“While pundits will explicate the reasons for the situation that Facebook currently faces, as issues with the business model, lack of transparency, or delayed response from the CEO in the face of this current crisis involving Cambridge Analytica, the writing has been on the wall for Facebook that it is passé.” Dr. Binod Sundararajan
BINOD SUNDARARAJAN
Associate Professor of Management; Associate Director, Rowe School of Business; Academic/Research Director, CELNET
Dr. Binod Sundararajan: Facebook is Dead, Long live Facebook! – A commentary about the half-life and shelf-life of the social media behemoth.
The half-life term is generally used to describe the decay of discrete entities, often, at the atomic or sub-atomic levels. On the other hand, shelf life refers to how long a product, service or entity can be stored/used before becoming unfit for consumption. If we were to have the two face-off each other, then according to a post on pharmainfo.net, “Half-life is the amount of time needed for a substance/drug to fall to half of its initial value. Shelf life means the duration of time for which the drug/substance would remain stable and not be deteriorated.”
Let’s take stock then (pun intended) of Facebook’s valuation as of March 2018. According to Delventhal (Investopedia, March 21, 2018), “shares of the Menlo Park, Calif.-based company are now trading at their cheapest level since the firm hit the public markets in 2012 at around 18 times its 12-month forward price-to-earnings ratio.” The article further quotes experts who say that it is probably good to buy Facebook stock now, i.e. buy low, but other experts indicate that if new regulatory measures are implemented, then it would affect the long-term growth strategy for Facebook.
Facebook is no longer seen as anything other than a place for parents to connect and a place for some membership groups to exist. It is of little interest to the millennials and gen Z demographic.
While pundits will explicate the reasons for the situation that Facebook currently faces, as issues with the business model, lack of transparency, or delayed response from the CEO in the face of this current crisis involving Cambridge Analytica, the writing has been on the wall for Facebook that it is passé. Facebook has tried to stay current by acquiring other companies or merging with still others. But with the passing of Web 2.0, the tweenage struggles of the Internet of Things (IoT), and a general cry of despair from cross-cultural and cross-political milieu about the lack of trust in things on the web, Facebook’s response (or lack of in the first five days since the Cambridge Analytica story broke) has to be seen as symptomatic of an organization that is out-of-touch with its demographic. Facebook is no longer seen as anything other than a place for parents to connect and a place for some membership groups to exist. It is of little interest to the millennials and gen Z demographic.
Modern users of social or sociocultural media understand that they are giving up a certain aspect of their private lives to make the online connections that they seek.
In order to remain relevant Facebook, like all big organizations, has acquired companies like Instagram, Whatsapp, and a host of other smaller entities. However, its acquisition of Whatsapp did not deter the co-founder of Whatsapp, Brian Acton, to urge the “deletion of Facebook”, or maybe it was the way Facebook acquired Whatsapp, that caused Brian Acton to join the #deletefacebook movement, This sheds light on typical M&A (Mergers and Acquisitions) approaches, but more so on CEO and organizational strategies not considering certain cardinal rules about what is important to constituents – in this case the seemingly real or illusionary aspect of a modicum of privacy with user data.
Modern users of social or sociocultural media understand that they are giving up a certain aspect of their private lives to make the online connections that they seek. These connections are often to locate friends and family lost through the mists of time, seek new friends or support groups, while away their time playing this game or that, or find some entertainment to enjoy and recommend.
If individuals, organizations and governments fail to adapt to the changing realities of the modern world or the needs of the demographics these entities seek to fulfil, then such organizations will slowly disappear into the black hole of “has beens”.
But as more and more such platforms are taking users away from Facebook, each providing better security, more options, and increased ability to connect with others, the one-stop-shopping experience of Facebook is antiquated. Is this then the death knell for Facebook? Probably not entirely. Facebook may continue to exist in some form, or go the way of its predecessors like Friendster, MySpace or Orkut. But, as has happened repeatedly, if individuals, organizations and governments fail to adapt to the changing realities of the modern world or the needs of the demographics these entities seek to fulfill, then such organizations will slowly disappear into the black hole of “has beens”.
So, it will be for Facebook. It appears that Facebook has reached its half-life and decayed in value (not just financial, but in the real or perceived value that Facebook users feel), is well past its shelf-life, and in effect, Facebook is dead. Long live Facebook!
Dr. Binod Sundararajan is the Associate Director of the Rowe School of Business, Faculty of Management at Dalhousie University. He teaches Managing People at the MBA level, and Business Communication, and Corporate Communications at the undergraduate level. Binod’s knowledge and experience is recognized internationally. His speaking engagements and conference presentations span the globe.