The Hooded One did it again. Here we were, slowly crawling back to the $42 we squandered on May 18. Facebook’s “big event” this past Tuesday was certain to give us another $3 kicker. Hell, we would get out if Facebook stock got back to just $38 a share, take the $4 loss, and call it even.
But no. A typically grueling, confusing, wonky and hubristic ZuckerPresentation left Facebook shares down for the day. And even lower the next day.
Yet, reading the media reports from the “Social Graph Search” big reveal (of which, of course, there are tens of thousands), one would think Facebook was onto something important.
When, honestly, all those reporters and bloggers should be saying just one thing: “We have no idea what the Facebook team was talking about.”
Worse, or “worst” perhaps, the words that investors wanted – needed – to hear were not spoken: sales, commerce, revenues, advertising.
Instead we got ludicrous examples of how one might use what is now a stream of effluent, mostly useless posts coming at Facebook users nonstop from their hundreds of “friends.” Here are some illustrations of what you can do in the near future with Facebook Social Graph Search (FSGS, shall we?) that some reporters heard, or made up (with apologies for grammar):
- Who are my friends who live in San Francisco?
> How could you possibly be “friends” with people…and not know where they live?
- Zuckerberg says that when he wanted to look for friends who would be interested in watching “Game of Thrones” with him…he did a search of friends who lived in Palo Alto and enjoyed the show. The result were 17 of his friends, including his sister…
> Do you have room for 17 people in your living room? And what a sad day it must be for a sister to know she can only be known to her brother digitally.
- Are you dying to know which friends appeared in photos with you before 2006?
> In a word, “no.”
- You can look up "friends of friends who are single."
> What if they are not on the market? Isn’t this what others might call “stalking” ?
- …to look up new product managers for Facebook, he might look up “people who have been product managers and who have been founders”
> That only works if those people are already in your network. LinkedIn would be much more useful for this.
And here was the supposed Yelp killer:
- What matters more – restaurants a site like Yelp says are good, or restaurants your friends think are good?
Within minutes, Yelp’s stock plunged 6%. And it fell another 4% the next morning. It was probably the only example anyone at Facebook’s event could understand, but it is a complete misread on reality. If our money wasn’t wasting away on Facebook stock, we’d pick up 100 Yelp shares ASAP.
Let’s say you are traveling to Dubuque and want to eat at a Mexican restaurant. Using FSGS, you might – might – find “friends” who have “liked” Mexican restaurants in Dubuque. But you wouldn’t know why, nor would you know if the results covered the entire set.
As an alternative, go to Yelp, type in “Mexican” and “Dubuque IA” and you’re pretty much done. How a stock can drop 10% on this scenario is beyond comprehension.
Yelp’s CEO and co-founder Jeremy Stoppelman, although way better looking than Mark Zuckerberg, hasn’t been “out there” enough, and certainly hasn’t exuded the confidence or gravitas, or whatever it is that ZuckerHoodie has, to put investors at ease.
If we ran the place, the Yelp blog, Twitter feed, and – why not? – Yelp's brand page on Facebook – would be churning at full tilt, explaining how much better Yelp is than the “social graph.” As of now, though, they sit, in a sort of deafening silence.
Without defending itself against Facebook, Yelp’s real issue – the inability to scale the business in the medium term – will become more apparent, sooner than investors would like to see. That’s the kind of real “scare” that can take a stock down. A lot more than 10%.