Why Facebook is killing Silicon Valley
steveblank.com
steveblank.com
Facebook changes how you interact with the acquaintances in your life. With or without Facebook, I'd keep in touch with my best friends. But Facebook keeps me in touch with some people I probably wouldn't otherwise know anything about. For better or worse, it really changes your relationship with those 'weak tie' friends.
LinkedIn similarly changes how you connect with former co-workers. There is no way I could have kept up with all these people as they switch from job to job if the world still operatered on an address book I update myself.
Obviously the iPhone was revolutionary.
These three are all 'big startups/big ideas/disruptive innovation', (pick your favorite moniker).
But the 1,000,000th iPhone app is not a big idea. The next Facebook game is not a big idea. Obviously there are some exceptions, but by and large these are just small fishing surfing on a big wave. Yet entrepreneurs and VCs are disproportionally investing their time and money into them.
Is it easy money? Do they have a lack of imagination?
I'm not sure but it seems like we all would like to see more money and talent going to the 'hard' stuff, whether that is material science, clean tech, biotech, AI, computer hardware, space technology, self driving cars, electric cars, etc etc.
That said, it's not a bad thing if a lot of entrepreneurs hit singles right now on this wave, and set themselves up to hit a home run later on a bigger problem.
Well, the assumption is that social is some sort of platform. You'd figure, now that we have some semblence of the relationships between people, we can build applications would wouldn't have been able to otherwise with it. It seems like that would be the case, wouldn't it? We often lament that our software treats us badly, usually due to social faux-pas a human wouldn't commit (like inviting your ex-girl to your wedding in a wedding invitation app).
In the same way that when other products we have that sprouted other industries as a result. Cars(along with highways) helped made suburbs possible. The first apps for the personal computer probably seemed gimmicky (why would people want computers in their homes other than for recipes?), but people kept trying since it seemed like something should be there.
So therefore, we see a lot of people trying. And it's true what Steve Blank said about VCs liking fast and big returns, but they can also only invest in what companies people start. There are also a disproportionate number of startups in that space.
That said, there are a lot of copycats that haven't thought deeply on the matter and are just digging there just because that's where everyone else is digging. In addition, social/mobile seems easy to people to do. Everyone's a self-proclaimed expert because, "hey, I'm social and I use a smartphone!". Social/mobile is hard to get right.
I believe it's just what innovation looks like. You're going to get patterns like this, where everyone's chasing after the same big and lucrative stuff (what someone else in their thread called #LowHangingFruits). Once it's exhausted (or seems like it is), people will turn their attention elsewhere.
facebook stock is just as bad as a mortgage backed security. yet i'm a speculator because i'm greedy.
Minor point- at what point can we stop calling this organisations 'startups'? Surely there should be no such thing as a "big startup". Facebook is not a startup. Any more.
The iPhone's marketing was very good. I'm not sure there was anything revolutionary about it.
Edit: Rather than answer individuals below, I'll state my terms here. Revolutionary indicates a complete change - the overturning of all that was before. We already had phones, we already had pocket computers, we already had phones that were pocket computers, we already had phones that were pocket computers that you could get extra programs for, we already had increasing use of them as time went on. We already had.
(I was going to go into a whole rant about why ubiquitous pocket computers are revolutionary, but maybe I'll let someone else tag in on that one if it's in question ...)
Post iPhone: Apple/Google control software ecosystem of mobile phones.
Revolution: A forcible overthrow of a government or social order for a new system.
By your own definition; _same_ system, just different controller, so no revolution.
In this case, I would suggest that while the system may seem similar, the end user experience differs greatly, for better or worse,
It seems that a true revolution happens not when someone invents a new thing, but when someone figures out how to make it useful to masses. Printing press is much older than Gutenberg. Steam engine is much older than Watt.
Basically, the gist is that to be successful, idea/offering/product/service needs to not only be 1) technologically advanced, yet feasible, but also 2)desirable from a user perspective and 3)viable from a business perspective.
