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Many, including myself, have been tough on Mark Zuckerberg. We blasted his idea of ‘making money to build better services,’ instead of the typical corporation’s goal of providing services to make money. We didn’t like, and we still don’t, the way Facebook transitioned to a public company -- with a lack of shareholder rights, a lack of transparency in its business model, and a general lack of respect for the public markets. But, at Zuckerberg’s first major public chat since the company’s IPO, we saw a more mature twenty-something CEO. He acted like a CEO who wants investors, and the world, to know that his company is not done changing the world.
In a way, all of us Facebook (Nasdaq: FB ) naysayers have been waiting for Zuckerberg to step up. It’s not that we fundamentally hate the social network. Who can help but be impressed by a company that has one-sixth of the world’s population engaged on one website? The ad revenue model wasn’t too impressive, and neither was the company’s first quarterly report, but the rapid rise of Facebook, and the potential the company has to disrupt multiple industries, is enough to excite idealistic growth investors, and even some more grounded ones.
I had nothing but disdain for Facebook -- up until Zuckerberg’s talk yesterday. His interview at the TechCrunch Disrupt convention was the single best thing I have seen from the company since its public debut. What made it so impactful?
Speaking in Investor-friendly terms
One thing that Zuckerberg and Facebook have failed to do, up until this point, is speak in a way that Wall Street and investors understand. Yes, we know that your goal is to connect the world, not to make money. Google’s (Nasdaq: GOOG ) philosophy is to not be evil. But when it comes time to talk to shareholders, Google is able to tell us exactly what we need to know. Google tells us what it's doing to make money from its ad platform, how its new expansion into hardware will steal away market share and boost revenue, and how its acquisitions are effectively contributing to its strategy of horizontal integration and creating a more efficient, profitable machine.
Up until now, Facebook has just sort of shrugged and said, "We’re trying, but we can’t explain it." Yesterday, though, Zuckerberg told us that there are billions of dollars in the company’s new mobile efforts. That’s what we want to hear. It’s nice to tell us about how intuitive the apps are, and the wide variety of new feature but, as investors, we just want to know where the money will come from. Zuckerberg told TechCrunch that more people are spending their Facebook hours on their phones, posting more, searching more, and just using it more, in general. He also said that mobile has the ability to charge more to advertisers than on a web page, where Google has the formula down pat.
We finally heard a Zuckerberg who should be running one of the world’s biggest web companies.
Confirming Strategies, Dispelling Rumors
The 'maybe we will, maybe we won’t' game works for Apple (Nasdaq: AAPL ) , because they’ve already earned the respect of investors, analysts, and everyone else on planet earth. It doesn’t work for companies that haven’t proven to us that they can push out a profitable product over and over again. Zuckerberg and Facebook have been very quiet regarding the future of the company, flirting with the idea of a phone from time to time, but never really taking a stance.
Yesterday, Zuckerberg confirmed there will be no phone, because it doesn’t make sense to go head to head with Apple and Android. Zuckerberg said what his company will do is provide a service that is deeply entrenched in Apple’s iOS, Google’s Android, and various mobile web platforms. His words on the subject: "The real value is about people bringing their information to apps to give social context to everything they’re doing."
This means checking your phone to see what restaurants your friends like in the neighborhood that you're in. It’s about finding the coolest party at the last minute, again on your phone. Zuckerberg made it clear that his company’s value is the ability to connect every part of our lives -- business, personal, social -- anything. It was the most lucid he has been on the path of this company to date.
Long road ahead
I'm still a long way from buying a single share of the social network. Without some more data, I can’t justify the valuations, given the current financial information. I really respected the way Zuckerberg treated this interview -- as an opportunity to tell investors he is serious about bringing this company to the top of its potential.
When will it happen? I don’t know. But as any value investor will tell you, it’s not about timing, it’s about paying the right price, and the Fool has your go-to resource to help decide how much you’ll want to pay for each company in our new premium research reports on Apple and Facebook. Because each of these companies have vastly different, but interrelated, drivers, you’ll need a detailed understanding of each company to decide whether or not to invest. Click here today to get started.