A market valuation of 100 billion dollars for a business started less than ten years ago is an impressive achievement and that sum now presents massive challenges for management who have to deliver on what investors believe the service is capable of.

At US$38 a share, Facebook is valued at 76 times its projected 2012 earnings of 50 cents a share, and nearly twenty times its expected revenues of US$5 billion. This compares to Google which trades at less than 15 times its 2012 profit estimate and six times revenue.

For Facebook to match Google’s value, the social media service is going to have to start making serious money beyond they can from charging egoists and corporations $2 a time for featured posts.

Google’s success was in moving out of their walled garden, had Google focused on advertising just on their own search pages the company would be earning a fraction of the billions they now make every quarter.

It’s difficult to see how Facebook can move off their platform into other sites and with users moving to mobile, the company will find itself even more constrained by Google and Apple who want to control access to their devices.

A more obvious course for Facebook is to maximise income from the massive data base of likes, preferences, relationships and opinions they have amassed from their users. How they do this will probably be the biggest challenge to Facebook’s management.

In monetizing their database, Facebook will push the limits of the law, tolerance of privacy advocates and possibly the patience of their user base. This is going to test a company that has in the past been slow to respond to public concerns.

Another challenge is perception – with such a massive valuation, Facebook is going to attract critics regardless of what they do.

A good example of this is the number of people criticising the float for not ‘popping’ on the stock market debut. At the end of the first day’s trading the stock had only gone up 0.6% and some in the media claimed this showed the IPO wasn’t the successful.

The idea a successful IPO is one that soars on the first day of trading is a naive view from a 1980s mindset. The idea was born out of the privatisation of British and Australian utilities in the 1980s and 90s where taxpayers were seduced by the idea of “free money” in exchange for selling community assets cheaply.

A ‘stag profit’ from a share that soars on its public float is theft from the existing shareholders and a transfer of wealth to insiders and their advisors.

Silicon Valley venture capitalists and startup founders aren’t dumb and have never fallen for that trick – investors pay dearly for stock in their ventures.

While no-one would call Mark Zuckerberg and his management team dumb they have a big job ahead of them finding revenue sources to justify the $100 billion market valuation. It’s going to be an interesting ride.

Much of Richard’s discussion centred around disruption – the newspaper industry was disrupted in the 1950s by television and by the 1980s most print markets had seen several mastheads reduced to one or two.

The remaining outlets were able to book fat profits from their monopoly or duopoly position in display and classified advertising.

By 2000, the web had killed that business model and the newspaper industry was in a decline that continues today as aggregator sites like Huffington Post steal page views and Google News further changes the distribution model.

One of the problems for the news industry is how different the online mediums are from print, radio or television broadcast. The struggles of media startup The Global Mail is a good example of this.

In the middle of last year news started trickling out that one of the Australian Broadcasting Corporations’s top journalists, Monica Attard, had left the broadcaster to set up The Global Mail, an online news site funded by Wotif founder Graeme Wood.

The site launched on schedule in February 2012 and underwhelmed readers with pedestrian content and a confusing layout. By May, Monica Attard announced she was leaving the organisation she’d founded.

Tim Burrowes of the media site Mumbrella examined why the Global Mail is struggling, his Nine problems stopping The Global Mail from getting an audience details how the site doesn’t use online media effectively.

At heart is a fundamental mismatch between the methods of journalists raised in the “glory days” of print and broadcast journalism against those of the online world, not least the much harsher financial imperatives of those publishing on the web.

One key problem it the TL;DR factor – Too Long; Didn’t Read. Where online readers tend to leave stories after around four hundred words.

Richard Gringas is quoted as encountering this problem when he worked at online magazine, Salon.

At Salon, articles were paginated, but only 27% of readers made it to the end of the four-page articles. Compared to competitors, Richard was told, this was a good benchmark. But with fresh eyes, he was astounded that a product was being produced with the knowledge that the vast majority of the audience would not consume the entire piece. Richard loves the long form, but if the objective is to convey information, we need to think about the right form for the right medium at the right time.

So “long form” journalism has to be written the right way and it has to be backed up with good visual components and have “short form” versions suited to the more impatient readers who make up the bulk of the web audience.

