Why facebook will decline in the next 5-10 years, why I wouldn't invest in them, and why I think the Scandinavians will invent something better

1. It's not cool. One reason that led to facebook's phenomenal success – apart from the whizz-bang back end computery stuff that made the whole thing possible – was that it was cool. There were no ads, it started out with the cool university crowds and spread out to the broader community. A very good marketing strategy, and it made a great basis for a movie. However, as it has spread out it has become less and less cool, to the point where aunties and uncles are using it. When aunts and uncles start using something, even the 'cool' aunt or uncle who smokes joints and goes on jungle adventures in the heart of Myanmar, the end is nigh! Even I started to use it few years ago and I, in marketing terms, are what you call a laggard, I only get into things at the point where everyone else has gotten on board, sometime around the time that the innovators, and everyone else, start to loose interest.

2. Facebook was exclusive. There was an in crowd, and 'out' crowd. It was a bit like passing notes to friends in class under the desk about how blah and blah are in love or how so-and-so stinks, or like the psychology of playground, you will play with these dues and you won't play with others. Once you start having to sign up your aunts, uncles, mums, dads, siblings – and then maybe your mum or dad comes in, like in the South Park episode, and makes you sign up your granny – the exclusivity has gone, making it even less cool.

3. Technical hitches and other faux pas – not writing here of major screw-ups, like system crashes and bugs, facebook seem to manage these very well and I think the company has the back-end computery stuff operating really well. It's more the technical faux pas – like allowing every Tom Dick and Harry friend of your sister being able to see your photos just because you tagged them in it or they liked it. Or when the site defaulted to publicly viewing, where you can look up old friends you don't hang around with anymore and browse their albums, or find enemies and find the dirt on them – not cool, not cool at all.

4. The internet is free and innovative, what facebook is offering, can be, and will be, offered by someone else. Facebook have done the work and now all you have to do is copy it and do it better, or better and slightly differently. 'No-one can do it better' you say, 'Google tried it and it is crap', well maybe Google will never get it right – but there was a time when we were using AltaVista, Ask Jeeves and a few other search engines that everyone has forgotten about, and Google came along and did do it better, and everyone jumped ship, it seemed like overnight now. The only thing that will slow the migration from facebook to a future (or existing) competitor, is that we have years of photos stored on it, and a whole bunch of friends signed up, but whoever (and there may potentially be several good competitors) takes a decent slice of the facebook pie will be able to figure out how to migrate these photos. Also many might be looking for a fresh start to their friends list. One reasons is that they might have too many, like Audrey Hepburn said in Charade, 'I already know an awful lot of people and until one of them dies I couldn't possibly meet anyone else'. But also, there may be a reason you haven't kept in touch with that high school friend all these years, why the sudden change of heart because it's easy to sign them up again? If you aren't going to invite them around for dinner chances are you really don't care much about them and at some stage one of you is going to realise that.

5. Easy-come easy go. I'm not stupid enough to think establishing and multi-billion dollar empire is 'easy', but it did come quickly and although it will no doubt last a while, the end could also be just as quick. I believe the end of facebook, at least as the big one, that has very few real challenges in some markets (and let's not forget there's plenty where it doesn't), will not be far off. As Churchill said, 'now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.' Facebook's domination, I believe, will soon be at the end of the beginning (if it hasn't already reached that point. It's had its all conquering stage, like the Germans taking over Europe and North Africa in 1939 to 1940 (though a lot nicer! I don't want to make out the dudes at facebook are nasty genocidal maniacs) or the Romans sometime in the early A.Ds when they conquered much of Gaul, Spain, Carthage, and even Britain, at this point both empires seemed unstoppable, but I believe, as with the Romans and Germans, facebook's empire expansion will start to slow or even just halt. The Romans took a few hundred years to fully expand and it took a few hundred years to get rid of the last remnants of it. Hitler's empire took a few years to create but only another few to crumble – though it certainly didn't go quietly. The inevitable halt to facebook's empire will be a problem for their revenue base and subsequently for investors, many of whom might be foolish enough to think facebook can just keep going on getting bigger and bigger. Which brings me to the point of why I wouldn't invest in facebook.

