I see Facebook as the AIG of Web 2.0 – too big to fail – yet Facebook is running out of money, just like AIG did and Marketing Piligrim asks is Facebook Headed for Financial Ruin? According to TechCrunch:
“… Facebook’s growth, thanks to all these user-created translated versions of the site, has probably exceeded even their own internal projections. And running this engine isn’t cheap.
The company is likely spending well over a $1 million per month on electricity alone, say experts we’ve spoken with. Bandwidth is likely another $500,000 or more per month on top of that. The company has earmarked $100 million to buy 50,000 servers this year and next. And sources say they’ve been buying one NetApp 3070 storage system per week just to keep up with all this user generated content. At up to $2 million each, that adds up quickly – we’ve heard estimates that they may have spent as much as $30 million this year alone with the company. And the icing on the cake – earmark another $15 million per year in office and datacenter rent payments.
And don’t forget those human assets. With 750 employees and growing, Facebook is spending at least another $10 million per month on payroll.
It costs a couple of hundred million dollars a year just to keep the lights on at Facebook. But the real problem is keeping up with growth, particularly storage needs. Add another $100 million or more per year for capital expenditures, and you’ve got a company that’s doing exactly the opposite of printing money.”
But that’s my point – Facebook is too much a part of what is happening today to be left to fail – so I’m not worried about Facebook falling on it’s face – I’m more worried about the rest of the world falling into a financial depression, and what that is going to look like and be like, to live though.
I do think Facebook will need to become more profitable, though – and that means developing stuff people will buy more of – and at that, in an environment when people are spending less and less.