Alexis Madrigal

Many tech twitterers thought the company's first day on the market would go a lot better than it did.

With the market closing up shop and Facebook sitting at $38 thanks to the deep pockets of the IPO's underwriters, so it's worth revisiting what people were saying about this IPO yesterday. Luckily, developer James Proud created a little app -- facebookipodayclosingprice.com -- at venture capitalist Chris Sacca's request to track predictions about the company's first day of trading. This got tweeted out to the Twitter tech elite and about 2,261 people entered their predictions. Mashable wrote it up like this: "Facebook IPO: Did Twitter just give us closing price?"

In short: NO.

What did they think Facebook would close at? $54.
What did Facebook close at? Exactly $38.

And I note that $38 should have an asterisk.

Only 26 of the 2,261 predictors offered $38 as the company's shares closing price. And as you can see in the chart above, the distribution of predictions were concentrated around $50 with a substantial number of people predicting a very high closing price. Put it this way: almost as many people predicted a close of $80 (21) as predicted a close of $38.

The big news of the day (the week? the month?) is that everyday investors can now buy shares of Facebook. Quiet. Please sit down, everyone. Ladies and gentlemen, quiet please. Please! I am holding the conch shell. I am holding the conch shell.



Everyone wants to have their say about Facebook today, even if there isn't too much more to say than there was yesterday. We know this is a company with an astounding number of very engaged users. We know that some people love it and other people find it annoying. We know their ads have a lower than average clickthrough rate, but that it seems like they have the potential to build the world's most formidable advertising business. We know they make some money but not nearly as much as companies that have much smaller market values.

That's the state of play. We do have a little new data: the stock didn't go wild. It priced at $38, debuted at $42, and is hanging around $41 as I write. That's technically what is supposed to happen, but practically never what happens, so people are a bit confused as to what that all means. I'm trying not to draw any huge conclusions from a few hours of trading.

More broadly, though, there are some interesting cultural, corporate, and catty things to speculate on, now that Facebook is public.

• Will people keep "sharing" as much as they do now?
  
The most basic assumption of the social media game is that people will keep sharing ever more and ever more. If only because it is so deeply ingrained, I think it's worth examining that idea. What if it doesn't turn out to be true? What if sharing peaks in 2013 or 2014 simply because people run out of time or because of some newfound sense of privacy or because some subtle cultural shift occurs? None of these things are impossible, though they would be running against the current trends.

One thing to note: people tend to think about privacy as a function of the amount of information that people share. So, if people are sharing a lot on Facebook, the idea is that they are OK with the privacy tradeoff or that they are fine with whatever information is available about them. But NYU philosopher Helen Nissenbaum sees things differently: she sees privacy as that information ending up in places you did not expect. So, as time goes on, all the information you've put on Facebook could still end up in a place you did not expect it to. That means that the aggregate amount of stuff that could lead to a Nissenbaum privacy violation continues to grow, particularly as people change contexts from college to work, say, or single to married.


• What are the Facebook natives going to think about online life?
  
There are hundreds of millions of people who are coming to Facebook at about the same time that they are coming to the Internet. They've always had a social web. They don't remember AOL. Most don't live in the United States. I'm not sure that those of us who have been on the Internet since 1993 are going to be able to accurately predict their online behavior or what they'll think about online life. Every day of their lives is going to be cataloged partially on Facebook, so what happens when they get older? Do they reject the service they grew up on or does it become a permanent social layer in their brains? I don't know.


• What are the mobile natives going to do with their time?
For just about everyone reading this post, your experience of the Internet began on a computer. For hundreds of millions in the developing world, this is not the case. Their primary or sole means of access to the Interweb is through a mobile device. I have a long running debate with Paul Kedrosky about what these people are going to do as the incomes of their countries rise fall and computer prices continue to decline. I think they'll switch to the old mouse-and-keyboard style as soon as they can afford them. Paul and many others think that they'll remain mobile device lovers. Why's that matter for Facebook? They're much stronger on the web than on mobile, most (but not all) people think

• If and when will Facebook's unusually centralized corporate structure be tested?
  Not all corporate structures are alike and as Matt Yglesias explained a while back, Facebook's power is concentrated in one person: Mark Zuckerberg. Is this going to become an issue for investors or are they all too happy having Zuck running the show?