6. Why I wouldn't invest in facebook. My initial thoughts are that it seems to me that facebook are a one-trick, or at least limited trick, pony. Put aside emotion and think of what they sell. Advertising, I would guess is their primary revenue stream. This puts them in the category of a media company – something like a newspaper except the journalist who provide the content are people like you and I. As the company continues to expand, as with the days of paper newspapers and their rising circulation, advertisers will be happy to keep putting money in – once the facebook empire reaches its limits and the barbarian hordes and Vikings, Visigoths and American G.I.s are at the borders ready to attack, the advertisers might start thinking – hey this Viking mob are cooler, I might risk a few dollars advertising with them, they don't have the coverage, but they do have the type of people I want to advertise to – the cool people who used to use facebook – and they are cheap. And when the cool people, and the advertisers start using the alternative/s that will mean less users and less bucks for facebook. The successful candidate/s to challenge facebook's supremacy (in the markets it has dominance) will probably have a period of consolidation where a few innovators will see if they have the legs to last, then when they can prove they have the right stuff, then it is possible, like facebook, that they'll reach a point where they quickly take off and steal a portion of facebook's business, maybe a certain country (remember both the Romans lost Britain relatively early on, and the Nazis couldn't even take the country), or a particular cohort – like the university crowd, or teenagers.

My suspicion is that someone Scandinavian will invent one of the next big social media thing that gives a serious challenge to facebook – they've done it before in Roman times, preventing the Romans from expanding North into Denmark, they also took over Normandy and eventually became rulers of Britain for a while, and they invented Lego, IKEA and the game Minecraft – anyone who makes money out of blocks, squares and flatpack furniture which you have to assemble yourself (actually all three of these things you have to make yourself!), will surely be able to build a better social networking platform than facebook. Maybe it'll just be a blank page with some tools where you build your own distinctive site, or, like facebook, one that's ready made.

Once the advertisers leave facebook – or at least spread their advertising dollars to other rising social media outlets, what is facebook going to do? They don't seem like a company that has much in the way of other logical expansion opportunities. Google has invented a good OS for phones, and have bought YouTube and Blogger, Apple have made all sorts of other gadgets besides computers, but facebook just provides a free service and charges advertisers to place ads, which many have learnt to thoroughly ignore, at the side of the facebook page. I guess they could make the ads more prominent, which will in turn piss more people off which will in turn will lead them to turn to the Scandinavian saviours who must surely be out there thinking about what their humble empires will look like. But look at the mistakes YouTube are making – forcing people to watch a 30 second add before a 30 second video – not cool man.

7. You can't keep the invading hordes out forever. It is really difficult for a company like facebook to guard against the invading hordes, be they blood-thirsty, exciting Vikings, or well-disciplined American G.I.s. Unlike other big brands, like Coke for example, facebook's place of business is still relatively 'free'. If you want to compete with Coke, you've got to make some distribution arrangements, get some deals from major supermarkets so you can get some shelf space, convince the local mum and dad store, or 7/11 and McDonalds to stock it, plus advertise really, really big to get people even to try it – not to mention get some factory and truck loads of sugar. Even for a brand like Pepsi, that's be around for a long time, it is still very difficult to knock Coke of top spot, and despite all their efforts they are the (relatively) poor cousin to Coke. What about someone new? Well, in the case of soda pop, it's a whole lot of hassle and a lot of money to try to be #1 in that market and there's certainly no guarantee of success at the end of it. The alternatives to facebook, on the other hand, don't face these issues, they can start small, smart, then expand once they get a few dollars in, they can do all the things facebook did like have no adds, exclusivity, innovation, and the cool vibe. They would have to do it better than facebook, and many of the invaders will pass away into history with little impact, but I think there will be the odd major breakthrough into the social media market that will leave facebook reeling. The Romans got over the attack of the Goths, and even managed to hold out in the East in Constantinople throughout the middle ages, but back then things happened a lot slower, facebook's death might be a matter of years rather than centuries. And what then? What else does facebook have to offer? Selling its name, the computers, the code? There may be value in the name, but even that's not guaranteed. It may be something like AltaVista, I think I could probably almost afford to buy that now, but in 1997, when I was doing my first HTML programming, I wouldn't have dreamed of such a thing!

