Facebook’s Newest Funding Source: You
Facebook is testing a new virtual gifts product that allows users to give “credits” to other users. The idea is that you can give other users these credits in addition to or in lieu of commenting or liking a message or status. So if for example I say “out walking the dog,” other people can throw some credits my way. VentureBeat has an exclusive overview.
Here’s why Facebook likes the product - you pay for the credits with cash, to the tune of $1 per 100 credits. That’s enough incentive for them to test this out, despite the fact that anyone who looks at it for more than a moment will realize it’s doomed to fail. There’s no real world parallel to this gift, like Facebook’s existing (and reportedly underperforming) virtual gifts product that lets you give someone an image of a cupcake or whatever on their birthday. My strong guess is very few people will use this, I can’t imagine someone saying “nice status update, here’s some fake money.”
But it’s another weapon that the giant will use to try to eke out a profit during these tough financial times. And it’s far better than having to return to the capital markets to raise money at what’s likely to be an embarrassing large discount from that ridiculous $15 billion valuation that Microsoft gave them in 2007. Maybe if enough users buy credits that can never be redeemed back for cash they can stretch their runway a little farther.
It’s been a rough week for the fast growing network. They fired Gideon Yu, their third CFO in less than two years, on Tuesday. Facebook’s PR group flat out lied to the world about it, telling everyone who’d listen that the reason was they wanted to go public and they needed a CFO with public company experience. In rushing to get the message out they failed to note that Yu already had public company experience, at both Yahoo and Google, and is one of the more respected CFO’s in Silicon Valley. All Facebook succeeded in doing was to cement their reputation as an organization that will say anything they like, damn the truth, even going so far as to unfairly trash their own employees. Not much backbone there, and it’s no surprise that they can’t hold on to executives. Any future candidate worth their salt would do well to think twice before joining.