Facebook's Culture Problem May Be Fatal
blogs.hbr.org
blogs.hbr.org
Now they're pulling a giant bait-and-switch. Attract users with privacy, kill competition, then kill privacy to gain easy profitability. This alone is pretty disingenuous, but to make these changes behind users backs (for example, pictures that were once private became publicly viewable) shows a blatant disregard for the trust that users gave Facebook when they signed up.
That said though, I wonder if there is a way a big corporation can avoid this path, they'll have to monetize somehow and once they're monetizing they'll have to do better and better every year of they will look like they are stagnant.
So the only way to maintain that - and for facebook monetization has always been an issue - was to squeeze the lemons a bit harder.
Some of them will squeal, but as long as the majority stays you can't really fault them, no matter how sleazy it is.
Network of friends = lock in, lock in => abuse.
It's always been like that.
The problem is that they are trying to hyper-monetize. Zuckerberg turned down a $2BN offer from Yahoo, so clearly he believed he could make the company worth more than that.
Zuckerberg is actually proving that they're worth more, the way in which he goes about it is not the most elegant though. I'm still willing to bet he'll succeed but the image of facebook is tarnished for ever, and it could very well be that if he does manage to sell for a much higher valuation that the buyer will find themselves with another broadcast.com.
Facebook is very dependent on being a single entity. If it sells, it has to sell to a company larger than itself, and that's about the only thing scarier from a user standpoint than what Facebook has already done.
I thought that Yahoo offered $1B and Microsoft (later) offered several (15?) billion.
Note that Zuckerberg may have interests other than money. For example, he may be happier running a company worth $3B than having $5B.
But Ballmer had come with something more sweeping in mind. "Why don't we just buy you for $15 billion?" he replied, according to a very knowledgeable source. Zuckerberg was unmoved even by this offer. "I don't want to sell the company unless I can keep control," said Zuckerberg, as he always did in such situations. Ballmer took this reply as a sort of challenge. He went back to Microsoft's headquarters and concocted a plan intended to acquire Facebook in stages over a period of years to enable Zuckerberg to keep calling the shots.
Zuckerberg also rejected that offer. The deal that was struck was for $250M at a $15B valuation
They have screwed their network creators over time and time again.
They exploit their users all they can.
The model I envision is very similar to the shared hosting model employed on the web. You sign up for hosting and you install a CMS like drupal or wordpress and you have yourself a community and you pay a subcription fee. But instead of drupal there could be a social networking application. Each network creator would be responsble for it's promotion and marketing but I think it's a viable model because there are existing real world communities that would like to establish an online presence and something like this may be a great way to do that.
Bingo! Facebook is the best available means of keeping up with geographically distributed and loosely connected friends and family, which was the core conflict I faced when I decided I didn't like how I was being treated by Zuckerberg, et al.
I resolved it internally when I realized that they were essentially holding my relationships hostage to get what they want out of me. After that it was easy to leave.
The way to avoid it is to align the incentives of customers and users, ideally making them one population.
Google faces the same issues that FaceBook does, but less so. With targeted advertisements, the user has at least indicated their intent to buy something: they want something, the advertiser wants the same thing, and both their incentives are at least partially aligned. The happiness breaks down when the incentives come out of alignment, eg. when advertisers advertise (and Google collects money for) things that people don't want to buy.
Apple has a more pure form of this. Its users pay for products - the user is the customer. And so Apple does everything they can to keep them happy. That's why Apple customers tend to be fanatically loyal: they want a good product, Apple derives all their revenue from giving them a good product, and so Apple has every incentive to keep giving them a good product.
Note that this doesn't preclude Apple from pissing off other groups. They're notoriously developer-hostile, for example, because Apple doesn't see third-party developers as being critical to its bottom line.
Follow the money if you want to see who a company is really working for.
You just proved that no big corporation is to be trusted. Each will eventually abuse its position, should that look profitable.
Facebook's buisness model was prone to abuse from the start. They were bound to turn evil at some point. It is worth bearing in mind when (if) singing in. Too bad so much users didn't.
The classic example of a company intelligently growing up with a generation is McDonald's and baby boomers.
First, cheap food at drive-ins where teenagers can hang out, check out cars, and find dates. Then happy meals for their kids, who can stay in their car seats in the drive-thru. Now, healthier choices and high end coffee.
McDonalds got it's kickstart because it was cheaper and faster (self-service) than drive-ins. Happy Meals kept parents from choosing other burger chains. Salads and low-carb choices came in response to dieting trends. Coffee was upgraded to avoid losing breakfast business to Starbucks.
But I'd wager none of these innovations would have come as quickly if there wasn't a business threat to the company.
But let's not give credit to "vision" and "foresight" when in reality it's just a company trying to keep up with the world as it changes.
Using the McDonald's example, it could be akin to McDonald's making all of their burgers out of ground turkey because they got a huge deal with a turkey meat distributor, the customers saying "no, give us hamburger!" and McDonald's saying "fuck you."
What happens to those customers wanting hamburgers? They go to Burger King.
The problem is: suppose they weren't making a profit on the hamburger and so serving the turkey was the only way they knew how to make profits. But also suppose that it would be quite hard for customers to switch to Burger King.
