{"id":990,"date":"2009-09-16T09:37:00","date_gmt":"2009-09-15T22:37:00","guid":{"rendered":"http:\/\/eliasbizannes.com\/blog\/?p=990"},"modified":"2009-09-16T09:37:00","modified_gmt":"2009-09-15T22:37:00","slug":"facebooks-no-longer-a-startup","status":"publish","type":"post","link":"https:\/\/eliasbizannes.com\/blog\/2009\/09\/facebooks-no-longer-a-startup\/","title":{"rendered":"Facebook’s no longer a startup"},"content":{"rendered":"

\"Facebook<\/a>Facebook announced today that they became cash-flow positive in the last quarter<\/a>. This is a big deal, and should be looked at in the broader context of the Internet’s development and the economy’s resurgence.<\/p>\n

The difference between a start-up and a growth company<\/strong>
\nThere are four stages in the life-cycle of a business: start-up, growth, maturity, and decline.<\/p>\n

In tech, we tend to obsess over the “start-up” – a culture that idolises small, nimble teams innovating every day. Bu there is a natural consequence of getting better, bigger, and more dominant in a market – you become a big company. And big company’s can do a lot more (and less) than when they could as startup’s.<\/p>\n

Without going too much into the difference between the cycles, it’s worth mentioning that a functional definition to differentiate a “startup” business from a “growth” business is its financial performance. Meaning, a startup can be one who has revenues and expenses – but the revenues don’t tend to cover the operating costs of a business. A growth business on the other hand, is experiencing the same craziness of a start-up – but is now self-supporting because its revenues can over its costs.<\/p>\n

This makes a big difference in a company, lest of all longer term sustainability. When a business is cashflow negative, it risks going bankrupt and management’s attention can be distracted by attempts to raise money. But at least now with Facebook finally going cash-flow positive, it has one less thing to worry about and can now grow with a focus less on survival and more on dominance.<\/p>\n

\"Cash<\/a><\/p>\n

Looking at history<\/strong>
\nSeveral years after the Dot Com bubble, I remember reading an article by a switched on journalist. He was talking about the sudden growth of Google, and how Google could potentially bring the tech industry back from the ashes. He was right.<\/p>\n

Google has created a lot of innovative products, but its existence has had two very important impacts on the Internet’s development.<\/p>\n

First of all, there was adsense – a innovative new concept in advertising that millions of websites around the world could participate in. Google provided the web a new revenue model that has supported millions of content creators, utility providers, and marketplaces powered by the Internet.<\/p>\n

Secondly, Google created a new exit model. Startup’s now had a new hungry acquisition machine, giving startups more opportunities to get funded as Venture Capitalists no longer relied on an IPO to make their money – which had now been effectively killed thanks to the over-engineered requirements of Sarbanes Oxley.<\/p>\n

Why Facebook going cashflow positive is a big deal<\/strong>
\nFacebook is doing what Google did, and it’s money and innovation will drive the industry to a new level. Better still, its long been regarded that technology is what helps economies achieve growth again, and so the growth of Facebook will not only see a rebuilding of the web economy but also of the American one. The multiplier effect of Facebook funding the ecosystem will be huge.<\/p>\n

And just like Google, Facebook will likely be pioneering a new breed of advertising network that benefits the entire Internet. And even if it fails in doing that<\/a>, its cash will at least fund the next hype cycle of the web.<\/p>\n

So mark this day as when the nuclear winter has ended – it’s spring time boys and girls. We my not have a word like Web2.0 to describe the current state of the Internets evolution, but whatever its called, that era has now begun.<\/p>\n","protected":false},"excerpt":{"rendered":"

Facebook’s going to repeat Google’s history (hopefully)<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12,29],"tags":[149,169,176,412,336,392],"class_list":["post-990","post","type-post","status-publish","format-standard","hentry","category-internet","category-trends-internet","tag-facebook","tag-google","tag-growth","tag-internet","tag-startup","tag-web","post-preview"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/eliasbizannes.com\/blog\/wp-json\/wp\/v2\/posts\/990","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/eliasbizannes.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/eliasbizannes.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/eliasbizannes.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/eliasbizannes.com\/blog\/wp-json\/wp\/v2\/comments?post=990"}],"version-history":[{"count":0,"href":"https:\/\/eliasbizannes.com\/blog\/wp-json\/wp\/v2\/posts\/990\/revisions"}],"wp:attachment":[{"href":"https:\/\/eliasbizannes.com\/blog\/wp-json\/wp\/v2\/media?parent=990"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/eliasbizannes.com\/blog\/wp-json\/wp\/v2\/categories?post=990"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/eliasbizannes.com\/blog\/wp-json\/wp\/v2\/tags?post=990"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}