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Well, despite the state of the world economy, Facebook finally managed it’s IPO today and ended the day at roughly the same level as it launched at, having had a high point of about $42 and a start point of $38. Now, when I were a lad we did IPOs differently – take the VA Linux IPO in the 1990s – a first day increase of nearly 700% on the starting price…..
But the world is different today, and the markets are older – although given recent behaviours not any wiser. The Facebook IPO was never going to be a show-stopper of the type we saw in the first dot-com boom, no matter how people hyped it up. But, even Linked In, that had it’s IPO more recently, opened at $45 and closed at around $90 on the first day. So what happened to facebook, and why should we care?
To start with, the opening price was, in my opinion, incredibly high for a company that simply peddles user generated content, games access, in game currencies, personal data access and adverts. And that’s why we should care, because ultimately the value of Facebook will depend upon how advertisers and data crunchers value that content and the 900 million users of Facebook, and whether those users will keep playing the Facebook game.
Why did Facebook go public? Traditionally, companies go public when they need a market in which to sell shares in the company to investors in order to raise money, typically for expansion, moving new products to market, etc. In recent years – especially in tech industries – the IPO has been seen as a means by which the people involved with the startup can flog their shares and get rich quick, and I’m afraid that’s what I see happening here.
The big question is – how is Facebook worth $100 billion dollars? That’s more than Ford and more than Macdonalds. Last year Facebook returned a profit of a billion dollars on revenue of 3.7 billion dollars, which isn’t bad going. Ford had revenues of over $100 billion, and profits of over $6 billion in 2010, having reduced it’s debt by $12 billion in the same year. Not bad either. But Ford only has a market capitalisation of $38 billion. So, that market capitalisation of Ford of 38 billions is related to a profit of $6 billions. Now, whilst you can’t compare Internet and non-Internet stocks, if I were to apply the same rules I’d start thinking that Facebook should, on those proportions, be floated at no more than $6 or $7 billion.
Let’s be fairer and take Google as our reference point. It’s Internet stock, after all. Current Market Capitalisation of $197 billion, revenue of $40 billion and income of $10 billion. Applying some ratios again, Google seem to have a profit of about 25% of revenues, and a Market Cap. of around 5* revenue. Now, Facebook has profits which are not that far off of the same ratio as Google – 1/3.7*100 = 27%, so if we apply the 5* rule we get 5*3.7 billion – let’s be generous and say $20 billions.
So, Joe’s rough and ready calculations say that Facebook should have sold at $20 billions. Now, I’m not a stockbroker – in fact, I’m not brilliant with money at all, but this seems….logical. The difference between Google and Facebook, of course, is the magic words ‘Social Media’. After all, Social is the future, according to the pundits, so it must be logical that the Facebook valuation reflects something of the massive profits that people expect to make from Social Media in future. Yes?
Right…let’s look at Linked IN. Recentish float, social media company, not so many users, blah, blah. Market capitalisation of $10 billion dollars (no missing zero), Revenue about $670 million, profits about $17 million. Oooer. So Social isn’t necessarily the magic word.
So what could that magic ingredient be? What do analysts think makes Facebook worth so much? Do me a favour. If, like me, you’re a Facebook user, walk to the bathroom, look in the mirror. Say Hi. You’re looking at 1/900 millionth of Facebook’s secret sauce. Those investors are putting a lot of money in to the hope that we will continue spending money that can, in some way, be associated with our use of Facebook. Now, I’ve not spent a dime through any Facebook related advert, game or doohickey in the 4 or so years I’ve been on there. I rate every advert that pops up in my Timeline (except for the ones from Charities and non-profits) as offensive. How we use facebook from here on in will make or break a lot of fortunes.
If you want something to put a smile on your face today, remember that 1/900 millionth of Mark Zuckerberg’s arse is yours. Collectively, Zuckerberg is our bitch.
