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OP-ED: Social media beyond Facebook IPO
May 30, 2012, 05:00 AM By Jahan Alamzad

The soprano has sung. The Facebook IPO opera is over. It started as serious as one of Wagner’s pieces, and ended whimsically confusing similar to Mozart’s "Cosi fan tutte.”

A memorable line in the movie "Dangerous Liaisons” says one does not applaud the tenor for clearing his throat. Now that Facebook is a famous tenor in the operatic scene of public companies, it must perform up to high expectations, or no applause.

Facebook stock didn’t hit the High C off the gate after its debut on the public market. Not that that is of little concern, but on a broader note, where is social media heading after this entertaining public offering?

We know for certain that we won’t return to the old days of life without Facebook, Twitter and LinkedIn. Whether these companies perform going forward, or others take their place, social media will be with us.

You can hardly find a newly-minted computer science graduate from any prestigious university who would be able to tell you the Amdahl story. Yet, in the early 1980s, that was where the coolest and the brightest in the world of computing galore wanted to be. Even though as a unit of Fujitsu, Amdahl still produces some of the most powerful mainframes, it doesn’t have the cache that it once held. But, that computing space is still with us and thriving.

You may sell your house to buy the stock of any social networking company now, or bet the family farm to short those stocks. You may win handsomely or lose pennilessly. However, social media will transcend your transient fortunes or misfortunes.

Our lives have been adjusted to social networking platforms. We use Facebook in lieu of endless personal email exchanges. Twitter assists us to choose quickly the news and information we would like to see from sources that we follow. And who would ever hire anyone these days who doesn’t have a LinkedIn profile?

Seemingly, the virtual life on social media reflects real life. Hanging on to an invented second personality in the virtual world doesn’t last long. People soon enough will reveal their true self while on these virtual platforms.

Personalities will be the same in either world, real or virtual. The reserved ones in real life will not be participating much on Facebook and updating their status. Those with outward persona post modestly or even regularly. The overbearing and obnoxious characters spam.

Is this good or bad? It depends on the perspective. Say you met a new person, happened to strike mutual likeness, and then became friends on Facebook. But, once you checked the profile of your newly-found friend, you discovered that person posted 20 status updates in two hours, much of it useless information. That helps you gauge your expectations, maybe even dropping that person as a friend in real life. Chances are that you will have reached that conclusion in the future without that information from social networking. That platform just saved you much time to get there.

For those who think there is a danger in using social media by revealing information, they are missing two crucial points.

In any social networking site, you can share information to the extent you want. Those who share lots of information would probably do so in real life anyway, to everyone. They are the ones we continually remind them the proverbial "too much information” so they can curb their divulging appetite.

On the other extreme are those who just have a profile without hardly any content. They are the ones for whom eyebrows are raised even if you meet them in person. Cool people have a nice balance between the two, both in real life and for social networking.

We live in a wired world, and much information about all of us is already online. Besides, the information on social media does not include very sensitive data, unless a user recklessly reveals that information. In reality, that user would most likely have revealed sensitive information in other ways.

Staunch advocates of social media, particularly those with skin in the game, say that the main reason for the strong future monetization is the fact that purchase behavior is influenced strongly by friends’ recommendations. One is more likely to buy something that was referred by someone that person knows.

That argument disregards the fact that people are different even if they know each other well. We enjoy different hobbies, drive different cars, wear different clothes and even eat different foods. We may listen to people we know and trust, but people make purchase decisions based on what’s good for them individually, notwithstanding that those decisions can often be impulsive, not rational.

For that, the future of social media will be parsed and specialized platforms. Users will still enjoy seeing a new picture of their cousins’ kids, which may not be on the same platform that would influence electronics purchases.

And that’s what is most exciting about social media these days. Will the current list of companies become another Amdahl, or are we witnessing the likes of Amazon? That’s one opera worthy of watching.


Jahan Alamzad is managing principal of CA Advisors, and specializes in the application of analytics to business problems. He is a resident of San Carlos.


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