The New York Times made a step in this direction with their iEconomy series on how the US middle classes have been displaced with manufacturing’s move to China.

An even better example of journalists using the web well is The Verge’s Scamworld where an online expose of Internet get rich quick schemes and the conmen behind them.

Scamworld shows us what skilled journalists can do online. The amazing thing is the site’s new steam is tiny compared to those of established outlets like the New York Times, Guardian, Fairfax or those of News Corporation.

This failure to execute by incumbent news organisations isn’t because they are lacking talent – every young, and not so young, journalist has been required to have multimedia skills and the ability to file stories in multiple formats for at least a decade.

Old Media’s problems lies in the mindsets of senior journalists, editors and their managements who are locked into a 1950s way of thinking where fat advertising revenues funded the adventures and expense accounts of roving reporters who tough as nails editors occasionally bullied into filing stories.

That model started to die in the 1980s and the Internet gave it the last rites.

Richard Gringas’ discussion at Harvard shows news and journalism isn’t dead, but it is evolving. Just like many other disrupted industries, the news media has to adapt to a changed world.

Just over thirteen years a group of Silicon Valley technologists wrote The Cluetrain Manifesto detailing what they saw as being the new rules of business in a connected world.

Cluetrain was mandatory reading when terms like “information superhighway” were fashionable and Yahoo! was the dominant web portal. It’s somewhat fallen out of fashion today.

Like most manifestos Cluetrain was partially unreadable and heavy on dramatics but it did lay down the principles that are now largely accepted in both the online and mainstream business worlds.

I was reminded of the Cluetrain Manifesto earlier this week at a suburban marketing event run by one of the country’s biggest media organisations. The lessons of the last thirteen years seemed to have passed by almost every business in the room.

Most of these businesses were operating they way they did in the 1990s. While some of them had a website and a couple had Facebook pages, their businesses had barely changed in the last twenty years.

These businesses are digital roadkill. Many of them have no idea what’s about to hit them as they sit paralysed wondering what the bright lights baring down on them are.

In this respect they aren’t dissimilar to the big department stores or electrical chains that are working to a model that’s ticked along nicely for decades and don’t realise how the fundamentals of the economy have shifted in the last five years.

Many of these small traders are still taking orders by fax and some of them still keep their cheque book ready to pay their suppliers bills. It’s that bad.

The idea of selling over the net is completely beyond them, only big overseas companies dodging GST do that sort of thing.

Even in the marketing field, these businesses have ignored the obvious for years with many still advertising in their local Yellow Pages and freebie community newspaper, despite barely making a sale from either in five years. But these channels worked for them once.

Few of them have up to date websites, are doing the bare minimum search engine or mobile optimisation and almost every single one hasn’t bothered to claim their local business listings.

To be fair to the little guys the host organisation was no better, this large media organisation has a good online product – they even own one of the major online local business listing services – but their sales people on the night didn’t mention it as they are too locked into selling their traditional local newspaper advertising products.

At least that company is wealthy and has other profitable arms that can prop up its dying local newspaper arms which can at least appear profitable while there are costs to be stripped from the operation.

Unlike those big media companies and retailers, the small local business doesn’t have big cash reserves or deep pocketed investors allowing them to survive for years in a declining market.

These small businesses are just going to drag their owners into poverty.

Not only have the old rules of business gone, but the value of businesses which choose to live in the past has evaporated. Few people are going to buy a business with an old, declining customer base.

“Roadkill” is an apt term for a business that probably won’t be around in two years.

Today the Cluetrain is big lumbering road train carrying ecommerce goods down the fast lane of the information superhighway with a driver that has no intention of stopping.

Make sure your business isn’t the cute fluffy rodent sitting in its path.

Most of these executives worked in organisations where IT departments had waged war on employees connecting their own equipment to the corporate network, so this was a serious development in the computing world.

In many ways employees had been bringing their own technology devices to work for years. It was, and still is, quite common to see public servants and those working for other bureaucratic organisations arriving at meetings with an underfeatured work supplied handset and their own smartphone.

IT managers hated this as they saw those private devices as a security risk and another headache for their overworked staff to deal with.

When the iPod was enthusiastically adopted by the executive suite, the game was over for those IT managers. Suddenly they had to deal with these devices and the issues involved.