My wife and I have always had cats – folks who know me may remember the comment I often make that I love my cats more than I love the vast majority of human beings. Whilst I say it with a smile, I sometimes think there’s a large amount of truth in that statement, particularly after watching the news on TV…
Last October we had a new arrival – Georgie (named by my God-daughter) turned up out of the early evening darkness and took up residence. We had no idea where she came from, but she was in bad state – skin and bones, matted and dirty fur, starving, cold and tired. Within a few days it was obvious she was going nowhere, and our ‘boys’ – our two male cats – found they had a new housemate.
Georgie in her basket
The photo on the left was taken a month or so after she joined us – she’s fatter and more ‘together’ there – the grey bits of fur are where we had to cut off some seriously matted areas which quickly grew back.
We had no idea how long she would last. We knew she was old and probably had a few health problems, but she kept defying the odds. We first said ‘She won’t manage it to Christmas’, then it was ‘Won’t manage the winter’. She did – she also took to wandering around to our next door neighbour and sitting on her lawn, getting fed in two households. Despite her age she tackled the cat flap with gusto, leapt up and down on to tables, helped to type Tweets on computers, took the phone table as her bed and became one of the family.
About 10 days ago she became less active and her habits became quieter – this wasn’t too much of a surprise as she did this occasionally. Over the last few days it became clear she was not herself and so a trip to the vets was arranged yesterday, where it became clear after tests that she was a very poorly lady indeed and that she probably only had a few days left with us.
We decided to let the vet put her to sleep, and went back to the vets to be with her – it was typical that as soon as she saw us she jumped up and purred. She left us very quickly, very peacefully.
It’s astonishing how big a tiny cat with us for only 8 months could leave such a big space in our hearts and lives.
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It always takes me a while to catch up with things, but it was recently the 30th Birthday of the Sinclair Spectrum. Like many of a certain age, the Speccy was one of the computers on which I cut my teeth. I was lucky enough to have been exposed to most of the popular home computers of the late 1970s and early 1980s by virtue of my first job and the fact I wrote articles for the computing magazines of the time.
I’d already bought a ZX81, and became the Z80 Machine code Guru for my employer – I was also writing books for Melbourne House on the Z80 based MSX machines – and the two worlds overlapped when I was asked by my employer to develop a way of extending the BASIC language of the Sinclair Spectrum to allow new commands to be added to the language. I managed to deliver the goods – oddly enough around the same time a magazine article was published that detailed a similar approach to my own – and I added writing books on Spectrum Machine Code programming to my repetoire.
I also wrote a fair number of articles about programming and interfacing the Sinclair machines, designed interface cards for it for my employer, dabbled in a little light robotics, but rarely actually USED the machine for anything! When I needed to write these articles and books I used my BBC Model B which had a proper keyboard. How I hated that rubber monstrosity on the Spectrum – the later Spectrum 2 had a better keyboard and made life easier, but one still had to deal with the multi-function behaviour of the keys. I think that that was the single biggest hitch with the Spectrum; had the ‘dead flesh’ keyboard just had ‘normal’ keyboard functionality, where you typed stuff in letter by letter, I think it would have been easier.
Still, I can’t grumble. This was in the days when if you were good enough to write and have your material accepted by a publisher, you got paid for it. This may seem something of a novelty these days when blogging and other forms of self-publishing seem to have ripped the heart out of traditional (OK, paid!) technical writing, but those magazine cheques of £40 or £50 went a long way!
I think that the Spectrum was one of two machines I bought (the other being an Amstrad 6128) that actually paid for themselves from my writing. That immediately makes the Spectrum special to me. I also learnt a HELL of a lot from it about low level programming, hardware interfacing, robotics and the Zen like patience needed to manage that keyboard and a tape recorder for saving and loading programs…..
Funnily enough, 30 years later, I spent several hours in my current day job looking at an interfacing problem involving a PIC Microcontroller. And the solution I eventually suggested was one that I dragged up from my Spectrum interfacing days….
