that was very surprising other things a few
very surprising other things a few
very surprising other things a few people on Twitter ironically where I
people on Twitter ironically where I
people on Twitter ironically where I followed the three stats that’s
followed the three stats that’s
followed the three stats that’s interesting
interesting
interesting facebook with a hundred billion dollar
facebook with a hundred billion dollar
facebook with a hundred billion dollar valuation with 3,000 employees is worth
valuation with 3,000 employees is worth
valuation with 3,000 employees is worth three times the four largest ad agency
three times the four largest ad agency
three times the four largest ad agency is combined who have 300,000 employees
is combined who have 300,000 employees
is combined who have 300,000 employees another one Facebook revenue per
another one Facebook revenue per
another one Facebook revenue per employee 1.1 million Walmart’s revenue
employee 1.1 million Walmart’s revenue
employee 1.1 million Walmart’s revenue per employee two hundred dollars and the
per employee two hundred dollars and the
per employee two hundred dollars and the last but not least apples EBITDA was 45
last but not least apples EBITDA was 45
last but not least apples EBITDA was 45 billion dollars Facebook’s was 1.8
billion dollars Facebook’s was 1.8
billion dollars Facebook’s was 1.8 billion but Facebook is going to be
billion but Facebook is going to be
billion but Facebook is going to be worth one-fourth of Apple so I get
worth one-fourth of Apple so I get
worth one-fourth of Apple so I get random stats from the Twitter community
random stats from the Twitter community
random stats from the Twitter community but pretty interesting long story short
but pretty interesting long story short
but pretty interesting long story short I guess not that this is should be
I guess not that this is should be
I guess not that this is should be treated as financial advice purely for
treated as financial advice purely for
treated as financial advice purely for entertainment go speak to an expert if
entertainment go speak to an expert if
entertainment go speak to an expert if you have a bunch of money lying around
you have a bunch of money lying around
you have a bunch of money lying around should you put it into facebook if you
should you put it into facebook if you
should you put it into facebook if you have money and you’re willing it to go
have money and you’re willing it to go
have money and you’re willing it to go to zero and you were going to be
to zero and you were going to be
to zero and you were going to be investing it let’s say in other Internet
investing it let’s say in other Internet
investing it let’s say in other Internet companies I you know I think Facebook is
companies I you know I think Facebook is
companies I you know I think Facebook is a good bet and I’m going to end it on
a good bet and I’m going to end it on
a good bet and I’m going to end it on this analogy when Google when IPO I said
this analogy when Google when IPO I said
this analogy when Google when IPO I said one hundred dollars a share which
one hundred dollars a share which
one hundred dollars a share which translated to 23 billion-dollar
translated to 23 billion-dollar
translated to 23 billion-dollar valuation I went back to my roots in
valuation I went back to my roots in
valuation I went back to my roots in finance and said that’s too expensive so
finance and said that’s too expensive so
finance and said that’s too expensive so I kept my money and all these other
I kept my money and all these other
I kept my money and all these other internet stocks that seemed more fair
internet stocks that seemed more fair
internet stocks that seemed more fair priced I got shafted why because
priced I got shafted why because
priced I got shafted why because everybody basically took money out of
everybody basically took money out of
everybody basically took money out of other search companies and other media
other search companies and other media
other search companies and other media companies in li ahoo and all that and
companies in li ahoo and all that and
companies in li ahoo and all that and basically put the money in the top horse
basically put the money in the top horse
basically put the money in the top horse which was Google so for that reason
which was Google so for that reason
which was Google so for that reason history repeats itself i would say
history repeats itself i would say
history repeats itself i would say facebook is probably a stock you should
facebook is probably a stock you should
facebook is probably a stock you should consider but talk to your analyst look
consider but talk to your analyst look
consider but talk to your analyst look into your crystal ball don’t take this
into your crystal ball don’t take this
into your crystal ball don’t take this as financial advice fair enough okay
as financial advice fair enough okay
as financial advice fair enough okay that’s hip mojo show 26 visit us on
that’s hip mojo show 26 visit us on
that’s hip mojo show 26 visit us on facebook
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