Why I Can’t Stop Investing in Facebook:

I Can’t Stop Investing in Facebook:

Almost a year ago to the day, I published my first book How to Leverage Your Real Estate Business With Facebook. Before I started researching for my book, I was already an avid user of Facebook. I considered myself a late adopter of Facebook, as late as someone could be who was in college during the college-only years of Facebook.

Half-way through writing my book I made my first investment into Facebook. The more I read, and the more I wrote, the more I invested.shut up and take my money

Today it is by far my largest holding. No, it does not pay a dividend. But for someone like myself (early 30’s) who is investing for the next 10-50 years, Facebook has a LOT of benefits. Imagine being able to invest in Google 10 years ago. That is where I see Facebook today. Much like Google, who began as a search engine, Facebook is much more than just a place to stalk your highschool exes.

The Biggest Misconceptions Regarding Facebook:

Facebook is just for teenage girls looking to share photos:
This is the hurdle Facebook faced during its first 3-5 years of INSANE growth. In addition to its incredible user acquisitions, its ability to monetize these users has been even more impressive.

Teenage girls are no longer using Facebook:
What once was considered its biggest problem, critics now maintain the opposite to be true. But hey, critics gonna criticize.

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All the young people are using Snapchat now:
Snapchat Snapchat Snapchat. AKA: Tha Facebook Killa. Except that its not. The biggest threat Snapchat poses to Facebook is that its attracting all the young people. When I tell people I am investing in Facebook over the next 10-50 years, their biggest concern is always Snapchat.

Tell me honestly, do you really think Snapchat is going to destroy Facebook and make them obsolete? Myspace is the common reference here, but remember who won that battle. I have mentioned previously why I think Instagram Stories is not a Snapchat killer, but still poses a threat to its growth, so I won’t touch on that here. (Don’t forget who owns Instagram)

What it all comes down to is this: The world is big enough for Facebook AND Snapchat. Much like the world needs Coke, Pepsi AND RC Cola. If you could go back in time to the invention of Soda, which one would you bet on?

If it isn’t clear by now, I feel that Facebook is Coke. Or using the television analysis, I think Facebook is CBS. Snapchat is currently MTV, but they are trying to become NBC. Will they? Maybe. Will it affect CBS value? I don’t think so.

If your argument against Facebook continuing to become a successful company is the existence of Snapchat, then I suppose you shouldn’t invest in any company ever, for fear of a competitor putting them out of business.

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Facebook isn’t cool anymore.
So what? Neither is Microsoft. Neither is Apple. What companies are cool anymore? What companies can stay cool from one generation to another? Is Snapchat going to be cool in 5 years after it monetizes its users, seeks rapid growth, and creates unique partnerships like its recent deal with NBC to stream episodes of The Voice?

The hardest thing for any company to do is monetize its customers without alienating them. Even the people who claim to hate Facebook still check their accounts 3x an hour.


What I love about Facebook:

REAL ESTATE– As someone who cut their investing teeth in the real estate business, I will always have a soft spot for this industry. Today, I believe the most valuable real estate in the world is the home screen on your smartphone.

How many apps do you have on your phone? How many do you actually use? How many do you use daily? How many are there on your home screen?

This is like being one of the first 3 channels on your TV. Can you put a value on this? Ask CBS, NBC and ABC.

Right now, Facebook owns 3 of these channels- err, apps on your home screen. Maybe not yours, but globally, Facebook occupies three of the most used apps: Facebook, WhatsApp, Instagram. Facebook messenger is also growing rapidly and soon they will allow money transfers through your account.

Thats like owning three huge blocks of prime real estate in the world’s fastest growing and most valuable city.

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GENIUS– Is it safe to call Mark Zuckerberg a genius yet? Yes, yes it is. In fact, one of the smartest things I think he has done is surround himself with any and all of the other geniuses he can find. Either by hiring them, or acquiring them.

When Facebook buys a company like Instagram or Occulus Rift, he isn’t just buying the company. He is buying the people. These are some of the smartest people in the world.

Then, he gives them unlimited resources and more smart people to interact with. This may not always lead to optimal results, but over time will lead to more positive returns than negative. I am literally willing to bet on this.

SMART GROWTH- Zuckerberg, and Facebook, understand the growth model better than anyone. They wrote the book on it.

Step one– Acquire users through exclusivity (college kids only)

Step two– Age up (grow with that demographic and then acquire older users)

Step three– create so much value for users that when you monetize they are too addicted to change.

Step four– grow grow grow.

Facebook and Instagram are both in step four. Most competitors don’t make it past step one. Some make it to step two and start to get offers from Facebook (as part of their step four). Snapchat is a unicorn currently struggling with step three (after turning down offers from Facebook).

I personally think Snapchat will succeed. I think they will find unique ways to monetize and will occupy a space on your home screen for many years.

But I don’t believe this is a zero sum game affecting Facebook. I would be more worried if I owned a television studio like NBC, ABC, CBS. Sure, they held a monopoly on your attention for several decades. But so did Radio and Newspapers.

