The story is out that Mark Zuckerberg says Facebook’s current priority is improving users’ mobile experience.

And I know there has been press about the amendment to Facebook’s SEC filing this week, in anticipation of pricing the IPO, to the effect that Facebook knows it needs to monetize on mobile.

But I wonder if the new SEC disclosure is more nuanced than anyone else is catching.

I ran a redline of this week’s Facebook amendment against the prior filing. Only three substantive changes in the entire draft prospectus. All three are worth looking at.

Here’s the first:

FB Amend 6 Change A

I think if you read just this initial paragraph above, your takeaway is fairly what has been reported, i.e., Facebook knows it has to be better at pushing ads on mobile, the way it pushes ads on the desktop. But then see the next paragraph with a significant edit:

Notice the approach from a different angle? The company here seems to be saying, look, we value user experience above the almighty (short term) dollar.

The paragraph is not saying that Facebook is backing off advertising on mobile as a long term strategy; but arguably it is implying that, at least at the outset, Facebook has found resistance to ads on mobile, and that failure to better monetize mobile to date is due to a deliberate decision to not serve ads on mobile at the desktop pace.

Here’s the third, pulling the points of the prior two cited paragraphs into a single argument:

FB Amend 6 Change C

It may be wishful over-reading on my part — finding significance about business direction where the company’s real purpose is to disclose that monetization of mobile is not certain — but I take some hope that Facebook is willing to consider that advertising may not, in fact, be the right way to monetize their mobile products.

Attorney William Carleton is a member of McNaul Ebel Nawrot & Helgren PLLC, a Seattle law firm. He works with startups and emerging tech companies, their founders and investors. He posts regularly about tech-related legal issues on his blog.

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Comments

  • Guest

    Anyone starting to place bets on FB’s valuation 12-months post-IPO?

    If they’re starting  with a valuation around 24x/earnings, and are clueless about how they’re going to make money in a mobile-first world (other than acquiring every “hot” mobile company in existence; which isn’t a bad defensive strategy, but shows no offense)…a year from now?

    • Guest

      Probably about a trillion.

      Seriously. No party of 900 million uses the products of one company in such a monoculture as they do Facebook. This is the company that could break the 13-figure barrier.

  • http://www.jakeludington.com Jake Ludington

    It reads more like they don’t have any data to support revenue projections on mobile. That makes sense because there wasn’t any advertising on mobile until very recently.

    I’m curious what you would propose as an alternative to advertising for Facebook’s mobile revenue strategy?

    • http://wac6.com/ William Carleton

      Jake, I could try to take cover under the apology that I don’t have the data; but if I did, I still might not know the right answer.

      Though I would start from an entirely different premise: given that friends really DO trust the recommendation of friends, and that social recommendations are far more valuable than generic messages (I am paraphrasing things Facebook COO Sheryl Sandberg says in this Facebook IPO roadshow video: http://www.youtube.com/watch?v=MVllZFlMo6Y), I would presume that businesses might well want to pay to garner intelligence from the network, but that I would ruin the goose that laid the golden egg (and miss my chance to really change the world for the better) if I let the advertiser game the social graph.

      The heart of this problem is a failure of business ambition.

      Here’s a quote from that same video, from Mark Zuckerberg, explaining how ads got onto Facebook in the first place: “”When I was in college, I wasn’t actually starting Facebook to be a business, back then. I rented servers for about $80 a month and, I didn’t have that much money – I was just a college student – so I put up ads, and when I had enough money to get another server, I would do that. So, ads, you know, have always been this really important part of what we do because we want to keep Facebook free for everyone.”

      Sure, practically every social and digital media service has the same story. But Facebook has the scale to overturn the default/fallback business model. The social media venture that eventually pulls it off, I think, will do it by maintaining fierce loyalty to the user.

  • Guest

    With iPhone 5 delayed indefinitely, we believe that the Facebook mobile phone will be poised to strike. What customer of Facebook’s 900 million wouldn’t want a cohesive mobile experience blending engagement with monetization opportunities?

    Imagine that familiar Facebook chat noise sounding pleasantly on your phone followed by this call to action:

    “Hey, William. I’m at El Gaucho and you’re only 400 metres away. Come by and you’ll receive $50 worth of food and drink for 50% off.”

  • rocky john

    Mark Zuckerberg says Facebook’s current priority is improving users’ mobile experience.

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