So what’s a “Like” worth?
You knew I was going to weigh in on Facebook’s IPO last week – how could I not???
So I ask again – what’s a “Like” worth?
I have asked that question before and I do speak about it in many of my keynote speeches – what is the value to a company or brand of a “Like”? Can it really be monetized?
Clearly if one of your close friends gives you a “Like” on something you posted on Facebook, it has personal value to you, much I’d bet. However, I suspect that if some random person liked or disliked something personal you posted, the value would be less – or maybe negative – it might have a creep-out value, in fact.
And the question that most savvy investors started to ask – late in the game, I’m afraid – was can Facebook really create value from the millions of “Likes” that so many brands have accumulated, thinking it was money in the bank – for themselves, never mind Facebook – or was their newfound obsession with advertising – that is, with interrupting your stream with paid messages – an indication that monetization would really be more like old-fashioned broadcast (albeit it possibly more targeted), not exactly the concept that people signed up for.
So what’s a “Like” worth?
Frankly, I think we have really found out – here is my view on the IPO and why it might portend better than some think:
Facebook was the second-largest IPO ever and the largest in technology – as if the “sharing company” is a tech company. Why isn’t Uniqlo a tech company? Or Nike? Time to revise our orientation, folks, on what’s tech and what’s not….
According to Bloomberg, the average first-day pop for a tech IPO is 32%:
Which would have made the Facebook crew even richer than they became – yet as we know, the stock closed pennies above the opening – Groupon, already repudiated, closed at a higher percentage, as did LinkedIn and Yelp.
But here is the key info – insiders dumped more shares than did the insiders in Google, and Goldman Sachs sold more than 50% of its share – more than they had announced originally – hmmm…
So the people who know the company best sold a huge percentage of their shares – wonder how they feel about the long-term viability of the stock price? Please note I say stock price – not company – a critical distinction for me. I think the company is amazing and has huge potential – it’s the stock price I’m after, and the shameless hyping.
Also interesting to note is that a number of funds that owned pre-IPO shares of Facebook dropped more than 20% as investors reacted to the relatively slow opening – which was the opposite of what many had expected when the IPO news first hit the street.
Now let’s be clear – the value of Facebook is still more than Amazon.com on one side – McDonald’s on the other and HP in the sort of middle – and Mark Z has over $19 billion…not too shabby – but come on….
So let me come back to my initial question: What’s a “Like” worth? Was the IPO a failure as the professional investors and funds who created the original circus backed away and individual investors were able to actually buy shares – unusual for such an offer? Was it proof that it was priced right – meaning that it’s valued where it should be and that the underwriters never expected it to pop…yeah – you want a bridge? Or is it something else???
Here is my take….
I always poll my audiences on the number of Facebook friends they have – when the numbers get into the 500s+, I ask them how many of those 500 or more buddies will pick them up at the airport – nervous laughter is always the reaction, but the point is made.
My bet is that Facebook just found out who will pick them up at the airport – the average citizen investor who uses the platform, believes in it and sees its long-term viability – not just its short-term money-printing side. They discovered true “Like” value.
Facebook has great potential – one day they will figure out how to monetize without killing the golden goose of its user base, and they have now been given the go-ahead to do just that.
If you own shares – give them a break – don’t look for daily movements or quarterly results – take a long-term view.
And bottom line – let me remind you of my view on GMOOTs – the Give-Me-One-of-Those attitude of so many today as they view the world and its developments.
“If fifty million people say a foolish thing, it is still a foolish thing. “
And there you have it – don’t be fooled. Look at Facebook – and everything else for that matter – with your own eyes, as a human user who knows the true value of “Like” and who knows that no price can be placed on true friendship.
What do you think?