FaceBook UnFriends Its Fan Base -- CEO and Execs out on Spending Sprees while FB in crisis

[KurtNYC]

1. Krispy Kreme was different -- started in 1937, IPO in 2000

It did the IPO on NASDAQ, like FB, but 13 months later in the middle of the dot com bust, Krispy Kreme moved over to the NYSE. The stock climbed to $50 per share in 2003 and the IPO was at $21 so that is a gain of 235% in a bearish market. After some accounting scandals and SEC investigation the stock fell out. But the execs blamed the low carb craze (Atkins) for the declines. Many say that KK spent the IPO money opening too many stores too quickly after being in business for 60 years.

FB starts in 2004, it is lauded in 2009. It continues to grow internationally but in the US it loses 7 million active users around April of 2011 and term "FaceBook fatigue" is coined. Some see this as geometric growth that burned itself out. In other words it hit a saturation point fairly rapidly and now needs to maintain it's user base and fight off competitors -- this requires different marketing than the period of rapid growth. Also it has now gotten bad press about privacy issues and 'following users after they logoff' and has not responded effectively. So while KK over expanded after its IPO, FB seems to have peaked before its IPO.

FB needs to spend its IPO money not on expanding like KK, but rather on re-invigorating its user base, fighting or buying competitors, and doing much better PR management which will get tougher after the public disclosures of how they actually make money kicks in.