As it becomes more fashionable to rail against Facebook in its initial IPO performance post lock-in there is an interesting factor that seems to be altogether discounted in its value as a publicly traded company. That factor is the level of interdependency it has created with its very existence. In fact, Facebook, in its short lifespan as a company / platform / entity has created some of the most broad reaching interdependencies that we have ever seen. Beyond Google Maps Facebook has probably created more business dependents than almost any other company. While Zynga is the obvious case study there are many other very large businesses that would struggle without its existence.
For example, Facebook has quickly risen to the top of the referral list for people consuming all sorts of content. Whether it’s film trailers, news stories, product launches, long-form videos, charitable initiatives, real estate listings, bands, artists, ticket sales people or even personal brand development we have quickly becomes hopelessly dependent on Facebook in referring business our way. And yet as this person we continue to call “the market” seems to ignore all of that in favor of a quarterly earnings report. In fact, most ecommerce sites will tell you that 5 years ago eBay was the most consistently featured site cached in someone’s browser post purchase … today it’s Facebook. Furthermore, Facebook connect has also created a portable identity marker that thousands of sites use to enable to better understand their visitors and resell / reuse their data. These insights are tremendously valuable for any business that looks at segmentation or referrals as a revenue source.
This begs a very interesting question because Facebook is not alone in the way it has created a massive interdependent state with its company. In fact, the entire internet that we know today is based on an interdependent, emergent process Stuart Kauffman calls creation through “adjacent possibilities.” Without the existence of one, the adjacent would never be created. This is not only exactly how the internet was built but it is also how the organic world was created. It emerged through a series of interdependent, adjacent possibilities. It is also true for us as human beings. The entire field of epigenetics investigates the expression of specific genetic traits based on its environmental conditions. Why do you think type two diabetes and metabolic syndrome X exist? It is because of the body’s reaction to certain set of environmental conditions created by the over indulgence of sugars and subsequent fat stores. The reality is that we probably have no idea what will be created because of the existence of Facebook but based on its scale the likelihood of it being quite impactful is probably quite high.
So what? Interdependence is great but where is the cash money “the market” says? Well here in lies the rub … a hierarchical structure with fixed values cannot value what lies beyond its basic function. This is especially true when looking at a universe, the internet, whose ideological function doesn’t totally adhere to a globalized capital framework. On the internet, the higher level of interdependency a company creates the greater prospects of longevity for its existence. In terms of “the market”, it breeds total confusion.
Facebook’s market woes is yet another example of incompatibility between the internet and a globalized capital economy. Just as “the market” continues to criticize the internet for its lack of appropriate business model is it not time for us to start to criticize the market for its inability to value interdependency into a company’s worth? I think so …