Skip to content →

Tag: valuation

Facebook: Love-based Valuation & Poisoning the Well

It’s Love (heart)

The temptation of total surveillance is always there, for government and for business. Marketers want the ability to know everything about everyone’s behavior, tastes and buying patterns to target offers and advertising at us. The more they know, the better they can target. Although most businesses need to do more than preach to the choir, they need new converts.

Facebook’s Beacon takes users for granted. Users love Facebook and they love what they can build within the Facebook platform. Love is a strong emotion, and when it is betrayed it can behave in unpredictable ways. Social networks are fragile and Facebook took a big risk with Beacon. More and more, Beacon is being viewed as a betrayal of Facebook’s users. When you think about the valuation of a company like Facebook, the real value is in the love and respect of the users. The technology is a wasting asset that has nominal value. Facebook risked everything with Beacon. The steps they take to recover at this point will determine the future value of the company.

The idea of “love” as a factor in value and valuations came to me from two directions. I heard former quarterback Steve Young talk about what made Bill Walsh’s 49er Superbowl teams so special. Young cited a number of factors, but added that the feeling of love and respect among team members as a key ingredient. It was a conscious coaching strategy that Walsh used to build a winning team. The other source is a talk given by Clay Shirky on software applications, Perl and community-based developer support. His idea is that a strong community can be a more dependable resource for application support than a commercial firm in the business of selling support services. This is certainly true of the Perl, Python, PHP and Ruby communities. It’s also true of applications like WordPress, Joomla and Drupal, and libraries like Prototype and Jquery.

You’ll often hear people joke about the special ingredient in some recipe being ‘love.’ We laugh, because we think of love as being insubstantial, in some ways without physical presence or value. But if we take it for granted, the joke’s on us.

Comments closed