With 901 million monthly active users and 125 billion friend connections at the end of March 2012, Facebook is the fastest growing company in history. That sounds interesting. But, alas, Facebook may lose all this anytime.
No, I am not joking. Mark Zuckerberg is a worried man. He is constantly living under the fear of losing everything he got. At the time of IPO filing, Facebook submitted a list of risk factors that could affect the company. And the worst of them is the fact that more and more people are using smartphones to access web and Facebook. As of April 20, 2012, there were more than 500 million monthly active mobile users. The problem here is: Facebook’s mobile platform doesn’t show ads. This pulls down their average revenue per user (ARPU), since Facebook generates majority of its revenue through advertisements. And Zuckerberg and his team have no idea how to monetize mobile traffic.
There are many other small yet significant worries that dwell inside 1601 Willow Road, Menlo Park, California (current Facebook headquarters) and could, literally, kill Facebook. In its S-1 filing to IPO, the company quoted the following lines under the heading ‘Risk Factors’: If we fail to retain existing users or add new users, or if our users decrease their level of engagement with Facebook, our revenue, financial results, and business may be significantly harmed.
Following is a list of things that could kill Facebook:
- • As aforementioned, Facebook’s mobile platform doesn’t show ads. And with number of mobile users growing, Facebook’s ARPU will go down and the company could lose advertisers.
- • The company fears that they could simply lose users, or fail to add new ones.
- • A new technology could come up that may let users block ads.
- • Zynga, which accounts for 12% of the revenue, could part ways with Facebook.
- • More governments could restrict access to Facebook.
- • Not to forget, other social networks by big-fishes like Microsoft and Google could unseat Facebook. Another social network called ‘Zurker’ is going viral these days.
- • Viruses, hacking, pishing and malware.
- • U.S. tax code reform could hurt the social giant.
- • Facebook’s software is too complex and who knows it may have a lot of bugs.
- • Moreover, Facebook is planning to acquire lots of other companies which may disrupt things at Facebook.
- • Ever since it released, many Facebook users started disliking the new ‘Timeline’. More and more people are showing discomfort with the monster social network. It seems like nothing is going the Facebook-way.
- • And nothing could go worse if the company loses its leaders like Mark Zuckerberg or COO Sheryl Sandberg.
As a matter of fact, in the first Quarter of 2012, Facebook is already down by 7.5% of its earning in the previous quarter.
Everything aside, the 3500+ employee contingent headed by the incredible Mark Zuckerberg shows no chances of backing down despite all the odds.
Who knows what will happen at the end of the day. Maybe Facebook could end up as another passing fad, or it could continue to dominate the social media. I would bet on the latter!
Achal Mishra
