Hey Facebook, you’re not my friend!
by Andreas Ruggie
By now we’ve all heard about the latest ailment afflicting modern civilization, the insidious condition known as…Facebook Fatigue!!
It seems wherever you look, the bickering is boiling. Here are a couple of recent zingers I found scanning AdAge:
“Facebook (…) seems tone-deaf to the range of negative public sentiment that any high-profile company should be able to read expertly (especially one preparing for a $100 billion IPO).” – Judy Shapiro
Now don’t get me wrong—I think the staggering success of Facebook, with its three-quarters of a billion users amassed in just eight years, is truly one of the great business stories of our time. But considering how widespread and at times fuming the general malaise has become, it strikes me that Facebook might just be the least-loved popular brand in recent history. And yet as the Wall Street Journal has reported, “Bankers, lawyers, P.R. mavens, caterers and everyone else are slobbering for a slice of the Facebook IPO magic,” adding, “Without a doubt, Facebook will be the most hotly anticipated stock debut (…) since Google, and maybe ever.”
Wow. That’s quite a discrepancy between sentiment and valuation, isn’t it?! Which caused me to ask the obvious question…why? How did the brand that everybody loves to hate become the soon-to-be crown jewel of Wall Street?
To seek the answer, I referred back to one of the holy bibles of our business, “Built to Last,” and re-read its key principle: “Visionary companies distinguish their timeless core values and enduring purpose (which should never change) from their operating practices and business strategies (which should be changing constantly in response to a changing world).”
So how does Facebook live up to this paradigm? “Well, they certainly seem to have the changing business strategy part down,” I sarcastically thought to myself. Indeed, with a list of competitors that now includes Google, Netflix, Groupon and Zynga, it’s getting hard to determine what business Facebook is actually in!
As far as the enduring purpose part is concerned, I must admit I was a little stumped as well. So I decided to poll a few colleagues in the office with a good old SAT-style question: “GE is to ‘innovation’ (or BMW is to ‘performance’) as Facebook is to… ?”
And guess what? Surrounded by some of the most brilliant branding experts around, this was the best response I got: “Uhhhhh, I don’t know… connections?”
Hmmmm, this was all very dissatisfying! “OK,” I told myself, “forget about strategy or purpose, what has Facebook actually done for us lately?!” And then I was reminded of something else Simon Dumenco wrote:
“I think it’s safe to say that we’re all pretty sick of the horrible things Facebook has done to the word ‘friend.’ The suffocating hypergrowth of Mark Zuckerberg’s Harvard-dorm project meant that friendship got converted into a form of conceptual Silly Putty.”
Harsh, but kind of true, right? I mean come on, who of us can credibly claim that more than 100 of our 500-odd “friends” on Facebook are actually real friends?
So let’s get this straight:
+ Facebook’s business strategy evolves so often that even yours truly, an MBA from MIT, can barely figure it out
+ Facebook has a vague, tenuous purpose that even branding experts struggle to articulate
+ According to AdAge’s esteemed media columnist, Facebook has officially ruined friendship
Awesome! And yet the company is projected to have by far the largest IPO in history sometime next year…
So let me go ahead and ask Wall Street a modest question:
Does your valuation include a discount for brand equity?
Andreas Ruggie is a strategy analyst for the Siegel+Gale New York office.