In the battle for customers, clients and audiences, the fight between Snapchat and Facebook is all for show.

The real fight is for space on your smart phone home screen. Facebook and Snapchat are already there. While other media conglomerates are slow to realize this shift in your attention, companies like Twitter, Instagram, Snapchat, YouTube (google) and Facebook are solidifying their positions and investing in the next ones: Augmented and Virtual Reality.

Oh, and did I mention that Facebook owns Oculus Rift? Currently the biggest name in this space?

The Death of Website Traffic

The Death of Website Traffic is Here: Are You Ready?

The era of the Website is coming to an end. You could probably blame Facebook if you needed someone to point a finger at, but its not all their fault.

Consider this: How do you spend your time on the internet?

If you are my dad you have a long list of bookmarks (I am talking hundreds of bookmarks) that you check on a regular basis looking for information that interests you.

If you are like me, and people like me, you are on Facebook, YouTube, Twitter, Instagram, Pinterest, maybe even sites like Quora or Medium.

And if you are just a couple years younger than me, or just more hip, you are on SnapChat, WhatsApp and probably a bunch of other stuff I haven’t heard of yet or can’t pronounce.

Trends always come and go, but technology, and especially the  internet, cause trends to start and end at a much higher and faster rate than ever before.

My sister, a few years older than me, didn’t technically grow up with the internet. AOL entered our house after she was 16 meaning she was out driving with her friends while I was starting an online Sports Cards Training business out of my bedroom.

Timing is everything.

But now I am 30, and I am too old to try and undestand SnapChat. Maybe just too busy. Maybe both.

But I do understand trends. And I REALLY understand Facebook. And when I say I understand Facebook I mean that I understand not just what they are today, but what they are also becoming.

(Author’s Note: I am long $FB. I am also the author of How To Leverage Your Real Estate Business with Facebook)

Why do I mention my father and sister? Of the three of us, my father is the least technoligically inclined, followed by my sister who is half and half, and then myself. A few decades separate my father and I, and only a few years separate my sister and I.

My Father doesn’t want to learn Facebook or Twitter, just like I don’t want to learn SnapChat or whatever. He refers to his list of bookmarks and searches the websites directly. This is how we all used to search the internet for our content.

But that trend is ending and the new trend has already begun.

Website Traffic is No More

The fact that you are reading this article on this blog is a miracle. I already understand this. In the future, possibly months or a couple years, this will be even more of a miracle.

Whether it is ‘Breaking News’ or just good content, the media is changing mediums.

Consider this:

Most of my traffic comes from Facebook. Some comes from a combination of other social media like Twitter and Pinterest, and some comes from search engines (mostly google).

If you are searching google for an answer to something, you are most likely going to find that answer as a link to a webpage.

But if you are using Twitter and Facebook, especially from a mobile device, you are highly unlikely to want to leave that medium. So unless the content I am trying to share with you is right there on that medium, the future of my content won’t have much of a future.

Facebook is rolling out insta-articles and Twitter is rolling out ‘moments’. Apple just launched ‘News’.

All thee of these roll outs allow you to read updated content and breaking news directly on their platforms without having to leave the site. Trying to convince someone to click on your link and wait for a new page to load is asking a lot from your viewers and potential customers.

 

What is the Solution?

Well, for writers and content creators like me it could mean the end of blogs as we know it. Trying to get a Facebook user to come to my website to read an article is already a big hurdle.

However, if I copy and paste my article onto Facebook directly, whether in a post or the Notes section, then more people on Facebook are more likely to read it.

Now, this won’t work on Twitter obviously so it is important that I treat Twitter (as well as my Twitter Audience) differently. This might include sharing a few tweets in a row summarizing the best tidbits of my article in addition to linking to the rest of it. If the tidbits are enticing enough, you may click.

What will not work, however, is the current trend of ‘click bait’. For those who aren’t aware of this term, it simply means giving an article a title that sounds very enticing, or baiting you to click on it, only to find out the article is either made up or doesn’t even discuss the topic for which you clicked on it.

If you are an individual or a brand, you will piss off your audience and they will stop following you all together.

If you aren’t providing good content, the same thing will happen as well.

If you are providing good content then people will share it with their friends and your audience will grow.

This sucks if you run a big website or newspaper, but this is great if you are an individual trying to grow your own book of business, whether you are a writer or entrepreneur.

 

The Death of Website Traffic 2015

If you make money from website traffic it is time to really rethink your strategy. I make very little money from my actual website, but I do make money when new clients find me through my website and I am able to serve them.

Because of this, I can upload my content to many different places and still be ok.

The same can be said for all those Grantland.com writers who were just fired or suspended or whatever ESPN just did to them. 

In the past, you needed ESPN or the New York Times more than they needed you. They were the brand and you were just a small name beneath the titles of some articles. But today, with Twitter, Facebook, cheap or free blown sites, the individual creates their own brand.

Sure, those big companies are a huge help and sometimes pay well, but the trend is already shifting.

