Profits, Not Eyeballs, Are What Matters
It’s been some time since we heard about companies building their businesses solely based on eyeballs. Facebook is now doing just that. They’ll worry about profits later. Can you blame them when the market has rewarded such misguided behavior in the past?
While there have been a few companies that were able to survive and thrive with such a model – think Amazon (AMZN) — Facebook is not likely to be one of them. Is that perhaps why Facebook did the WhatsApp deal?
There’s an air of desperation to the transaction that says “we can’t make it on our own so let’s keep buying and buying no matter what the price. Just get the eyeballs and everything will be all right.”
I’m not so sure that will be the case.