DISQUS

Chris Dessi · 8 months ago

Facebook is doing just fine. There seems to be this underlying human need to point to the looming failure of a company that has such lightening fast acceleration to success. The companies that are outpacing their DM efforts with an outlandish burn rate are those that aren't offering any value to the end user, not Facebook. Think - toolbars, etc. Anyone that would pay a $1 on search key words to dupe a person into downloading something to their computer to make $1.20. The consumer will most likely uninstall anyway. The missing link here is that Facebook, unlike these other companies- adds value, and consumers stick around. Facebook's costs will certainly increase, but with $200million in the bank, the sky is certainly not falling for Mr. Zuckerburg et al. These are unchartered waters, and I think Facebook has (under these unusual circumstances) done phenomenally well.

server+ exam · 2 weeks ago

yes you absolutely right and facebook doing so well.Mr. Zuckerburg et al. These are unchartered waters, and I think Facebook has (under these unusual circumstances) done phenomenally well.

Sarah · 8 months ago

Storage of all those pictures is not cheap, no matter how they've architected it. $200 million doesn't last long. And FB has a good-sized staff, expensive downtown PA offices etc. Dont get me wrong, I hope they do well since I like the site generally. But I suspect this is posturing.

Chetan · 8 months ago

@Sarah - i think you've got it right. This seems to be a tactical move to deflect attention from the recent exit of the CFO and tighter market conditions. Timing is very suspicious.

tom · 8 months ago

Storage costs are really low. Costs are around $100 per Terabyte this makes for 100$ for 2048000 photos. But Traffic isn't that cheap. If we assume that from 200 Mill Users 1/3 uses 100 Mb day per day and we assume that traffic costs are at 1.5 cent per Gigabyte Traffic (=200000000*0,33*0,0976563*0,015) this makes for 96679,737
$ traffic costs day per day. So 200 Mill on the Bank account ist 5 years of stable traffic (but it increases rapidly) without costs of labor and hardware.

FB has to find a way to earn money without annoying users to much. Thats not easy but i hope they will find a way.

Snoopster · 8 months ago

Tom,
Is $100 per TB the cost to own or rent? ~66 million users generating 100 Mb per day - both figures seem high. According to compete FB has ~90 million monthly uniques so your assumptions imply 2/3 of monthly uniques visit daily which seems unlikely. I'm assuming the majority of the traffic bandwidth is due to loading the default profile pictures and incrementally other photo album pictures (I don't have a sense for how much bandwidth is used by games/apps). FB pictures are JPEG and if you save down a few you'll notice most are under 50KB so let's assume 100KB on average to be safe. 100 Mb in daily traffic per user implies each user is looking at 1,000 pictures a day on average - doesn't jibe with personal experience and I am one of the few that use FB nearly daily

rkorba · 8 months ago

Eric -- this is truly interesting math -- ignoring any pretense of this being anything but a swag, seems that if they "net" burn $100MM with top line of $500MM and (average over the year) of 300MM users, then all costs of service, offices, lunches, humans, benefits, servers, bandwidth, hosting, parties, etc. still only amounts to maybe $1.25 per active user per year. 10 cents a month to monetize and cover all operating and SG&A costs per user? and it can only get better over time at monetization per user and scale costs. or, i could be off by several orders of magnitude. dunno. :)

Matt Prados · 8 months ago

Facebook needs to be more like twitter in its ability to allow great apps to build bigger social networks faster. But stay clean at the same time. But come 4B not a chance boys. If you start charging people will leave.

Chris · 8 months ago

Nice article. Eric, you seem to have the best "sources" from Facebook.

>> "Facebook ... is also planning to have its engineers publish detailed
>> information about how it manages its infrastructure
>> (and saves money as a result, apparently)"

I saw the video below which talks about their Memcache usage.
For backend engineers, the talk is interesting. For others, it's probably really boring.
But it does talk about tweaks that save them millions in infrastructure costs.
http://www.facebook.com/video/video.php?v=63182...

cadi9122 · 3 months ago

I read this too. Good read!!!

Unblock Facebook · 8 months ago

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Larry · 8 months ago

Interesting....Is the $4 BB value based on the preferred or the common?

Eric Eldon · 8 months ago

I didn't go into that but preferred. I don't think Facebook would be selling common stock to investors.

Jonathan · 8 months ago

Great article. And Interesting thoughts... and even more interesting math. I dont know much money things cost and how much space pictures take up so I won't try to dispute the math. That said, $200 million is a lot of money, but I can't imagine it would last more than a year or two at most, especially given FB's size and the number of users it has. FB has a very appealing UI and offers features that keep its users coming back, but I am not sure if its revenue model is all that much different from when it first started. No doubt, FB has become a darling in the eyes of those on Sand Hill Road, but I can't bank on a business that has yet to breakeven. Sooner or later people are going to get tired of FB (sorry, it's just how things work. We are a generation of ADHDs) so it needs some other way to monetize its larger user base if it's going to become profitable and stay profitable.

Ryan · 8 months ago

Sorry to FB, but their story doesn't jive with recent events (CFO ouster). They can wave their arms all they want about not needing cash. Of course, claiming to not need cash is exactly what a company who does need cash at an inflated valuation would say.

Haggie · 8 months ago

"The lady doth protest too much, methinks."

-Shakespeare, Hamlet Act 3, scene 2

homepage · 7 months ago

If zuckerberg thinks this company is worth more then $4B he has lost his mind.

edsion007 · 2 months ago

Hmmm.. why it has to do with twitter so much?

Aion Kinah · 2 months ago

FB has a very appealing UI and offers features that keep its users coming back, but I am not sure if its revenue model is all that much different from when it first started.

wuwei19871118 · 2 months ago

Great article. And Interesting thoughts... and even more interesting math. I dont know much money things cost and how much space pictures take up so I won't try to dispute the math. That said, $200 million is a lot of money, but I can't imagine it would last more than a year or two at most, especially given FB's size and the number of users it has. FB has a very appealing UI and offers features that keep its users coming back, but I am not sure if its revenue model is all that much different from when it first started. No doubt, FB has become a darling in the eyes of those on Sand Hill Road, but I can't bank on a business that has yet to breakeven. Sooner or later people are going to get tired of FB (sorry, it's just how things work. We are a generation of ADHDs) so it needs some other way to monetize its larger user base if it's going to become profitable and stay profitable.

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sandiee · 4 weeks ago

seems that if they "net" burn $100MM with top line of $500MM and (average over the year) of 300MM users, then all costs of service, offices, lunches, humans, benefits, servers, bandwidth, hosting, parties, etc. still only amounts to maybe $1.25 wedding dressesper active user per year. 10 cents a month to monetize and cover all operating and SG&A costs per user?

China · 2 weeks ago

Facebook needs to be more like twitter in its ability to allow great apps to build bigger social networks faster. But stay clean at the same time. But come 4B not a chance boys. If you start charging people will leave.

China Wholesale · 2 weeks ago

i think you've got it right. This seems to be a tactical move to deflect attention from the recent exit of the CFO and tighter market conditions. Timing is very suspicious.

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