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I’ve always had the attitude that any company that has to remind it’s staff to ‘Do No Evil’ is either employing the wrong sort of people or is trying hard to hide the fact that they might not be paragons of virtue.
This week my increasingly hardcore anti-Google attitude was turned up another notch by the Terms and Conditions on their new ‘Google Drive’ product. Google Drive is Google’s answer to products like ‘Dropbox’ – look at it as an online hard disc that you can use for storing copies of your files, swapping files with other people, etc. In teh Terms and Conditions, Google rightly state that they respect your intellectual property rights, and that the rights to the data you upload stay with you. So far, so good. They also then say:
“When you upload or otherwise submit content to our Services, you give Google (and those we work with) a worldwide licence to use, host, store, reproduce, modify, create derivative works (such as those resulting from translations, adaptations or other changes that we make so that your content works better with our Services), communicate, publish, publicly perform, publicly display and distribute such content.”
Whoa, dude! From this it would appear that by uploading your stuff to the Googleplex, you’re providing them with source material for anything they wish to derive from the stuff you commit. Sort of like Facebook, but without poking… And Microsoft have a simnilar clause in their equivalent online Cloud storage service T&Cs.
The difference is that Microsoft and Facebook get ‘pulled’ fairly regularly for abuse of privacy, attitudes towards standard, Intellectual Property and Patent enforcement, what have you. But Google still seem to be the Teflon boys of the modern IT landscape. I have to say that I now regard Google as a bigger threat to my privacy and to the general health of the information landscape than Facebook or Microsoft. Why?
Google own increasingly large amounts of the search landscape; like ‘Hoover’ they are a brand that has become a verb. People tend to Google rather than Search the Internet; businesses have been known to fail when Google modify their search algorithms. The data that we pass through Google – even when we’re not logged in – can still be logged against our IP address and passed on to the US Government (as well as being used within Google itself for various purposes). Despite this I still use Google – because there is not yet an equivalent that is as good. Microsoft Bing is getting there, but has a way to go, and I guess that that is how many people who are uncomfortable about Google but still use them feel.
There’s an old saying saying along the lines of ‘If you’re not paying for the service, you’re being sold.’ Maybe it’s time for the unthinkable – a paid for search provider. I’d be very tempted to pay for a good search service that was curated enough to remove the crap, whilst not threatening my privacy or intellectual property. A new frontier for entrepreneurs?
I found out tonight that there are over 70 versions of the Bob Dylan song ‘All along the watchtower’ on the online music service Spotify. I sort of worry that there might soon be a ‘Watchtower radio’ channel online somewhere that plays nothing but versions of the song – and, of course, there are songs on there with just as many if not more cover versions.
I should add that I’m quite a Spotify fan – heck, I even have a paid subscription to it – and I can’t remember the last time I popped a CD on when working – I just go to Spotify and play my choons from there. Every now and again I search out a particular favourite of mine and see what other versions are around – there are usually a few that I’ve not heard before – and after you prune away the Karaoke versions it can be quite an interesting musical experience to listen to a few in succession.
I find it a good way of finding new artists that I might like. By listening to cover versions of music that I like in the original, it removes a variable from the complicated equation of ‘do I like this band / artist?’ If I already like the song, it comes down to what they’ve done with it. A good example of this was when I came across a cover version of Neil Young’s ‘Like a Hurricane’ done by the Dave Matthew’s Band – I liked what I heard and became a fan of the latter based on what they did to the Neil Young classic.
What was I looking for when I was searching through covers of ‘All Along the Watchtower’? Well, fans of the TV series Battlestar Galactica will recollect that a very ‘arabesque’ influenced version of this tune had a very significant role in the series, and apart from that it was a bloody good version. We’re getting there – a recent addition to the lists was a cover by Dominik Hauser and Tim Russ and that was pretty damn close!
