How would you describe Facebook without the Internet?

With all the Social Media buzzwords floating around, someone who was not born with a smartphone in their hands would find the idea of Facebook extremely complex. I tried to explain the concept of Facebook to my parents. However, I realized that some user-interface elements obvious to me were not obvious to someone who equates their computer with nothing except email.

Facebook does a great job of marketing itself. But in my opinion, Facebook does not do a good job of explaining user interface elements to non-technical users. Otherwise, basic Facebook concepts such as Wall, Posts, Comments, Message, Tagging, and Targeted Advertisements would be extremely clear to everyone.

This post is my attempt to explain the various components of Facebook to non-technical users. Let’s assume for a moment that there is no Internet. Describing Facebook without Internet is like describing automobiles without roads, but I’m still making an attempt!

For example, people in ancient civilizations – where modern technology was non-existent – still had a ‘Social Network’. How did they communicate with each other?

Let me tell you a story about ‘Social Network’ in a world without Internet, phones, emails, or smartphones.

Welcome to NoGizmo. NoGizmo is a small (imaginary, I hope) town with around 100 residents. As the name suggests, they have no phones, computers, or Internet. However, they have a very unique way of communicating with each other. This story is about Amy, Bob, and Jim who live in NoGizmo.

The Wall – the main feature

Residents have a whiteboard in front of their houses. They can write anything on the whiteboard. For example, Jim writes short messages about his day-to-day activities. People walking by read the whiteboard.

The Post – communicating with the world

Jim wrote on his whiteboard ‘There’s a huge sale in Home Depot.

The Comment – responding to posts

Amy walked past Jim’s house and she saw the post. Amy picked up a marker and wrote under Jim’s post ‘I’d like to shop there too!

The Security  – allowing only selected people to view/comment on the post

Jim did not want everyone adding comments on his whiteboard. He placed his whiteboard behind a glass door and locked it. He gave copies of the key to selected people who could unlock the glass door to write comments. When Bob walked past, he saw Jim’s message, but could not write on the whiteboard since he did not have a copy of the key to open the glass door.

Messages – sending personal messages not visible to the world

Bob decided to throw a secret party for Amy. He wrote a letter on a piece of paper and dropped it off at Jim’s house. Jim read the message and wrote a reply to Bob on a piece of paper and dropped it off at Bob’s house. They had now planned a party. Only Jim and Bob knew about the party. This was because, communication between Jim and Bob was not conducted on the notice board. This particular communication was private.

Photos and Tagging – sharing photos and identifying (tagging) people

Jim pasted a photo he took with Bob and Amy on the whiteboard. Jim marked the names of the people on the whiteboard under the photo – Amy, Bob, Jim.

Remove Tagging – removing identification

Amy did not want her name on the photo. She walked past Jim’s house, and with her key, she opened the glass door to Jim’s whiteboard. Amy erased her name under the photo.

Advertisements – displaying ‘relevant’ advertisements

The Ad Company  (AdCo) saw the whiteboards as a great opportunity to advertise various products to people. AdCo now has a small space on every whiteboard where it advertises products related to the interests of the people writing on the whiteboard. For example, Amy posted that she plans to go skating. So, AdCo advertised skating gear on Amy’s whiteboard. If Amy saw the advertisement and went to the local sports store to purchase skates, AdCo would get a 5% cut from sale.

Here’s how virtual elements in Facebook compare to real-world objects in NoGizmo:

  • Wall = Whiteboard
  • Post = message/announcement by the owner of the Wall.
  • Comments = response to a Post or a Photo.
  • Security = a locked or unlocked whiteboard; allowing only certain people to comment.
  • Messages = personal messages only visible to the intended recipients.
  • Tagging Photos = identifying/marking photos.
  • Remove Tagging = removing identification.
  • Targeted Ads = advertisements based on the demographic/interests of the user.

The next time your parents/grandparents ask you about Facebook, just ask them to read my story about NoGizmo. I am sure they will enjoy it.

By the way, I’m glad I don’t live in NoGizmo. I can’t live without the Internet or my gizmos!


When will the Social Media Bubble burst?

Hundreds of Social Media companies have created huge opportunities for marketers to reach their customers more effectively. The Social Media landscape is growing so rapidly that mergers and acquisitions have started.

Facebook recently bought Instagram for 1 billion dollars. Here are some interesting facts about Instagram:

Number of employees: 7

Number of users: 30 million

Revenue: 0$

Profit: (You’re kidding, right?)

Facebook’s 1 billion dollar acquisition of a company that generates zero revenue sounds really bizarre. Facebook’s deal brings back memories of the Dot Com bubble of the late 90s. Companies with no revenue, weak or non-existent revenue models, and weak strategies tried to cash in on the Dot Com boom, which led to their demise. Social Media companies seem to be heading in the same direction. Whether it is Social Media (or traditional media), Dot Com (or physical companies), past (or the present), the rules of business remain the same. The basic rule of business is: Revenue – Expenses = Profit. And companies must deliver value to the customer to generate revenue.