At a seminar run by systems integrator Logicalis earlier this week looked at some of the issues around BYOD for companies. What was striking in their presentations were the need for HR and legal departments to be part of the process for adopting this philosophy.

The BYOD philosophy is a big jump for organisations as it means relaxing controls on employees and for many managers that is the biggest challenge.

Part of that challenge is controlling the organisation’s data on devices that could be going anywhere and doing anything.

While companies like Logicalis and Citrix address this with remote desktop applications that create a virtual Windows desktop on the employee’s device, networking giant Cisco offer their ISE devices to run “identity services” that set up rules controlling what staff can access and where they can access it from.

Cisco Australia’s Chief Technology Officer Kevin Bloch gave a good round earlier this week up of where they see BYOD driving business. To Cisco, the move to mobile devices is irresistible as shown in their Global Mobile Data Traffic Update.

Interesting both Kevin and the Logicalis speakers see BYOD as being part of the recruitment process. Increasingly younger workers expect they will be able to use their own devices rather than relying upon employer issued workstations and mobile phones.

According to Kevin, Cisco’s research is finding many employees would trade salary for the right to bring their own device which is something that should grab the attention of budget constrained managers.

This also ties into other employer trends such as Activity Based Workplaces where companies provide hot desks and staff are expected to store their items away at the end of each workday.

Ross Miller of the GPT Group described how this is another trend driving the paperless office as staff using hot desks find packing away files and paperwork each day is an unnecessary hassle.

What we’re seeing with businesses adopting BYOD policies is a big change in the way places operate and this has consequences for all divisions of an organisation from HR and legal through to marketing and corporate affairs. It’s a genuine game changer.

How the BYOD philosophy is changing business is good example of technology driving our habits and work practices in ways we don’t always anticipate.

One thing is for sure, the workplace of the future is far more autonomous and diverse than those we’ve been used to for the last hundred years, the businesses who don’t adapt are those being left behind.

Mastercard’s PayPass is the latest move in the battle to control the online payments industry as consumers move from plastic cards to using their mobile phones and Internet devices.

One of the interesting aspects of PayPass is how it is a direct challenge to PayPal who in turn recently launched their PayPal Here service which threatens incumbent credit card services like Mastercard and Visa along with upstarts like Square.

While its early days yet in the mobile payments space as consumers slowly begin to accept using smartphones and tablet computers to pay for goods and services, its clear the industry incumbents are moving to secure their positions in the market place.

It’s going to be interesting to see how this develops, many merchants will be hoping this competition starts to drive down transaction costs.

Paper is messy, difficult to file or store and cruel to the environment. So being able to move and save information electronically made sense.

Despite the promises of the last twenty years, the quest for the paperless office seemed lost.

While the networked PC gave us the ability to get rid of paper, its advanced word processing functions and graphic capabilities along with the data explosion of email tempted us into generating more paper.

To compound the problem, over the last thirty years paper manufacturers found cheaper ways to make their product which meant the price of paper dropped dramatically just as we found more ways to use it.

So rather than delivering on the promise of eliminating paper, computers generated more than ever before.

Just as it seemed all was lost in IT’s War On Paper, the tablet computer came along. Coupled with cloud computing services and accessible fast wireless Internet, suddenly it appears we might just be on the verge on delivering on those promises of the last twenty years.

At a suburban football game I saw this first hand as I watched the ground officials electronically filing match information with their league.

“This used to be a pile of paperwork that used to take until Tuesday to be filed and collated” the ground manager told me, “today it’s done within half an hour of the game ending with almost no paper involved.”

For amateur sports clubs, money isn’t so much the problem as time. There simply are never enough volunteers to meet the workload of getting a team on field.

This is true with almost any community based organisation – from volunteer firefighters to community kindergartens organisers struggle with rosters and finding helpers.

In business the same resource constraints exist except we know we can fix these problems by paying a worker to do it. The problem there is few businesses have unlimited funds to employ filing clerks and form fillers to handle the paperwork.

By killing paper in the office, we’re making business and the economy more efficient. We’re about to deliver on that promise.

Bill Gates once wrote that in the short term we overpromise what technology can deliver while in the long term we underestimate its effects.

This is true of the paperless office – now that promise is being delivered the effects on business and government will be profound.

