People saw value in Facebook, otherwise they wouldn't have purchases shares last week. Yes, well overvalued but investors are willing to pay a premium for the associated and perceived value.
1) The main value is the sunk cost people have in Facebook. The vast majority of your family and friends are on the platform. You unwittingly have built up a scrap book of your past few years - photos, messages, relationships...
2) The other value is the time people spend on Facebook plus the large user base. You just need one or two mechanisms to extract revenue from this position and you are winning.
There are plenty of risks, some may be:
1) The Government cracks down on privacy or advertising standards.
2) An alternative arrives that makes it easy to transfer your profile. You can always download your Facebook profile.
3) Suffers the MySpace factor. Facebook is left behind due to better and more exciting offerings.
For now, Zuckerberg has shown his ability to compete. Until people stop spending hours on Facebook, they are very far from failure.
1) The main value is the sunk cost people have in Facebook. The vast majority of your family and friends are on the platform. You unwittingly have built up a scrap book of your past few years - photos, messages, relationships...
2) The other value is the time people spend on Facebook plus the large user base. You just need one or two mechanisms to extract revenue from this position and you are winning.
There are plenty of risks, some may be:
1) The Government cracks down on privacy or advertising standards.
2) An alternative arrives that makes it easy to transfer your profile. You can always download your Facebook profile.
3) Suffers the MySpace factor. Facebook is left behind due to better and more exciting offerings.
For now, Zuckerberg has shown his ability to compete. Until people stop spending hours on Facebook, they are very far from failure.