Strong Opinions @marksbirch

-“Why Facebook Clearly Belongs in the 10X Revenue Club” by Bill Gurley

From an analysis of the Facebook S-1, it is clear is that advertising is what is driving growth in the Internet space. What was less clear is what it has taken to achieve that growth. From this analysis, despite the power and progress of technology, sales and salespeople are the crux of revenue growth.

This is something that has not changed since the early days of the Internet. Yahoo sold banner ads, Monster was selling job listings, and Google was selling search ads. What they all have in common is that they all require large salesforces. If someone was looking for the next big thing, it would be either in better targeting ads (increasing click-through and conversions) or lowering expense of customer acquisition (automating sales process through self-service).

As an aside, this is also the issue in finding success in the small business market. Selling into the small business market has historically required a large sales organization to fuel growth. The Yellow Pages is the classic example, and even decades later, you can look at what the Groupon’s of the world needed in order to achieve scale.  It came down to a building a massive sales force and this will likely not change any time soon.