• What are the thousands of new rich people going to spend their money on?
  If you live around the Bay Area, this is a big question. It won't play out immediately, but everything from the businesses they fund to the restaurants they frequent to the apartments they buy will be transformed by today's big event. New companies, new neighborhoods, new ideas about how cities should be run: we'll get all that and more as these people make their way further from Palo Alto's HQ, the money rippling reality before them.
  
  
• What will happen to other social media stocks?
  As Facebook debuted, shares of GroupOn and Zynga took a nosedive. Perhaps that's because investors who wanted exposure to social media now can get in on the main course instead of messing around with the side dishes. It'll be interesting to watch what happens as time goes on.
  
  
• How will being a public company change Facebook's culture?
  Some people think: not much. In fact, one of the first articles out of the gates today was about how after Mark Zuckerberg rang the NASDAQ opening bell from Palo Alto, everyone whooped it up for 10 minutes and then went back to work. But this is a long game here, and you never know how the company's new orientation might impact who is interested in working for them or how they have to shape their products to meet investor expectations. (Then again, see the point above, re: company control.)
  
  
• How will the Google and Facebook competition evolve?
  Last year, Google was the company stepping all over Facebook's turf with the launch of Google Plus and the social layer it represented. Will Facebook start to push into Google's information organization and discovery territory in 2012 or 2013? And for what it's worth, Google's actually up 7 percent since the Facebook's IPO.
  

I do not think that I can add anything to this video, but I would like to thank its creators, who have brought so much joy to me on this day. "Most of the people in this video have never met face to face," the video maintains. "We are a global family of people committed to inspiring and empowering each other via Facebook."

Don't miss the song's Facebook page, either.

OK, I do have one thing to say about this video. This is a celebrity singalong from our universe in which everyone sort of behaves like a celebrity. It's "We Are the World" multiplied by The Cult of the Amateur and raised to the power of Facebook's opening-day share price.

Via @normative

Your Google search experience is about to change.

No, don't worry, it's not another social integration. The latest update has nothing to do with Facebook and everything to do with Google's core strengths of organizing information so that you can find it faster.

Now, when you search certain things, say, Tom Cruise, a box will pop up in the right column of your search with structured data about the topic. Google can identify 500 million people, places, and things and can serve up a custom selection of data based on the nature of the noun.

Google knows that you are very likely to want to know certain things about Tom Cruise (e.g. his height) and other things about Bill Gates (his net worth) and other things about astronaut Don Pettit (which Shuttle missions he flew).

How good is Google at both guessing what you want to know and having that information in its databases? In some cases, the company is really good. "Based on the other things that people are looking for when they are looking for Tom Cruise, our knowledge graph is going to show you 39 percent of the answers to the next thing you might be looking for," said Johanna Wright, director of product management for The Google Knowledge Graph, which is what the company is calling this new feature.

In the online world, there is this relentless obsession with relevance. Everything has to be relevant, relevant, relevant. The way the word is normally translated in common speech is that something is relevant when you're interested in it at a particular time and place. Facebook's news feed is all about showing you things that are relevant to you from your friends. Google wants to show you the most relevant pages for a given search. And, to my mind, they actually do a pretty good job doing these things.

As businesses, though, what they really want to do is serve up the most relevant advertisements. That is to say, they want to serve up the ads that you're most likely to click on. So they refine and refine and refine the algorithms they've got with more and more and more data in the quest to find ads that people want to click on.

It's fair to ask, I think, how are they doing? One indication comes courtesy of this infographic that these marketers created showing the differences between Facebook and Google's ad networks. It contains three remarkable stats about clickthrough rate (CTR), which is the percentage of the time a user clicks on an online advertisement. The average, these marketers say, is about 0.1 percent. Facebook's CTR is below average at 0.051 percent and Google's is above average 0.4 percent.

