Below is my open letter to Mark Zuckberberg, CEO of Facebook. Please read and share on your social media accounts.
Dear Mark Zuckerberg:
You lost billions of dollars last week, as did Facebook. The loss is on paper, which in the short term means very little to someone like yourself because you’re in it for the long term, or so I assume. Good news is if the stock doesn’t tank again, you’ll be OK considering you’ve got more money than most Americans would make in 1,000 lifetimes. So the question becomes, “will the stock tank again?”
Full disclosure: After holding Facebook stock for roughly two years, I sold it back in January. Immediately, I took the profits and then placed a short against the stock knowing it would go down.
Back in 2016, I had purchased Facebook stock based on my own user experience. The LIVE video platform you offered was amazing, and it led me to believe my small businesses could compete with the likes of Fox News and CNN.
Facebook LIVE had great potential for all broadcasters, content producers, and small businesses willing to make the investment in video publishing. Thus, I bought your stock because I felt Facebook LIVE would grow into something that leveled the playing field, and in the process could potentially eliminate the cable and satellite TV companies.
I also purchased the stock because I saw the value in your ad network. The ability to target new customers based on their LIKES and preferences was the most powerful ad tool I had ever seen.
Other business owners I spoke to, regardless of their industries, all agreed with me. They loved Facebook LIVE and Facebook Ads because both products offered real, measurable value. From connecting directly with our customers, to generating leads to our website, Facebook gave us the ability to build a brand without having to run 30-second TV spots. Simply put, Facebook offered a platform like no other. Finally, the tools small businesses had been waiting for had arrived, and so we dumped loads of ad money into your pockets. But then the slide started.
Facebook began tinkering with its own algorithms. Suddenly, without any real warning or reason, the ability to reach customers was limited. The emails from Facebook users who had “LIKED” our pages stated flooding in. It was an ocean of complaints and they all read the same. Our fans, customers and supporters claimed they no longer could “see or find us” in the newsfeed.
The problem wasn’t isolated to my company. I spoke to other businesses from different industries and many of them complained about the same thing.
Slowly but surely the problem grew worse, and as a result, slowly but surely our ad spend with Facebook grew less. Our investment in Facebook LIVE grew less. And at the same time, Facebook’s arrogance grew huge.
Years ago, when we first started advertising with Facebook, you offered companies like mine access to a group of Facebook sales and support agents stationed in Phoenix, AZ. Having those people accessible was as valuable as it was comforting. It showed that you cared about us as advertisers and thus, there appeared to be a dedication on your part to make Facebook ads a win-win service. If and when a problem surfaced, the impression I got was that Facebook would fix it. But it was all short lived. Facebook took the support away. Suddenly, without any warning, there was nobody to call for help or guidance.
Now, if there is a problem, there is nobody to call or email, there is only an option to report a problem via a link buried deep within the other useless links Facebook offers. Having no other options, we use it from time to time. The response we receive is usually days later, and appears to be computer generated as it typically has nothing to do with the reported problem.
The issues we’ve had with Facebook negatively affected our business, but even so, I held on to your stock because I knew it would take Wall Street a longer period of time to realize what I was seeing take place.
I finally sold the stock and then immediately placed my short in January after Facebook failed to respond to my request to speak with someone about potentially spending $250,000 on Facebook ads in 2018.
Facebook is losing users because the company has lost its original voice. You’ve forgotten what got you to the top. Facebook shouldn’t be dictated by what “you think” users should, and should not see. The platform only works if it caters to the needs and desires of its users and advertisers. In short, allow us to reach the people who want to be reached without restrictions.
What happened to Facebook, and what will continue to happen to Facebook if it doesn’t change, is what happened to the TV networks who thought it was their place to decide when and what programming was made available to viewers.
Perhaps you’ve gotten too big. Perhaps you’ve gotten too political. Maybe you’ve bought into the nonsense that a mere $100,000 of ads placed by Russian accounts swayed an election? Whatever it is, your problems are real. Therefore, the Facebook slide will continue on, and I will continue to short your stock.
Filling feeds with baby pictures and cat videos will not build the Facebook user base, and it certainly will not entice advertisers to spend. Perhaps I speak for myself in saying the following, but if Facebook continues down this path, the ad money will move to other platforms. I do know one thing for certain, for as long as you continue as is, the $150,000 I spent in 2016 and 2017 on Facebook ads is a thing of the past. Today, you get $0 from me.
Currently, your stock is hovering around $170 per share. Assuming you will continue to ignore letters like this one, my 12-month price target for your stock is $130. Sure, you’ll see a little ad spending pop during the mid term elections and Christmas, but long term you’ll never get back all the people and advertisers you are losing today.
The good news for Facebook is there is time left on the clock before it’s game over. With the economy humming, companies are looking to expand. You should capitalize on this. Advertisers would be willing to try again if Facebook finds its way back to normal sooner than later. However, the window is limited. It’s a matter of time before Amazon or Twitter figure out how to replicate what you originally built. Once they figure it out, you’ll be the next MySpace.
I depart by saying I hope Facebook’s arrogance and poor customer service finds its way to the trash can. I hope you hit the reboot button and find your voice. Go back to caring more about building a customer base instead of appeasing political warriors. If you do return to normal, it would be nice to make money with the Facebook platform again. If not, we’ll still make money with you, only it will be from shorting the stock.
Dennis Michael Lynch