So I finally did it. I joined facebook. I had already passed through college at the time when facebook started to gain steam, so I am a bit late on to the bandwagon. According to the wikipedia, the site was launched back in February of 2004, but up until September of 2006, membership was restricted to students and certain other organizations. I joined on December 8th 2007.

I joined because of the recent pie in the sky valuations of 15 billion dollars being thrown around the Internet. I am an investor who fears irrational exuberance. Although the company is not publicly traded, massive fluctuations in valuation of a company like facebook have the ability to create ripples in other companies viewed to be part of the same industry. Before I even logged on to the site I knew that the 15 billion valuation was a moon shot, but after the checking the site out, I can see much greater issues ahead.

myspace.com and facebook seem to be very similar sites when you take a broad view from a great distance, however, when you start using the two sites, the differences become clear almost instantly.

myspace allows and encourages users to to create online avatars that do not contain much personal information.

facebook wants you to enter your actual information, and as you desire to expand your usage of the site, it requires more information. For example, in order to friend people without entering a captcha challenge, you need to give facebook your telephone #.

With the disaster that is/was beacon still fresh in mind, I with boldly claim that facebook is going to have a hard time furnishing significant revenue growth going forward. The technique that separated facebook from myspace was the use of personal information and data mining to focus advertisements. I am sure that in the mind of an advertiser, custom tailoring ads to clients is a dream, but in practice, it shots up alarms bells for most Internet users.

Maybe this would have worked back when facebook was seen as a protected environment for college students, but now that it has been opened up to the wilds of the Internet, I do not see this as working.

I believe that facebook has some strong advantages over myspace as a networking site. So far I have found it much easier to re-connect with past alumni and friends due to the "you may also know" fields that are generated using my behavior. Using my online facebook behavior to tailor my facebook experience is what I view as an acceptable use of personal information and data mining. The problems start when you try to connect that back to my real world. I am already connected to my facebook friends in the real world, we went to college together, drove across the country together, they stood next to me at my wedding. If I want someone to have my phone number, or know what I am up to tonight, I will tell them.

15 billion is 100% out of line, looking at what myspace has done to newscorp since it was purchased, I peg facebook at something more conservative, like 1/2 a billion dollars, and I think that is being generous.

myspace is a place for browsing skanks and hooking up, facebook is a place to give up some of your own privacy in exchange for a bit or information and a reconnection with your friends that you may have lost touch with.