Tag Archive for 'Facebook IPO'

The Facebook lesson about the value of users

What would you say about a company that has 900 million people – one out of every 13 Earthlings – using its consumable product virtually every day? That’s an unbelievable marketing and product adoption success story, isn’t it?

As you probably have figured out, this company is Facebook, the world’s largest social media platform. And its consumable product is the time, attention and information these 900 million users give Facebook every time they log in.

The future of social media platforms, used to help us connect with and build communities among friends, family and customers, is no longer being debated. Social media may seem like a craze, but it’s not a fad and isn’t going away. But the future of social media platforms as publically traded companies is another matter, primarily because of their business model.

The business challenge for Facebook is that it doesn’t have 900 million customers, it has 900 million users. The distinction is that a user pays you a visit and a customer pays you money. Facebook is really good at getting users to engage and re-engage. But now that it’s a public company, there is new scrutiny from investors and fish-eyed analysts on how effective it will be long-term at getting advertising customers to pay for access to these users.

A few months ago, when Facebook first announced plans to go public, we asked our audience if they thought Facebook’s stock “… will prove to be a good investment?” Only nine percent said, “Yes,” with the rest not optimistic about the stock, especially for the long-term.

Recently, the weekend after Facebook’s initial public offering (IPO) launched – perhaps we should say, belly-flopped – amid more hype than we’ve seen since the “dot bomb” days of 1999, we wanted to see if our audience would “Like” the stock any better as a long-term investment, so we asked, “Do you want Facebook stock in your retirement portfolio?” Only 8% said yes.

It’s very encouraging how these two polls demonstrate that small business owners consistently understand the business model difference between the value of a user verses a customer. But the lesson isn’t that users are bad. Indeed, your small business’s digital users – who want to get to know you online before they buy – are the new breed of prospects: future customers who, unlike Facebook’s users, may one day pay you more than a visit.

Thank you, Facebook, for providing small businesses with a valuable lesson about users and customers.


I talked more about the lessons small businesses can learn from Facebook on The Small Business Advocate Show. Click click on the links below to listen or download.

Lessons Facebook can teach small business about users

Why small business users are different from Facebook’s

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