If you are in sales, or a writer, or an entrepreneur, or somewhere in between, the solution is clear. Keep providing value.

Whether this means creating good content or answering the tough questions or being very transparent about your business, it doesn’t matter whether or not people are visiting your website.

But if your income depends on ‘clicks’ and ‘website traffic’ then I am sorry to break the news to you, but pretty soon your only traffic might be from my dad.

(I love you dad!)


Why Facebook is More than Just a Safe Investment

I Began Researching Facebook for The Book I Was Writing: Before it Was Published I Found Myself a Facebook Investor:

Facebook was born while I was in college. At the time, I was considered a ‘late adopter.’

I fought it, you could say. First, it captured all of the girls. (Smart).

Soon after, most of the guys trickled in.

Eventually it was my entire campus. Actually, it was all of the campuses.

Facebook began as a ‘college-only’ social network, meaning you needed an @.edu email address to sign up. Then it opened up to the public. Then the world.

Recently, Facebook achieved one billion active users in one day. ONE DAY!

Facebook also owns Instagram, WhatsApp and Oculus Rift, after several billion dollars worth of purchases.

Many said they paid too much for these companies. Many of those people are silent today.

I recently wrote a book on how to effectively use Facebook for your real estate business. It is really a book for  anyone in sales looking to effectively utilize the power of Facebook.

I started researching and writing earlier this year. Before long, I made my first investment in Facebook. Soon after I made another. Additionally, I plan on purchasing at least two more blocks before the year is over.

I am not a trader. I am an investor. I usually prefer to invest in income streams (ie. Cash Flow). But there are many roads that lead to wealth.

For example:

I can invest $100 every month into a dividend paying stock and grow that income stream over time with dollar cost averaging and appreciation. (I do this too).

Or:

I can buy a stock for $100 that does not pay a dividend, but instead has the potential appreciate at a much faster rate than a slow growth dividend paying stock. When that happens, I now have a larger sum of capital with which to invest in an income stream.

You see, my end goal is the same: Passive Income.

These are two examples of ways to obtain it.

As I stated above, Facebook is more than just Facebook (Instagram, WhatsApp, Oculus and more…) So in a sense, Facebook owns the present (anyone in High School and Older) and the future (Tweens using WhatsApp, Instagram and eventually Virtual Reality).

 

Facebook’s Secret Sauce:

But Facebook also holds a secret sauce in it’s grasp. In fact, in addition to all these other reasons I love Facebook as an investment, this aspect might be the safest bet that Facebook is more than just a safe investment for the years to come. Simliar to why cigarette companies were such a great investment.

Or why Coke and Pepsi dominate both Warren Buffett’s portfolio and refrigerator (He owns Coke but drinks Pepsi.) Cigarettes were proven to be addictive. Despite many current claims, studies also show that sugar is addictive. Both of these substances provide the brain with pleasure, despite the fact that almost everyone knows they are bad for you in the long run.

I recently heard someone call Facebook and Twitter ‘dopamine snacks’. I wish I could remember where I heard it because it’s brilliant. Facebook and Twitter are the reason its so hard to read books any more.

We get bored very easily. Reading short bursts at a time actually provide our brains with a pleasure sense, or dopamine snack.  People either love Facebook, or they hate it. But almost everyone still uses it. What does this sound like to you? Addiction? I am not arguing that Facebook is healthy for you any more than I would argue that sugar water and tobacco are healthy for you.

I do believe that you can use Facebook for good, and it can be a great tool to grow your brand and market your business. Additionally, there is no better way to stay in contact with everyone you have ever met and will meet (even those you don’t like.)

What I am arguing is that Facebook is a great long term investment. The upside potential is incredible, and the downside risk, in my opinion, is extremely low. It is so well-positioned to succeed that I do not think one bad step would hurt them like it would another company.

Could it survive a Volkswagen like scandal? Possibly. It has the tools (the company purchases listed above) and the people (Zuckerberg, his team, and now the team of people who founded companies like Instagram, WhatsApp and Oculus) and has already proven it has the process. (Somewhere Marcus Lemonis is nodding) But sometimes things happen faster than I imagine.

The last time I felt this way about an investment was with housing in 2009. I mention this because I knew housing was a great investment at the time, but my time horizon was 10-30 years. Housing bounced back much more quickly than I expected, but I was also not surprised when it did.

Now take special note: I do not mean to say that I think Facebook is where housing was in 2009. Instead, I get the feeling that Facebook is where Google was around 1999. Facebook also has the advantage of learning from Google’s playbook, with both its successes and failures. I expect Facebook to be a very great investment in the many years to come.

I would not be surprised if Facebook doubled in a couple years. Maybe it will take 10 years. Facebook is not my only investment, and I feel confident investing in an appreciating stock like this because I am also well-invested in many cash flow producing investments.

Of course, I could be completely wrong about all of this. It wouldn’t be the first time I was ever wrong about something. But I am willing to put my money behind this belief. And if I am wrong, then please buy my book. I will need the sales.