Facebook announced earnings on Tuesday, and the key word was “billion.”
$3.2 billion: Revenue for this quarter.
One billion views: A new milestone for videos.
And, perhaps most importantly, 1 billion users.
It’s a number Facebook itself has already exceeded, and it’s also the number that Facebook CEO Mark Zuckerberg set as a goal for Facebook-owned products like Instagram, WhatsApp and Messenger before Facebook attempts to “aggressively” monetize them and turn them into “meaningful businesses in their own right.”
“This may sound a little ridiculous to say, but for us products don’t really get that interesting to turn into business until they have about a billion people using them,” said Zuckerberg.
“It sounds a little ridiculous to me as well,” says Nate Elliott, analyst at Forrester Research.
“The reality is Facebook didn’t turn its primary property – the Facebook business – until it had about a billion users,” says Elliott. “And I wonder if they’re not using that as the benchmark for everything else they do.”
But to understand just how “ridiculous” that benchmark is, you have to appreciate the sheer size of one billion. To do that, I called up my high school math teacher, Don Smith.
“It’s an incomprehensible number, Stan, it really is,” says Smith.
The only way to comprehend it is to use a device to shrink it to something more manageable. For instance, consider an inch.
“A billion inches is over 15,000 miles,” says Smith. Or about five trips from New York City to Los Angeles.
A billion users–that’s 120 times the population of New York City. To get that many users, you usually have to look at whole industries, not individual companies.
“For example, the toilet paper market is pretty universal, but nonetheless, it’s not a single supplier,” says Roger Kay at Endpoint Technologies Associates.
There are a handful of businesses that sell physical products to a billion people – Proctor & Gamble, Unilever, and so on. But Facebook has the advantage of a product it gives away for free, which it can do because its digital. “So how many accounts do you want to set up? As many as you want,” says Kay.
The disadvantage of a free product is that you don’t make money selling it–instead, you typically have to sell ads. This quarter, Facebook made about $2.37 in revenue for each of its 1.35 billion users.
So which companies would interest Mark Zuckerberg?
How many products actually have a billion users? It depends on how you measure.
- Facebook didn’t pass the billion-user mark that long ago, and its biggest acquisitions, WhatsApp and Instagram, have a ways to go at 600 million and 200 million active users, respectively.
- PayPal claims to process 10 million transactions a day, or a billion every two years. But they only have 157 million active accounts. Snore.
- Amazon has inconceivably huge sales, but a piddly 244 million user accounts. Forget it.
- As mentioned above, there are several huge conglomerates that reach billions of consumers – Procter & Gamble claims to serve nearly 5 billion people – but it’s unlikely that they produce a single product that serves a billion people.
- Google, one of Facebook’s biggest rivals, is a contender. It was one of the first sites to reach a billion monthly unique visitors, and YouTube is there too, but it’s not clear how many individual products would interest Zuckerberg. For example: Gmail had only 416 million users the last time Google reported those numbers, in 2012. Google Drive only has 240 million users.
- Apple is close too. There are 800 million iTunes accounts, a decent measure of unique Apple users across their product line. The app store alone has clocked 75 billion downloads, and Apple just sold their 500 millionth iPhone.
There’s one company we’re fairly certain meets Zuckerberg’s billion-user requirement by any measure: Coca-Cola. The company moves up to 1.9 billion servings a day, and its namesake beverage has been around for 128 years.
At press time, it wasn’t clear if Zuckerberg would be interested in turning Coca-Cola into a meaningful business in its own right just yet.
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