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Facebook is expected to file for its IPO today.When shares start trading in May, the company is expected to be valued somewhere between $75 billion and $100 billion.
Facebook is so valuable because 850 million people use the site each month, and half come back every day.
Can Facebook sustain those user numbers?
Grow them to a billion?
Will Facebook’s business ever profit enough to justify that huge valuation?
Probably. It’s such an integral part of so many people’s lives.
But if it doesn’t happen and Facebook’s best days are in the past, it will be because of these five problems.
PROBLEM NUMBER ONE: Facebook actually makes us miserable.
Daniel Gulati argues in the Harvard Business Review that Facebook is making us unhappy because it makes everyone else look really happy.
Facebook, he says, is “bringing down a lot of people’s daily sense of well-being.”
He says Facebook is ruining our relationships with our friends because instead of meeting up with our friends, too often we just Facebook chat them.
Gulati’s research also found Facebook photos and status updates stir up jealousy, anxiety, and in one case depression. Reading posts about a friends exciting new job or internship also caused distress for users.
PROBLEM NUMBER TWO: Facebook users hate change.
A survey conducted by the security firm Sophos found that of the 4,000 Facebook users polled, only 8 per cent liked the change.
Furthermore, 51 per cent of of survey participants said that they were worried about the new format.
Slashgear found that 45 per cent of respondents to a poll about Facebook timeline said that the new features made them want to delete their account.
Only 3 per cent of respondents replied that, “I’m a Facebook Addict, the more to share, the better.”
Facebook has shown no fear of ignoring user complaints in the past, but as its userbase gets bigger, it might get harder to make important, sweeping innovations.
PROBLEM NUMBER THREE: More schools are starting to censor their students’ Facebook use.
High profile universities are taking measures to ensure athletes Facebook posts don’t damage the schools image.
Schools like The University of Maryland and UNC have issued ground rules to their athletes about what they may and may not post on social media networks and they are actively monitoring their activity on these sites.
Meanwhile, employers have been banning Facebook for years. For example, nearly half of UK companies ban Facebook and other social media sites at work.
PROBLEM NUMBER FOUR: The next Facebook could come along any day.
Before there was Facebook, there was MySpace.
An army of Silicon Valley investors and entrepreneurs are at work on a better Facebook. Some examples include Pinterest, Tumblr, Instagram, Twitter, Path, and even Google+.
PROBLEM NUMBER FIVE: Facebook may never develop a big business
Everyone says Facebook is the next Google.
So far, it isn’t. Just look at this chart.
The problem is that Google has the perfect advertising product. User literally tell Google the kinds of products they’d like to see advertised.
Facebook advertisers can target ads based on user data like “interests,” but it’s not nearly as effective.