Google Has A Magic Money Making Machine

Here's one thing that's clearer than ever after Facebook's IPO mess: Google has a magic money making machine, and it's possible no other internet company will ever have the same sort of (relatively) easy success.

The number one comparison point for Facebook as it headed towards an IPO was Google. Facebook, like Google, was a giant web company that had hundreds of millions of users. Facebook, like Google, was working on highly-targeted ads that could hit hundreds of millions of consumers.

But a funny thing happened on Facebook's path to becoming Google 2.0 (from a business perspective). Everyone suddenly realized Facebook's ads aren't that good. And everyone realized that Facebook's ads, while very good at targeting, aren't nearly as powerful or effective as Google's.

And then everyone realized Facebook isn't going to have its own magic money making machine. If it's going to make lots of money, it's going to be more of a grind to figure it out.

In our newsroom, someone threw out a good analogy for Facebook's ad business*: It's like you're at a party, standing around, talking to your friends, and someone made the posters on the wall advertisements. Maybe you'll look at them, but they're not really what you're there to do.

Google, on the other hand, is like you're walking through a grocery store looking for whatever you need and the advertiser gets to jump in at the last second and offer you what you're looking for.

As Chris Dixon has written, successful online advertising is all about purchasing intent. How do you capture commercial consumer interest?

Google's entire business is based on people asking commercial questions and giving advertisers an opportunity to provide the top 2-3 answers to the question.

That's an amazing business. And it's one Facebook doesn't have.

That's not say Facebook isn't going to figure out a way to make gobs and gobs of money. It has 900 million users. It has a team of super smart people looking to solve a hard problem. It can figure something out.

It's just not likely to be a magical money making machine like what Google has.

From businessinsider.com

Related Books

In The Plex: How Google Thinks, Works, and Shapes Our Lives

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The Facebook Effect: The Inside Story of the Company That Is Connecting the World

WOW! Facebook Is Now Worth More Than These 10 Huge Companies

Facebook is finally going public.

It'll be worth about $104 billion when it debuts at $38 a share, and there's guaranteed to be a pop once it starts trading.

That means that Facebook — an eight year old company — is worth more than some of the largest, most successful companies in the world that have been around for decades.

Even some of the top tech companies that have been on top of Silicon Valley for decades have fallen behind the Web 2.0 wunderkind.

Here are some of the most interesting ones:

• Hewlett-Packard, one of the largest PC makers in the world, is smaller than Facebook. It's worth $44 billion — less than half of Facebook's titanic $105 billion valuation. HP also just laid off about 25,000 employees. 

• Facebook is four times larger than Dell, another super-giant PC and server maker. Dell has a market cap of about $26 billion. It's still trying to find its way in the post-PC era.

• It's bigger than Salesforce.com, a company that is more or less partially responsible for the cloud computing revolution. Salesforce is only worth around $20 billion — and its interns end up as high-ranking officials from time to time.

• Starbucks, the coffee chain that literally appears twice on every corner. Starbucks is worth about $40 billion — less than half of Facebook. We hear plenty of horror stories about Starbucks.

• The New York Times, one of the most prestigious content publishers in the world, is a blip compared to Facebook. Sharing is apparently worth 105 times more than some of the best content available on the Internet. The New York Times is worth slightly less than $1 billion. A bunch of New York Times staffers are actually planning to quit.

• Target, a huge big-box retailer similar to a higher-end version of Walmart, is worth less than half of Facebook. Target has a market cap of about $37 billion — well short of Facebook's expected valuation. Target actually raised its guidance this week, raising its value.

• Facebook barely edges out Amazon, the largest online retailer in the world. Amazon is worth about $100 billion, while Facebook is worth just a smidge more. Amazon's Kindle has been a bit of a bust so far.

• Disney is worth about four-fifths of what Facebook is worth. The owner of ESPN and a ton of other properties is worth about $80 billion. Disney could soon be replaced by Rovio as one of the biggest media properties in the world.

• Facebook is worth twice as much as eBay. eBay has a market cap of about $50 billion.

• Facebook is worth about 10 Nokias put together. Nokia, one of the largest phone manufacturers in the world (not smartphone), is worth about $10 billion. The Nokia Lumia 900 is actually pretty nice, though.

Not much of a surprise, though. Facebook is making a world-changing piece of technology, and it also happens to pay its engineers better than most other companies in Silicon Valley — so it attracts the best talent.

But Facebook still isn't bigger than the typical tech giants: Google, Microsoft and Apple. Microsoft is worth about $250 billion, while Google is worth $204 billion and Apple is worth about $500 billion.

From businessinsider.com