Sometime in August, Facebook will top 1 billion users. Every few months, Twitter floats a press release that it has added another 100 million users. In quarterly earnings calls during the past year, Google has had to sheepishly admit that it its Google+ social network isn't growing as fast as hoped. Pinterest is the hottest new social network, in large part because it reached 10 million users faster than any of its predecessors.
Building a social media empire is all about building numbers. Those numbers, however, don't always have dollar signs in front of them.
"I do think there is a ton of speculation," said Dean M. Wright, founder of the social data and research company BrandMixer LLC, noting last year's Groupon initial public offering and this year's likely Facebook IPO. "This speculation is driven largely by investors being enamored by the numerology of social media: Facebook has 850 million users! Over 50% of Tweets come from mobile and 300 million people in the U.S. have a mobile! Every minute there are 2,000 check-ins on Foursquare!"
Seiman says he believes Facebook's purchase of Instagram was impulsive, and that Facebook likely overpaid for the app maker. But, ultimately, Facebook feared it would not be able to show Wall Street investors that it had a mobile strategy based on its existing product, so that fear drove the company's wild speculation.
Seiman, as we previously reported, does not necessarily think the acquisition is a fatal flaw.
"If Facebook has one advantage that could possibly make its own 'go-fever' a little less destructive, it is unique in its ability to bring unparalleled scalability to the table of its acquisitions," Seiman said. "No one doubts that it likely overpaid for Instagram in what seems to be an impulsive move, but if anyone can use scale to elevate a potential contender into the next Facebook… perhaps it is Facebook."
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