May 31 was the first worldwide “Quit Facebook Day.” Concerned about privacy, an estimated 35,000 users pressed ‘delete’ in a single day.
Can you imagine losing 35,000 customers in one day?
What I find interesting about the fall of Facebook is how quickly it’s happening. It seems everywhere I turn, I’m seeing another sign of its demise.
Here’s a rough chronology of my awareness of troubles at Facebook:
• On May 11, The New York Times published a story about four angry college kids who created Diaspora.com, an alternative social network that claims to protect user privacy more closely.
• On May 18, my friend Scott declared he was “done with Facebook.” Losing one user is not a big deal, but Scott is one of those guys who always seem to be on the forefront of trends. He was one of the first people I know to experiment with Facebook and become a power user quickly. For me, he’s a reliable bellwether of things to come.
• On May 31, my wife looked up from her Globe and Mail to inform me that it was “Quit Facebook Day.”
So it took just 20 business days for me to go from thinking of Facebook as a darling of the economy to considering joining the 35,000 who were leaving. Admittedly, I’m not a big user of Facebook or technology, and if I were, I may have become aware of issues at Facebook sooner, but it is still interesting to me that it took just three short weeks.
When businesses fall out of favour, it can happen fast.
Here’s my list of the top seven most spectacular falls from grace:
• In 1996, Onvia.com was founded by Moose Jaw, Sask., native Glenn Ballman as a one-stop shop for small businesses to buy office supplies. Onvia.com went public on March 1, 2000, with a market capitalization of $4.9 billion. Mr. Ballman himself enjoyed a net worth on paper of $944 million the day after the IPO. Onvia failed to get traction with small-business owners and it re-made itself as a business intelligence company. Today Onvia’s market capitalization of around $43 million makes it roughly 1/100th as valuable as it was 10 years ago.
• New York–based The Hit Factory was purchased by Edward Germano in 1975, and it became one of the most famous recording studios of its time, eventually becoming hallowed ground for artists like Bruce Springsteen, Madonna and U2. Mr. Germano died in 2003 and he left the business to his wife, Janice. Instead of carrying on in his honour, Janice closed the studio on April 1, 2005, to move to Miami because it was sunnier.
• GeoCities was purchased by Yahoo for $3.57 billion in January, 1999. Yahoo closed GeoCities on October 26, 2009.
• Washington Mutual was America’s sixth-largest bank and it was humming along nicely until a run on the bank saw it lose $16 billion in deposits in 10 days. On October 25, 2008, the United States Office of Thrift Supervision (OTS) seized the bank’s assets, turning them over to the FDIC, which eventually sold them to JP Morgan Chase for pennies on the dollar. The fall of Washington Mutual was the largest bank failure in U.S. history.
• The Learning Co. was purchased by toy giant Mattel in 1999 for $3.5 billion and it was dumped for $27.3 million in 2000.
• AOL acquired Time Warner — then one of the most valuable and prestigious media companies in the world — for $164 billion and became AOL Time Warner. After the merger, AOL’s dial-up service lost share quickly to new rivals offering an open platform and a faster Internet connection. AOL updated its business model, but it was too late. Time Warner finally cast off AOL on May 28, 2009.
• Fortune magazine ranked Enron “America’s most innovative company” six years running. In 2001 the company reached a $90-billion (that’s with a B) market capitalization, making it the seventh-largest company in the United States at the time. Enron filed for bankruptcy on December 3, 2001.
If your business is booming and the future looks bright, although it may feel counterintuitive, now might be just the right time to sell.
Special to The Globe and Mail
John Warrillow is the author of Built To Sell : Turn Your Business Into One You Can Sell. Throughout his career as an entrepreneur, Mr. Warrillow has started and exited four companies. Most recently he transformed Warrillow & Co. from a boutique consultancy into a recurring revenue model subscription business, which he sold to The Corporate Executive Board in 2008. He is the author of Drilling for Gold and in 2008 was recognized by BtoB Magazine’s “Who’s Who” list as one of America’s most influential business-to-business marketers.