And should you ever want a version of Black Sabbath’s ‘Paranoid’ as played by a string quartet, I point you here…
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An early memory of mine is listening to my Uncle Idris play Johnny Cash songs on his guitar. Particularly he did a great rendition of ‘Ring of Fire’, though without the Mexican trumpets, Mexican trumpeters being singularly rare in the town of Warsop in the 1960s. Back then, Cash was a big name, although I’m not sure that he was ‘cool’ – more mainstream. And he became more known for his novelty songs like ‘A Boy named Sue’ and ‘One Piece at a Time’, and his TV show, than his more straight forward country / rockabilly songs.
Figuratively speaking, Johnny Cash wandered in and out of my life over the years; he showed up as a murderous singer in Columbo; I’d see his name on the credits of various TV shows and films and also became aware of his conversion to Christianity and his near constant battles with drug addiction. I admired the guy; in attitude he reminded me of people like Neil Young – ‘not bothered what you think of me, I’m just going to do my music’ – in appearance he vaguely reminded me of some North American Indian version of my own father and uncles.
I loved his appearance in ‘The Simpsons’ episode ‘The mysterious voyage of Homer’, where, under the influence of “The Merciless Peppers of Quetzlzacatenango! Grown deep in the jungle primeval by the inmates of a Guatemalan insane asylum” Homer undergoes a spiritually rich hallucination in which Cash play’s his spirit guide, a coyote. By now I’d grabbed a few CDs of his music, and also read his biography, particularly intrigued by his conversion to Christianity and his claim that he was still one of the biggest sinners he knew.
With the ‘American’ recordings, he became something of a cool icon – the black dress, the sparse musical performances – especially with the cover he did of the NiN song ‘Hurt’. Even now, it’s a song that reduces me to tears.
This was around the time that I started taking a more serious interest in my own spirituality, a process that eventually led to my being confirmed in to the Church of England a few years later. I started looking at Cash’s back catalogue – his spiritual songs, gospel music – and also finding out more about his life. He was definitely no angel – but he was a man who was honest with himself and others – what you saw was indeed what you got, warts and all. ‘Hurt’ is indeed his epitaph, but I often think that the lyrics to the U2 song ‘The Wanderer’ – which Cash sang for the band – sum his journey up:
I went out there
In search of experience
To taste and to touch
And to feel as much
As a man can
Before he repents
And as he put it in his own song ‘Man in Black’:
Well, you wonder why I always dress in black,
Why you never see bright colors on my back,
And why does my appearance seem to have a somber tone.
Well, there’s a reason for the things that I have on.
I wear the black for the poor and the beaten down,
Livin’ in the hopeless, hungry side of town,
I wear it for the prisoner who has long paid for his crime,
But is there because he’s a victim of the times.
I wear the black for those who never read,
Or listened to the words that Jesus said,
About the road to happiness through love and charity,
Why, you’d think He’s talking straight to you and me.
Well, we’re doin’ mighty fine, I do suppose,
In our streak of lightnin’ cars and fancy clothes,
But just so we’re reminded of the ones who are held back,
Up front there ought ‘a be a Man In Black.
I wear it for the sick and lonely old,
For the reckless ones whose bad trip left them cold,
I wear the black in mournin’ for the lives that could have been,
Each week we lose a hundred fine young men.
And, I wear it for the thousands who have died,
Believen’ that the Lord was on their side,
I wear it for another hundred thousand who have died,
Believen’ that we all were on their side.
Well, there’s things that never will be right I know,
And things need changin’ everywhere you go,
But ’til we start to make a move to make a few things right,
You’ll never see me wear a suit of white.
Ah, I’d love to wear a rainbow every day,
And tell the world that everything’s OK,
But I’ll try to carry off a little darkness on my back,
‘Till things are brighter, I’m the Man In Black.
Shortly after my own confirmation, I was asked to think about my own journey to Christ, and who influenced me on the way. Three names popped up – my Aunty Harriet, CS Lewis, and Johnny Cash.