Facebook Hemorrhaging Cash, Runs To Dubai For Money

http://www.alleyinsider.com/2008/10/facebook-hemorraging-cash-runs-to-dubai-for-money

by jmorin007 • 18 years ago

22 45 18 years ago

ErrantX• 18 years ago

If they can cut jobs rather than raise (too much) more money then they probably should.

Spewing money that fast is BAD all round (and no amount of shoring investment will help long term). Either they need 2 or 3 years capital or they need it fixed now...

Cut hard and deep now, refocus, reassess and build on current revenue streams.

But they wont....

Dilpil• 18 years ago

Can facebook possibly make as much money as has been invested in them?

dmix• 18 years ago

Sorry for stating the obvious, but they generally have to show that they can make the money back (about 10x) to investors before taking the money... its much harder to comment on whether they can or not when your not involved with the company.

jonknee• 18 years ago

Sorry for stating the obvious, but VC is a big risk that only rarely pays off. The VC bets on Facebook weren't because of a business model they have, it was on that they will be able to find one that works on a huge scale. Sort of like Google and AdWords. It's all unproven at the moment and the valuations were simply based on the number of users.

run4yourlives4• 18 years ago

That type of thinking led to the first dot-bomb, the housing boom/bust, and hell, even the depression.

Lot's of people do very stupid things.

river_styx2• 18 years ago

I realize that Facebook gets enormous amounts of traffic, and so requires the resources for scaling/high availability and all that. But how in the world have they gone through most of $500 million? What the hell are they doing over there?

maryrosecook• 18 years ago

They do have ~700 employees (http://www.crunchbase.com/company/facebook)...

river_styx2• 18 years ago

That's sort of what I'm getting at. Why do they need so many resources? I mean, looking at the software and its requirements, I don't see the necessity.

wensing3• 18 years ago

I'd rather be http://www.crunchbase.com/company/craigslist

run4yourlives4• 18 years ago

Doing what, exactly?

vaksel• 18 years ago

why is it taking these guys so long to come up with a business plan? Why is Zuckerberg promising one in 3 years, and not coming up with one now. Hell they have 700 people, not one of them can figure out how to monetize 1 of the most visited sites in the world?

ntoshev3• 18 years ago

Maybe it's a really hard problem that we don't fully understand.

EDIT: deleted unnecessary nagging

wensing3• 18 years ago

Or maybe it's a really hard problem that we don't fully understand.

The problem seems simple in one sense: uncontrolled growth, no?

byrneseyeview2• 18 years ago

I think what they're doing is daring, but it makes sense. Creating a business plan narrows the companies options; as long as they don't have one, they're flexible enough to bring in new users (and keep old users coming back), which could open up more possibilities.

If Zuck had monetized when Facebook was at Harvard, Facebook would have been cash-flow positive. And he would have graduated with a few thousand dollars extra in the bank, rather than dropping out and ending up with a billion-something net worth.

timr2• 18 years ago

Paper net worth.

callmeed• 18 years ago

Apparently Zuckerberg didn't read the Sequoia meeting notes ...

jmtulloss• 18 years ago

Or he did, which is why he's trying to raise money now.

ksvs• 18 years ago

Rather a spun title.

run4yourlives4• 18 years ago

Hear that? It's the ghost of .com past sneaking up on you... timing might be right too. :-)

bigthboy• 18 years ago

I've never really understood Facebook from the business side at all. I generally like the service they offer (generally, though it is really lacking interesting and helpful aspects) but I've never understood their thinking on business moves. They've got a very popular software platform, one of the most visited sites in the world and rising, and some how 700 people can't figure out how to make a buck.

I agree with most of the other people here... Zuckerberg promises a business plan in 3 years? What the hell? I can see having your product and company out there and be selling things or providing a service and not necessary have the business plan down and taking some time to find one that really does work well, but when you have 700 people, corporate offices, and a widely popular product/service, a business plan seems to me to be something you put at the front of the line. Not: "hmm, we'll get to it later, lets just enjoy the fame!"

Most of what goes on at Facebook could be ran by 70 really good people. That's not including investors/shareholders at all. That's 70 people that are just in charge, server/network managers, system engineers, accounting (do they need one?), and marketing. It appears Facebook got the idea that it needed to have its own in-house Microsoft Research or something.

webwright• 18 years ago

As impressive as Facebook is, I truly think it is ridiculous that they have ~800 employees. How many does Craigslist have? Wikipedia? Granted, FB needs a few more to manage ad sales/delivery, but... 800?

henning• 18 years ago

That's one of the advantages of simplicity: far lower overhead.

craigslist is very simple, so they have something like 23 employees.

wensing3• 18 years ago

25 according to CrunchBase.

liuliu• 18 years ago

Wikipedia seems like only have 5 programmers. Am I correct?

alexandros• 18 years ago

Facebook was hell-bent to become the new google and built an organization to match. In fact, the hype was promoting facebook as the successor in the ibm->microsoft->google line. Thing is, google did not begin to be 'the new' anything. And with the downturn setting in, Facebook may have to get its focus back or we may be talking about it as 'remember that website that had tons of users and no revenue' in a few years.

aston2• 18 years ago

Lots of Facebook's man power is in customer support (which also involves community moderation). When you have more than a hundred million users worldwide, there's a lot of work to go around in that area. And I guess they're not outsourcing much of it.

fallentimes• 18 years ago

I wonder who has more customer support problems/issues to deal with: Craigslist vs Wikipedia vs Facebook?

kirubakaran• 18 years ago

and 10,000+ servers!

known• 18 years ago

Someone please tell me what is Facebook's USP?

aswanson• 18 years ago

They need to hire Paul Bucheit. Hell, he came up with adwords for google, he can do it again.

Facebook Hemorrhaging Cash, Runs To Dubai For Money

Related Stories