8. I wouldn't join a club that would have me as a member – or when the bellboys get in, it's time to get out. There's a saying amongst real investors that when the bellboys get into the stock market it's time to get out. I know nothing about investing and have never bought a share in my life, but I know about the float (if that's the right term) of facebook. Because everyone was using it, when it did go public I heard a few murmurs around other people I know, who also had no idea about shares, that it might be worth investing in – hey it's already such a big thing, billions of users and all that. When people like me start thinking about shares in a company, based on the fact that it looks kind of a cool thing to invest in, it's time to take a second and third look. It's like the old Chaplin saying, I wouldn't join a club that would have me as a member! Emotion aside, I think the time to invest in facebook was some years ago when it probably was cool, but now our aunties and uncles (hey, I'm one of those as well so nothing against you guys!) think it's cool, it's too late for that. If you wanted to invest in facebook now I'd suggest taking a look at their revenue streams, potential for growth, and, rather than accept they will be a dominant force beyond the next 5-10 years, keep in mind that someone out there, right now, is gunning for Zuckerberg's spot. And what's more is, they'll do it.

9. No contract, no guarantees. There's probably some fancy lawyer out there who will argue with me, but my understanding is that facebook users, like myself, do not have a contract with facebook. There maybe laws in different countries which relate to my relationship with the facebook company, such as privacy and defamation, but facebook and I have no particular agreement that sets out what it is they are giving me. A contract, and again I am happy to have a fancy lawyer argue the point, usually requires what's called consideration to come into affect, or to be binding. That consideration is usually monetary. You want to sell your house, you find a buyer, you agree to a price, and you exchange contracts to sell. The buyer can expect that the pervious owner will now hand over the keys and not come back a few years later and say, now I want my house back. Same with buying something from a shop – you walk in, you see what you want, you pay your money, and it's yours. With facebook, they are providing you with something free which means you really don't have a formal contract with them. If they decide that they want to sell your user name to the highest bidder, what is preventing them from doing so? They let you use it for a while, and they can promise that you'll always have it, but I can't see any binding agreement that would prevent them from taking an offer to buy the name, and maybe, they could be nice and give you something similar. What about all your photos? They can promise to keep them forever, but again, no contract. If you'd even paid them a dollar a year and then they made you the promises about keeping them forever, you may have been in with a chance. But if they lose them, or decide to charge you for them and you wanted to take some steps against the company, good luck. Any promises facebook make, apart from those covered by the laws of the country you live in, are not legally binding. If you were to sue them, for example, because they lost your photos I think a judge would probably come back to you and say, well you should have backed them up, these dudes just offer a free service, you get what you pay for they say. You have much a much stronger agreement when you buy a Coke. When you buy a Coke you can expect it to be refreshing, I think it says so on the can, if it isn't refreshing you could go to the judge and say these dudes sold me this refreshing drink, it says so on the can, and they didn't provide me with a refreshing drink, and the judge would say, oh how tragic, I order Coke to give you the $1 back that you paid for it, plus whatever damages relating to how unrefreshed you were following the drinking of the Coke.

And what about all those other promises you assumed facebook would keep. You might be covered by common law for some things but when you signed up for facebook you tick some box on some agreement that you probably didn't read, so when your photos end up getting shared to friends of friend of friends, and things go pear-shaped because it's a nasty photo, or it shows you sky-larking on a day you were meant to go to work and you get fired well then I think things get tricky. Facebook, who let's remember have many billions of dollars which you probably don't have, yeah well sorry but we do give this service for free and you did read the terms and conditions didn't you and we never promised that we would prevent friends of friends from viewing your photos and whoops we won't do it again, have a nice day.

The Romans at least had the Pax Romana with their subjects which I believe would have been more 'legally binding' than any agreement you have with facebook. The states Romans occupied, in return for not rebelling, might might get a Roman engineer to come along and build some public toilets or a legion or two to help keep the peace. Because you haven't paid facebook any money, within the bounds of the law, you really can't expect as much from facebook as the conquered Roman territories could – and you certainly cannot guarantee that they will keep to their promises. You and your family and friend photos and comments and profile pictures are just occupying a little bit of cyberspace at the grace of the facebook empire. They don't even really need to offer you technical support if they don't want to, or any other service for that matter, though it makes good business sense to do. At the end of the day you, and the billions of other users, are just there to make sure that that empire can attract advertisers so they can make a profit. And I for one don't think that's necessarily going to turn out so cool for many of us which I think could lead to rebellion against the empire! And from the Star Wars movies we know that in the end it won't take much to destroy them.