Is Facebook a Ponzi Scheme? One Blogger Says Yes

Ponzi schemes, and calling things Ponzi schemes, is majorly in fashion these days, thanks in part to the conviction of actual Ponzi schemer Bernie Madoff, but also because “Ponzi scheme” is just a fun thing to say. And so in that spirit we get analyses like “Yahoo! was a Ponzi scheme” and “Social Security is a Ponzi scheme.” Groupon has lately fallen into the Ponzi hunters’ crosshairs, but one target eluded them until this week: Facebook.

Joseph Perla outlines a pretty straightforward argument: Facebook’s ads are ineffective, and so the company constantly has to find new rubes to bilk people into buying display ads on the site. Eventually, though, the jig will be up after everyone has wizened up to Facebook’s awful ads, and then the company will no longer have any revenue, and people will really regret having been so eager to buy stock in the company.

It’s a fun argument, like all “X is a Ponzi scheme” arguments are, but it rests on the assumption that Facebook can’t find a way to make ads more effective and that Facebook has to make money on advertising. Both of those are debatable assumptions, but we’re still pretty tickled by the image of Mark Zuckerberg and Bernie Madoff trading stories in the big house.

mtaylor [at] | @mbrookstaylor