Jay Marcyes

Since I work in the Social Networking space it has always worried me that Facebook/Twitter seem to make very little money for their relative size. Jason Calacanis once said that Google had a giant money machine in the back (search ads) that just printed money day and night, and that machine allowed Google to wander around and try out new things, as well as be a huge public company.

This seems to be the case with all huge public companies. AOL has its dialup subscribers (a money printing machine still printing in the billions, though it's starting to show its age). Microsoft has Office and Windows. Amazon has physical item sales. Indeed, it's like there was a moment at each of these companies where something clicked and they were able to build their money printing machine.

Facebook, on the other hand, hasn't built one of those machines yet. Sure, they announced they were profitable-ish, but they're fighting tooth and nail for that money, it's not the easy printed money mahine money that is usually running full steam by the sixth year of most companies, and that's a problem for the long term viability of Facebook.

That's why I found the article so interesting, because it talks about the economics of social networks and why they might never have a money machine (though I don't believe that, I just believe it hasn't been found yet). Below are my favorite parts of the article.

On IPOs for social networks:

It is no coincidence that there is not one public social networking company.

On advertising as a money printing machine for a social network:

I spent five years trying to sell advertising on Tripod. Almost twenty years later and as the eight largest social network on the Web, Tripod does $350,000 per month of advertising revenue, about as much advertising revenue as Google generates in an afternoon. 

On whether social networks are media companies:

I raised $14MM of venture capital for Tripod based on millions of random people creating lots of content for free, and tens of millions of people looking at that content. But when random people create content for free and other people look at it is that a media business?

On trying to find the next money printing machine:

Media companies and the venture capital community have been chasing the next “search engine” business model for over ten years; this elusive creature that creates highly valuable advertising inventory without the costs associated with actually creating content, and has the financial and cultural profile befitting a public company. The chase first lead to email (Hotmail, 411, Mail.com); and then on to instant messaging (PowWow, ICQ, Ubique), personal homepages (Geocities, Tripod, Anglefire), blogging (Weblogs, Blogger, WordPress), video blogging (YouTube, Grouper, Blip.tv), social networking (MySpace, Facebook, Bebo), and is now focused on micro-blogging (Twitter, Tumblr, Pownce). Indeed, some media companies have paid a lot of money for businesses that provide these tools for free with the eventual promise of advertising support; and some venture capitalists (and entrepreneurs) have made a lot of money on those transactions. But in all cases profitable revenue never materialized.

On the idea that social networks might be like public works:

I could be wrong about all of this of course. But what if I’m right and social networks are like the streets, roads and highways of the virtual world: lots of users but no profitable business model?

And from Bo Peabody's first article (which is also worth a read, more discussion here), on buyer's remorse:

That's a mistake media companies, which invested heavily and with high hopes in social networking, are only just starting to understand. News Corp. is struggling to make sense of the $580 million it paid for MySpace, Time Warner has publicly regretted the $850 million it spent on Bebo, and Yahoo recently shuttered Geocities, for which it paid some $3 billion back in the late 1990s.

Both articles are worth a read, and even if you think he is full of crap, you can't help but take a moment and wonder if he might be right. And after taking that moment, get back to work trying to find that money printing machine.

The basics of this great post by Stevey Yegge is that people who are for the legalization of Marijuana haven't thought about all the questions that are associated with making it legal, and that it is much harder a problem than it looks on the surface.

As soon as I saw the high comment count I was pretty sure I knew what most of the comments were going to say, and I was spot on. The comments are littered with, "actually, legalization would be super easy" (it wouldn't) and, "you are making it way harder than it needs to be" (he wasn't). And on, and on.

But the most prevalent comment gist was "just because it's hard, doesn't mean we shouldn't try." Sure it does, if the perceived benefit isn't outweighed by the perceived costs associated with making it a reality.

I happen to agree with Stevey here. I think legalization of Marijuana would be tons more difficult, with way less pay off, then most pro-legalization people would have you believe. And personally, I feel that the vast majority of people that smoke marijuana wouldn't benefit from legalization anyway since they are under 21 years old and any legalization would most likely be for 21 and over.

Now, for some of the quotes I liked from the post. The first part of the article talked about complexity, to highlight how complex a problem like the legalization of marijuana might be, by highlighting how hard it was to make a change at Amazon.com (where he used to work):

anything you try to do at Amazon these days involves touching a thousand systems, all of which are processing gazillions of transactions a second, and you want to completely redo the database schema [...] I suppose I should think of it as a valuable experience. If nothing else, I understand Complexity in a way most people will, mercifully, never have to.

Stevey then describes what most management, most of the commenters on the internet, and every armchair programmer, armchair activist, and armchair politician have in common:

[they] have what my brother Mike refers to as "Shit's Easy Syndrome".

You know. As in, shit's easy. If it's easy to imagine, then it's easy to implement. Programming is just turning imagination into reality. You can churn through shit as fast as the conscious mind can envision it. Any programmer who can't keep up is an underperformer who needs to be "topgraded" to make room for incredible new college hires who can make it happen, no matter what "it" happens to be, even if they have to work 27 hours a day [...] Shit's Easy syndrome is, well, pretty easy to acquire. Heck, you don't even have to be a VP. Directors sometimes get it if they stay away from the code for too long.

Sadly, most of the people that suffer from this syndrome have made their way onto the internet, and they love telling people what they want. They don't care if the majority of the population doesn't want the same thing, or care at all for that matter. All that really matters is they want it, so everyone needs to accommodate them. after all, their request is easy, right?

But what I love most about these people is they can't be wrong, despite often times not having any real data to back up their position. And they don't hesitate to attack your character if you offer a differing opinion.

The great thing about the internet is that anybody can voice their opinion. The bad thing about the internet is that anybody can voice their opinion.

Good writeup on why the Washington Post allows anonymous comments. The big takeaway is:

"Man is least in himself when he talks in his own person. Give him a mask, and he will tell you the truth."

In other words, without anonymous comments, people are more reserved, trying to put their best face forward so to speak. Are there horrible, racist, and disgusting comments made? Of course. But there are also good, mature, well thought comments that for the most part counteract the filth.

As the creator of Delicious, Joshua Shachter knows a thing or two about urls and how they should be archived. So I am glad he hates url shorteners as much as I do.

I have never liked them and the only time I have ever used them is on Twitter, where you kind of have to. But I also make sure I feed my Twitter stream back into this blog which then grabs the original url and archives it so I make sure I can always get back to the original information.

The other thing I hate is a frame at the top, and I fear the new url shorteners are bringing this back into the mainstream, especially since Digg is now doing it also with its diggbar.

Joshua sums up nicely all the major arguments against the use of shorteners and I agree with every one of his points and pose this question: how many of these url shortener services do you think will still be around in two years? How about five? My guess, not very many, taking with them a large part of the usefulness of the twitter archive in the process.

Interesting (though long, I mean, it took me like an hour to read) look at how the current financial crisis could shape the future landscape of the US.

Cliff notes: New York is probably alright, Phoenix is most likely screwed.

I support this 100%.

Some thoughts on why the semantic web might never become a reality. Main point: companies don't like to play nice with each other.

Update - I stumbled across Cory Doctorow's rather old (from 2001 it looks like) meta data article which is also a good read and still pretty accurate even today. Though some people are getting better with the use of services like Del.icio.us and Flickr. My favorite line:

Short of breaking fingers or sending out squads of vengeful info-ninjas to add metadata to the average user's files, we're never gonna get there.