Is your business prepared for these changes?

The advice was terrible and what was valid could have come from a 2008 book on business social media marketing.

But the room loved it and obviously the client – a major bank – thinks the speaker’s work is worthwhile. He has a market while many of us who’ve been covering this field for a decade don’t.

Timing is everything in business. Earlier this week stories went around the Internet about how Microsoft could have invented the first smart phone.

Microsoft could well have done it, they tried hard enough with Windows CE devices through the late 1990s and there was also the Apple Newton and the Palm Pilot.

While all these companies could have developed the smartphone in the 1990s it wouldn’t have mattered as neither the infrastructure or the market were ready for it.

Had Microsoft released the smartphone in the mid 199os it would have been useless on the analogue and first generation GSM cellphone networks of the time.

Customers were barely using the web on their personal computers, let alone on their mobile phones, so the smartphone would have been useless and unwanted.

Ten years later things had changed with 3G networks and real consumer demand so Apple seized the gap in the marketplace left by Motorola, Nokia and the other phone manufacturers with the iPhone and now own the market.

Apple weren’t the first to market with a smartphone, just as Microsoft weren’t the first with a Windows-style operating system and Facebook weren’t the first social media platform.

Those who were first to the market stood by while upstarts stole the market they built.

Plenty of people have gone broke when their perfectly correct investment strategies have been mistimed – “the market can stay irrational longer than you can stay solvent” is often proved true.

That’s the same with the speaker this morning; he’s not the first to discover social media’s business benefits but his timing is impeccable.

Being first is no guarantee of success if your timing is wrong.

It’s tempting to think that Google is untouchable and that’s certainly how it appears when you’re on track to earn forty billion dollars a year and book close to 40% of that income as profits.

On the same day, Sony announced a massive restructure including with 10,000 redundancies and the company’s CEO, Kazuo Hirai, spoke of a sense of urgency to address the once dominant corporation’s drift into irrelevance.

Twenty years the thought of Sony – one of the world’s innovators in consumer electronics – would be wallowing in the wake of companies like Apple and unknown upstarts like Google was unthinkable.

Fortunes are won and quickly lost in a time of great change and this is something we should keep in mind about Google when we look at their rivers of gold.

“Rivers Of Gold” was a term coined to describe the advertising riches of the newspaper industry in the 1980′s. Google’s online advertising is partly responsible for destroying that business.

Today Google is a search engine business that makes its money from the advertising that deserted print media and went online.

It may be that manufacturing mobile phones, running “identity services” disguised as social media platforms or augmented reality spectacles are the future of Google but right now they it’s search and advertising that pays the bills and books the massive profits.

The challenge for Google is not to lose sight of its current core business while building the future rivers of gold.

If Google’s leaders can’t manage this, then they risk following the newspaper industry that they themselves disrupted.

But what if he’d been born in Sutherland, New South Wales rather than Seattle, Washington? How different would things have been for an Australian Bill Gates?

The first thing is he would have been encouraged to study law; just like his dad. In the 1970s lawyers had far more status and career prospects than software developers in Australia.

Causing more concern for his parents and career counselor would have been his determination to run his own business. It’s far safer to get a safe job, buy a house then start buying investment properties to fund your retirement.

If Bill still persisted with his ideas, he’d have hit a funding problem. No bank wouldn’t be interested in lending and his other alternatives would restricted.

In the Australia of the 1970s and 80s they’d be few alternatives for a business like Micro Soft. Even today, getting funding from angel groups and venture capital funds depend upon luck and connection rather than viable business ideas.

Bill Gates’ big break came when IBM knocked on his door to solve their problem of finding a personal computer operating system; the likelihood of any Australian company seeking help from a small operator – let alone one run by a a couple of twenty somethings – is so unlikely even today it’s difficult to comprehend that happening.

Eventually an antipodean Bill Gates would have probably admitted defeat, wound up his business and gone to work for dad’s law firm.

Over time a smart, hard working young lawyer like Bill would have done well and today he’d be the partner of a big law firm with a dozen investment properties – although some of the coastal holiday properties wouldn’t be going well.

While some things have changed in the last thirty years – funding is a little easier to find in the current angel and venture capital mania – most Australians couldn’t think about following in Bill Gates’ path.