While these differences are meaningful and say something powerful about Google and Facebook, let's do the math on those percentages to see how relevant the ads you're seeing really are. For Google, people are clicking on about 1 of every 250 ads they see while searching. For the average, it's 1 out of every 1,000 ads. And for Facebook, people are only clicking once every 1,961 ads they see.

That's the reality of relevance in the online world -- and, not so incidentally, while companies are so eager to scoop up any data they can to increase the likelihood that you'll click.

A preview of what the next wave of anti-corporate activism might look like. Call it Big Dada: speaking noise to power.

Through the 1990s, a practice called "culture jamming" grew in popularity and sophistication. It aimed to disrupt consumer culture by transforming corporate advertising with subversive messages. So, as in the example above, a Coca Cola sign has been defaced to note the company's other imperative aside from love. Another canonical example was current BuzzFeed chief Jonah Peretti's 2001 attempt to order a pair of Nike's through the company's website emblazoned with the word, "sweatshop." Culture jammers would use the power of brands against themselves. Their most famous organ remains the magazine AdBusters, which is widely credited with helping jumpstart Occupy Wall Street last year.

Culture jammers capitalized on the general feeling of many on the American (and global) left that corporations had (and have) too much power and that one very powerful expression of that power was advertising. Advertisements seemed to have mythic influence that could get people to do all kinds of things from buying Hummers and McMansions to starving themselves to attain fashion-model thinness.

Active culture jamming was always a niche activity, but failing active engagement with brand transformations, ignorance was considered the next best policy. Better to skip past commercials with Tivo or stick to NPR than watch or listen to the ads on these broadcast media. Being ignorant of advertising has been considered a moral good; it meant that one was not in sway to the corporate paradigm, etc, etc. The underlying idea is that the activist position is to transform or ignore corporate assets and advertising.

Fast forward to our world in which an increasing amount of advertising runs online. The old logic of culture jamming would say that anticorporate activists should run ad blockers or perhaps something like the (now outdated) Firefox extension, Add-Art, which replaced corporate callouts with curated art.

But the system of advertising has changed in the online world. First, because of the private nature of the browsing experience, there is no way to transform ads for others' political consumption.

Second, Google and Facebook ads are measured on what's called a cost-per-click basis. Advertisers are charged not by how many people see their ads, but by how many people click on them. That means that the old method of passive resistance to corporate power -- ignoring ads -- costs the advertisers nothing. In fact, it makes the delivery of those ads more efficient. Advertisers' dollars get spent on those who find their ads "relevant" and are open to their marketing methods. And because of the private nature of the browsing experience, there's no real way to deface or transform an ad as a political statement to others. Whatever personal pleasure one might find in Add-Art, it's not doing anything in the societal realm. (There are anti-corporate memes, sure, but those would not be a direct response to the ads that Bank of America runs when you search for mortgages.)

I foresee that activists might find the best way to disrupt corporate power on the Internet is to be begin interacting with the ads they're being shown and muddying the data that's being collected.

The counterintuitive logic of online advertising is that any time someone clicks on an ad, it costs the advertiser money. So, clicking on any, say, mortgage-related Google ad, would cost the company that placed it more than $1, according to current pricing. Other banking-related keywords are more expensive, too. "Jumbo mortgage" has an average cost-per-click of $2.42 (and you'll find Citi, Union, and Fremont banks advertising on the search). "Mortgage calculator" goes for $5 (presumably because those searches are more serious). One person's clicks, of course, don't mean much. But a million people's clicks would. Tens of millions of clicks would. And this is a kind of online activism that's closer in nature to Anonymous' famed distributed denial-of-service attacks than to protesting in the streets. It's something people could participate in without leaving their computers and it would not be hard to write tools that would help activists coordinate their actions.

