I Am Short on Facebook

At Osage Venture Partners, we don’t invest in consumer technology.   For those who read our occasional blog posts or who have browsed our website, it should be clear that we are business technology investors.  Personally I do not understand leading edge consumer behavior and would have a hard time guessing what the next trend will be.   I certainly respect the investors who do this well and think they deserve all the credit they get.

Consumer trends do impact business technology, as a worker (whether an employee, staff member, etc.) can be thought of as a consumer with a purpose.   When the purpose is understood, a product that serves the purpose has an ROI, and thus can be rationally assessed.   Business products have lifecycles that are much longer than most consumer products and are much less subject to flavors of the day.  Ubiquity for consumers is uncool.  Ubiquity in business means efficiency.   Scale for consumers is not their problem.  Scale for businesses is a slide down the cost curve and up the profit curve.  Facebook’s success will be its downfall

Here are some of the reasons I am short on Facebook –

1. Cool young people do not hang out at the same places as parents and grandparents.  Like the search for the next great undiscovered beach, when the families show up, when the resorts go up, the backpackers go elsewhere.  The cool people are spending time elsewhere and less and less time on Facebook – they just have not told us where yet.
2. Social will fragment.   If I only care where my friends are, why do I care if a billion other people are there?  Only the advertisers care and we are not social for advertisers’ benefit.
3. Targeted advertising based on personal information is creepy and the backlash is coming.   Google read our emails when they drove around town.   What do you think Mark is doing with your pictures?
4. Companies that are secure about their position do not have their CEOs buying small non-revenue start-ups for $1.0B without consulting their board of directors.  Companies who want to sell their stock to the public should not ignore corporate governance after they have filed their S-1.
5. Remember when everyone wore Levis?   Remember when everyone loved the Motorola Razor?  Remember when we used to be addicted to our Crackberries?   Remember Facebook?

Sure – it may empower a few more third world revolutions, but the biggest first world revolution for Facebook will be where its users go next.

Stay tuned for my views on LinkedIn and why I am long on the benefits of a business network.