Part of the reason is conservatism but a much more important reason are our taxation and social security systems.

Under our government policies an inventor, innovator or entrepreneur is penalised for taking risks. The ATO starts with the assumption all small or new businesses are tax dodges while ASIC is a thinly disguised small business tax agency and assets tests punish anyone with the temerity to consider building an business rather than buying investment properties.

At the same time a wage earner is allowed to offset losses made in property or shares against their income taxes, something that those building the businesses or inventing the tools of the future are expressly forbidden from doing.

Coupled with exemptions on taxing the capital gains on homes, Australian households – and society – is vastly over invested in property.

Making matters worse, the ramping up of property prices over the last thirty years has allowed generations of Australians to believe that property is risk free and doubles in value every decade.

That perception is reinforced by banks reluctant to lend to anyone who doesn’t have real estate equity to secure their loans.

So we have a society that favours property speculation over invention and innovation.

Every year in the run up to Federal budget time tax reform becomes an issue, the real effects of negative gearing and other subsidies for housing speculation – the distortion of our economy and societies investment attitudes – are never discussed.

In Australia there are thousands of smart young kids today who could be the Bill Gates’ of the 21st Century.

The question is do we want to encourage them to lead their generation or steer them towards a safe job and an investment property just like grandpa?

Those trends are going to affect local businesses – particularly the home based service providers – in a serious way as the local web designer and bookkeeper find themselves undercut by freelancers in countries where an Australian day rate is a month’s pay.

With those thoughts in mind I went along to a round table discussion with crowdsourcing advocate Ross Dawson, Freelancer CEO Matt Barrie and Design Crowd founder Alec Lynch to hear them discuss some of the issues around the concept ahead of their half day workshops in Sydney later this months.

Having read Ross’ recent book, Getting Results From Crowds, many of the concepts and arguments are familiar but its worthwhile considering how the trend of a globalised workforce is changing.

The benefits of crowdsourcing services

Crowdsourcing services like Design Crowd and Freelancer have benefits traditional outsourcing services don’t have.

Alec Lynch describes these as reduced expense, speed and risk. A broad range of cheap, accessible suppliers mean businesses aren’t locked into costly contracts with the attendant risks while they can bring projects to fruition in days.

Until recently, globalisation only bought benefits for major corporations with manufacturers contracting work out to China, back office functions to India and software development to Eastern Europe.

The rise of web based services where smaller, one off projects could be paid for by credit card has bought global outsourcing into the small and medium sized business markets.

Now local businesses are affected by business practices that, until recently, were the concern of those working for large organisations.

This is bad news for local service businesses; the suburban web designer or bookkeeper is now finding themselves competing with individuals who, as Matt Barrie points out, have a very good weeks’ income for the equivalent of a day’s pay in Australia.

Basically the same forces that drove most low value manufacturing offshore are now driving services and white collar jobs the same way.

Responding to the threat

There are major downsides for clients using these project based outsourcing services; for instance designing a logo is only part of a much bigger branding exercise which in turn has to be considered against the orgainisation’s longer term objectives.

Often, most of us don’t know what we don’t know and that’s the real reason why we hire an expert to explain why a logo should look a certain way, an expense should be allocated to one specific cost centre and not another or why we should one software package over another.

When we outsource our services, particularly to a low cost provider, we lose that expert insight and end up with someone just carrying out a task; it is up to us to supervise something we probably don’t understand ourselves.

Part of that supervisory role is project management, in the design field managing creatives can be like herding cats. This is why experienced project managers are worth their weight in gold.

Like many essential skills, project management is one of those which most of us don’t have and is chronically undervalued but when a business is outsourcing to a freelancer in Estonia or Eritrea then this service is essential.

Providing those skilled supervisor and management roles is where the opportunities lie in a crowdsourced market place.

In many ways, we’re seeing the end result of the post-industrial society. Just as we offshored the manufacturing industries through the 1970s and 80s then the low skilled office work in the 1990s and 2000s, we’re now outsourcing local services to low cost countries.

Whether ultimately this is a good thing or not is a big question but for local businesses, the trend is clear and much of the basic work is going offshore. Those who choose to whinge rather than adapt will be left behind.