In the commercial world, already something like 10 percent of all clicks on Google ads are perpetrated by various bad actors, usually bots or spyware that are trying to make a tiny bit of money for delivering clicks to Google. The company has to actually refund that money to advertisers, which means it's probably a vast sum when you consider Google's $37 billion of 2011 revenue. (Consider that the Move Your Money project claims they got about $50 million moved out of big banks to credit unions.)

This form of activism, however, wouldn't be click fraud if it weren't perpetrated by machines. It's hard to see how it could be against the law or even against Google's terms of service. It's "window browsing" as activism, sucking up corporate resources as a political act.

But beyond the immediate financial impact this kind of action could have on marketing budgets, if the collective action became large enough, it could begin to impact the quality of the data that Google and other data intermediaries are collecting about each and every Internet user. If enough people started to seem interested in home mortgages who were not actually interested in home mortgages, it might start to disrupt their ability to efficiently target users with behavioral advertising. This would be statistical noisemaking as a form of protest. 

After the attention that Occupy Wall Street garnered last year, the attempts to revive the movement in May have not caught fire. As they always have, activists will keep trying new things. How long before they realize that many businesses are valuable more for their data than their storefronts? Banks are troves of data being mined for profitable strategies. How long before activists see that making their data harder to analyze could be a political tool?

Call it Big Dada: speaking noise to power.  

The unlikely story of a company that built a business selling the recent torrent of digital photos.

The stock photo company Shutterstock has grown tremendously as companies of all sorts realize that they're in the media business. And if you're in the media business, you need visuals. The incumbents in the stock photo space, like Corbis and Getty Images, get expensive if you need to illustrate hundreds of pages on a website.

So, Shutterstock came along with an all-you-can-eat subscription model and said, "Here, use tons of photos from this library of 19 million images." Some of the images are cheesy, but they serve the role that clipart used to: filling a space that you know needs an image with something vaguely topical (see above).

Now, after doubling revenue growth over the last two years, the company is preparing for an IPO.

It's an interesting game that Shutterstock is playing. Individual customers pay an average of about $3 per image. That's dirt cheap, but they make up for it on volume, bringing in $120 million of revenue in 2011. On the producer side, my read of their SEC filing is that they paid out $39.3 million in royalties to 35,000 contributors. So the mean contributor is making something like $1,100 a year by posting their work on the site. (I don't know exactly what the distribution looks like; we only know that no entity received more than 10 percent of the royalties paid out.)

This is clearly a buyer's market. In fact, it's amazing that some entity, i.e. Shutterstock, has been able to build a nine-figure business on the flood of digital imagery emanating from DSLRs across the world given that buyers aren't paying much and sellers aren't making much. They've come up with a cost structure that's low enough to enable them to turn a decent profit. The company's had net income of around $20 million a year since 2008.

From an investment perspective, the most obvious red flag, though, is that their revenues have more than doubled in the last several years, but their net income has been stagnant. They're having to spend a lot more money on sales and marketing than they did back in 2008. If that trend continues, something will have to change on the revenue side.

Even the most cherished skills for manipulating our machines eventually lose their utility.

At some point in the not-too-distant past, the key technological moment in a teenager's life might have been when she learned how to depress the clutch with her left foot, change her car's gear with her right hand, while giving the engine gas with her right foot. As the driver improved, the action became automatic and if you were a particular kind of dumb, rural teenager (like myself), you may have tried to see how fast you could get your car going in a given direction. The keys to this (I may have discovered) are when and how you shift the gears. I felt much mildly unsafe joy in getting from 0 to 60 as quickly as possible in my little Ford Escort.

Nowadays, though, more than 90 percent of American cars come with automatic transmissions. And the deskilling of teen drivers, I'm sure, has begun. One more skill, like efficient rotary phone dialing, will go missing and more more system will become a little easier to use and more opaque.

So it was with great nostalgia that I watched this incredible video of the hundreds of gear shifting clips from all five Fast and Furious movies. I've never actually seen these films and luckily, now that we have this YouTube video, I'll never have to. Imagine what this will look like to the kids of the future, almost all of whom will not know how to "drive stick."