Only when you put strongly advanced yet feasible, desirable and financially viable innovations out there do you get really successful and revolutionary advances.
Lots of cool tech fails to make an impact because it doesn't solve a need or can't be clearly fit into a business case – and you can repeat that story for any of the three key parts of this model.
It seems obvious, right? Except you can point to an endless string of failures, big and small, that clearly didn't account for at least one of those three parts.
It wasn't just marketing. It really was a transformative product.
That's not a knock on Apple, by any means. I think they're brilliant at taking an existing consumer product and dominating it by making something that's radically better designed and made. They are very willing to let other people pioneer a category and prove the market before coming in to crush their competitors, drive their executives before them, and hear the lamentation of their women. One could argue that given their particular skills, that's a much better use of their time and money than pioneering anything major.
The App Store provided an entirely new sales and delivery platform for inexpensive smartphone software programs.
This is a $2B market for software that didn't exist before. I'd call that an entirely new market. Perhaps not big by Apple scale, but lots of companies would kill to have a $2B market.
Did Apple do much better with a more powerful device and a large user population used to buying music and other media from them? Absolutely. But that's still doing it better, not doing something entirely new.
I think Apple's (correctly) viewed as the company who "makes it work" with the right combination of technology that is cutting edge enough, but integrated superbly. When they are really out on the leading edge, the results are mixed (e.g. Newton), although that may have changed with greater vertical integration and supply logistics in recent years.
On that level, though, how "entirely new" does something have to be before it gets that stamp. If a given company invents something but doesn't bring it out of beta, and another company becomes known for commercializing it and bringing it to millions, who gets / deserves the most credit?
That being said, it is clear many Apple fans (and Apple themselves, frankly) have gone way past a reasonable division of credit. Considering the last decade-plus of smartphone history, the idea that Apple should be suing HTC (among others) over products they developed with Andy Rubin's ex-Danger team is laughable. If either (or both) had spent a bit more time and money on patent lawyers in the early 2000s, they could have sued the iPhone out of existence. At least at HTC (at Google is a more complicated question), I'm sure there are a few people who regret that they didn't.
Apple did, thought, create a revolutionary new distribution mechanism. But imagine for a sec that some third party had invented the App Store. Who would they have sold it to? Apple, Nokia, and Microsoft. Or perhaps AT&T, T-Mobile, and Verizon. The market for that innovative product was large companies who sold a lot of phones. Apple just happened to have an exclusive on it, and used it to crush their competitors.
>Apple definitely forced the pace of evolution in that market substantially, but they didn't create an entirely new market.
Here's one example: mobile and mobile apps. Look at the number of start-ups (and established companies) in mobile, compared to just a few years ago. The app store model made buying, downloading and installing mobile apps, brain-dead simple for users which exploded the market.
You have to give them more credit.
It certainly didn't help, but to this day (and probably for the foreseeable future), there is still a larger non-iPhone slice of the market to divide up. Existing smartphone players could have stuck with incremental improvements and held onto more than enough to survive.
As evidence, I'll note that iPhone didn't pass Symbian until somewhere between Q2 and Q4 2011 (depending on which analyst you believe) - after Nokia announced the switch to Windows Phone. Existing players could have survived the iPhone, but something else happened...
I'm happy to agree that Apple's App Store was a revolutionary approach to software sales, though. That really did transform a market entirely. But the iPhone itself was not revolutionary in the same sense.
Credit for revolutionizing a market should go to whatever brings it to that market in large enough numbers to matter. This is why we usually credit Ford for revolutionizing transportation, even though many interesting automobiles preceded his.
It's hard to see from the SV bubble, but most people were introduced to smartphones with Blackberry and Android. It wasn't long ago that the iPhone was seen as an interesting toy used by celebrities and a few friends by people outside of tech circles.