Then you have characterized something of the paradoxical condition of the Facebook. Making money while accumulating ill-will.
Facebook and Twitter both have the problem that they have to justify the amount of investment they raised, and both are doing things that are unpopular with their community (users for Facebook, developers for Twitter) to make a bigger business than the original things that got them popular can sustain.
However, it has always been much smoother at the apology business than Facebook now seems to be.
Many of them will have gotten married (median age of first marriage in 2007: 27), and some will have had kids. There's a dramatic shift there: most "family" people I know tend to expect more privacy and control over their lives, and be less focused on expanding their social life and sharing details with their friends. But this is anecdotal, I know: I'd love to see a study on how social networking use patterns change during this age shift.
It's not just that the Facebook needs to offer different fare but that the fare older adults want conflicts with the fare Facebook would like to offer in order to become profitable.
An increase in value for advertisers means a decrease in value for users. Users want privacy, advertisers want everything in the open. Facebook in an attempt to sustain growth has effectively forced users to accept people within their networks that they aren't really close to and this makes users less comfortable in their own space.
Facebook is at a critical juncture and its future depends on how it manages the problems they are facing now because the house of cards can come tumbling down at any moment. What they have going for it though is that there isn't really any clear alternative at the moment that users can turn to. What clear though is that people do want an alternative but till then I suspect most will bear with it till the alternative comes to their rescue.
This started with the crapton of funding they've taken on. Which led to them hiring hundreds of Google level engineers. Which led them to needing even more funding to stay afloat.
And now that they have so many obligations to investors they need to monetize it at any cost to justify the valuation.
So they are doing it at the cost of user's privacy, since that's one commodity that most people don't really care about.
On the other hand, isn't this great for HN users? Facebook is screwing up in some core areas. Up and at'em, I say!
a) people, often students who run their entire social lives on facebook, have 1000+ friends, and spend a long time every day on the site. Often students. Probably don't have much money -- but you might be able to get them hooked with small payments. Also, market it as a gift thing. Your uncle doesn't know what to get you for chrismas, but knows you spend a lot of time on facebook and has no problem spending $20 for a present. Also something to buy for the girl you're flirting with (and yes, it likely is that gendered). Livejournal made this work very well. In this situation it doesn't matter _what_ you offer for the paid account, just that it exists as an option.
b) anybody using it profesionally: event promoters, venue owners, bands, etc. May not deeply like or understand FB, but getting it right is worth serious money to them. Simplification, information management, statistics, maybe tech support.
c) Professionals who know nothing about facebook, but feel they should have a presence there. Sell them a service with lots of hand-holding, maybe integration with tools they already use.
Just here's link for a) http://www.livejournal.com/paidaccounts/
Instead, users are the product. Advertisers are the customers.
Too bad the original article failed to clearly make this point.
I think Facebook is running up against human nature. Yes, humans are social, but we are also exclusive. Software that provides an outlet for the former but not the latter is betting against human nature. That's not a strong position to take, particularly when your success was built on both of those factors. Relying on lock-in to support these changes is hoping that the superstructure will compensate for removing a girder. It may work, but the fundamentals are against it. And there's a tinge of recklessness about it.
That said, it would be a very useful thing to have if someone could get it right.
I say this only half in jest. One can't get 400 million + people to move, but niche sites could certainly peel off a substantial number of users over time. And facebook itself started out as a niche social netorking site...
Yes, I use Pirate as the language on Facebook, can you tell?
At some point, I was starting to perceive FB connect as this holy grail that would finally bring some convergence and eliminate multiple logins and so forth. Of course, there are alternatives like OpenID, Google Friend Connect but they seem to be on the fringe still in terms of adoption and usage.
I run a site where the only way to sign up (as yet) is using FB connect, primarily to improve the authenticity of members (and it also reduces fake profiles by order of magnitude).
This backlash is definitely making me question if it's the right thing to do anymore.
Erm...no. The technology this generation was born into was the internet, and it wasn't until barely 10 years ago that the social web became what it is. The aspects of social activity is the technology this generation was born into, and the only reason this is relevant for discussion is that just like we evolved out of IRC, ICQ and are moving away from AIM, too they will move away from centralized, top-down hierarchies of managing social interactions.
I don't think the problem was with keeping up but rather staying the same service. Facebook needed to not evolve and remain the same way it always was when it was first conceived.
"Use Twitter Instead!"
If you're going to boast in public that you like to drink a Sparks for lunch, violate the open container law, and walk by the police station, don't be surprised if the cops notice.
In fact, if you're going to say something that you don't want to get out, you'd better be really careful of how you protect it. Nixon learned that lesson the hard way.
If someone spends thousands of dollars on hair implants because they believed an informercial telling them that they will get laid every night of the week, I would sit them down and have a long talk about tooth fairies, santa clause, bridges, and swamp land salesmen.
But I would still despise the businesspeople preying on the gullibility or naivité of their customers.
So perhaps it is a very good idea not to put anything online that would ruin you if it leaked. But it's still reprehensible to leak things after setting an expectation that they are private.