Let’s see what Social Media companies are doing that may lead to their demise:

Skyrocketing Valuations – Facebook is valued at 104 billion dollars. Such skyrocketing valuations for Social Media companies raise a red flag. For a company whose assets and patents are not as valuable, the valuations seem astronomical. Such valuations were quite common during the Dot Com boom. Dot Com companies’ valuations reached exponential heights – only to come crashing down in the year 2000.

Weak Business Model – Facebook’s business model is based entirely on advertising. Show advertisements to the users – charge money from the companies. This is strikingly similar to the Dot Com business model where companies relied mainly on advertising revenue. Facebook markets itself as the only company that can show ‘targeted advertisements’ since it knows more about the users. But tell me, how many times have you really clicked on a Facebook advertisement? Moreover, if Facebook users install applications like Adblock plus, Facebook’s advertisement is blocked.

No Subscription Revenue – Most Social Media companies don’t deliver enough value for them to charge subscription fees. There must be a compelling reason for users to spend time on the site and they must be willing to pay for it. Some companies like LinkedIn charge subscription for value added services (LinkedIn’s basic account is free). However, most Social Media companies would start losing users if they started charging subscription fees since users don’t see enough value in paying for it.

Number of users is the only strength – Facebook’s only strength is its users. The advertising revenue, valuation, and bargaining power are all based on the fact that Facebook has 850 million users. Another Social Media company entering the market may immediately take away users from Facebook. Losing users would immediately drop Facebook’s valuation. There is also a theory that Facebook purchased Instagram since it was threatened by its 30 million users. What value does Facebook have to show apart from its 850 million user base?

Lack the Core Competence – Unlike companies like Apple that have changed the landscape of the mobile industry by creating awesome products, Social Media companies are just web interfaces with multiple users logged on. They don’t sell products, services, or generate subscription fees. Therefore, they will be unable to sustain exponential valuations, growth in revenue, and constant profits. After all, how much money can you really make on Likes and XOXOXs!

It would be interesting to see if there really is a Social Media Bubble and if the bubble will burst soon. The fundamentals of business remain the same whatever the business is. Therefore, Social Media companies that realize the basics of business will survive. Others will fade away.

If you are thinking about investing in the Facebook IPO on May 17th, just be cautious. Web 2.0 may just be Dot Com 2.0. And may just be the next!

The well-connected world

If someone from the 1960s were to visit us today, the first, but not really the only, thing that would blow them away is how well-connected everyone is with everyone and everything else.

We are Facebook friends with people we barely spoke to in high school. We follow celebrities, who don’t know us from Adam, on Twitter. We join online forums and fandoms to discuss intimate details of our interests with like-minded individuals. We give instant feedback about the movies we see or the song that we just heard for the first time. We share photographs from our lives with perfect strangers on photo-sharing websites, hoping to learn some never before understood photography technique. We take seconds to open a browser and search for the information we need. We are able to get “expert” opinions from people on the Internet on whether that soreness in our back is because of sitting too long or is something horrible like a slipped vertebrae.

And yet, we are moving farther away from what defines us as a people.

We are losing touch with doing things just for the fun of doing them. How many of our Facebook friends have said “pictures or it didn’t happen!” for a status update about something amazing that we did? And so we feel obliged to add pictorial evidence of having gone scuba-diving or rock-climbing. Such a fun statement, and yet the sentiment behind that statement reveals an awful undercurrent: if the world doesn’t know what we are doing, we are not doing anything worthwhile.

We are losing our ability to collect, retain, and process information. That Wikipedia page explaining backaches may get us to exclaim “awesome!” but how much of it do we really retain? We read that page, and then go back to sitting on that really horrid couch while slouching in an attempt to get comfortable.

We are growing apart from what connects us with the people around us. No doubt, there is merit in being able to talk to other fans and collectively squee about a book from our favorite author. But the time that we spend on that fandom website is time that we have taken away from the real people around us. Telling 200 Twitter followers that “This new restaurant is a gastronomical delight!” is not quite the same as telling your friends “This new restaurant is amazing, let’s go eat there sometime.” Arguably, you could say that on Twitter, but do you really want a random guy living 5 states away showing up at the restaurant when you are waiting for friends?

We live in a world of information overload. Each one of us feels the need to be connected with the world every hour of every day. None of us can imagine life without updating our Facebook and Twitter feeds with–sometimes irrelevant–information. The question that the guy visiting you from the 1960s is going to ask is: “whatever happened to good old going outside and throwing a ball around with friends?” And that is the question we need to ask ourselves as well.

May be what we need to do, is to take a step back and disconnect from the online world and connect with the real world.