Apple revolutionized smartphone design, but they didn't revolutionize the industry. Google did that by creating a good smartphone operating system that anyone could use freely.
Android made it easy to make a good smartphone by removing the biggest hurdle. What matters in the history books is who had a lasting impact. Will the future look like Android where the basic software is free to duplicate and modify? Or will it look like Apple's tightly controlled system?
History doesn't seem to favor Apple's way of doing things. Apple's way can never create as diverse a market as Google's has.
Very important not to underestimate the polish and usability that iOS brought to the table. I remember looking into developing an app for symbian and realising how tricky it would be (tools, guides, lack of examples, crappy devices, etc).
Would it have been significantly different today? Sure. But by that standard, iOS would have been significantly different today without Android, too.
PS: Remember when people paid for ring tones?
http://www.demogeek.com/2009/07/31/how-to-add-custom-rington...
This is one of those truisms that technologists love to repeat over and over again. "It already exists, so it is not revolutionary." I think it just a curse of the people working on the tech.
To technologists, the tech isn't that amazing or revolutionary. "We already had that 5 years ago!". What they miss, and will probably continue to miss as long as there is technology, is that what is amazing is making it available to everyone in an accessible format.
It's the go-to example, but that was the genius of Apple. Sure, all the tech was already there, but what was revolutionary was starting the path to putting a computer in every home.
A machine or piece of technology by itself isn't any more amazing than anything else. Having it available and easy to use for all of humanity is very revolutionary.
Absolutely. But I feel compelled to point out that the wealthier slice of the developed world isn't "all of humanity" by a long shot. Right now the revolution that is encompassing all of humanity is the mobile phone itself. The smartphone's going to get there, but it still has a long way to go.
That's stretching it a bit, don't you think? Apple devices are neither ubiquitously available (i.e outside US), nor are they within the price reach of "all of humanity"
edit: oops, I did not read fpgeek's response before posting
before the internet we already has arpanet, tcp/ip, newsgroups, telnet. there is nothing revolutionary about the internet? or is there?
This is nothing new. What's new is that there are a lot more people connected and willing to use the web now. And their computing devices have ample power. And they have an installed version of UNIX. The network is growing continously. And we're still not done yet. It will grow more.
The formula for these startups is simple: Take something simple that nerds have long known how to do, using UNIX, e.g., share a photo, and make it so easy that anyone can do it. This made sense in the past, when few people had running copies of UNIX.
What is CGI? It's letting someone use UNIX utilities, or use a scripting language interpreter running on UNIX, who cannot run those utilities or that interpreter herself. (Not counting all those Windows servers.) Today it amounts to telling someone to use the web and CGI to run a script on a server somewhere that she could just as easily run on her own machine. A lot of the data that is kept on servers somewhere else could be stored on the user's local machine. Instead users are trying to figure out how to use all this extra space. So they fill it with music and movies. Then we tell them they should put that stuff in the cloud. With storage costs what they are, users can purchase enough external hard drive storage space to store their whole digital life. But they're being told to give their data to someone else.
We could just teach them how to run the UNIX utilities on their own machine. Or teach them how to use scripting languages to do basic tasks.
But we don't. We think of everything in terms of client and server. Even when every user is holding the power of a server, powerful enough to serve her needs, in he palm of her hand.
At some point, we'll reach the point of "self-service". Because it does not make sense with the computing power we now have to keep letting someone else do everything that could be simply done by users using their own devices. This not 1980, or 1990, or even 2000. An enormous number of people are using UNIX (via OSX or Android, for example) and they don't even realize it.
There is a place for "the cloud" and big jobs, but for most users, like the ones on Facebook, they can accomplish most things without having to use a server in some datacenter somewhere.
And this is more cost-effective. And if more people knew how to use the underlying UNIX system they now have on their laptops, tablets and smartphones, we could see huge advancements in their productivity.
Instead we're still trying to keep them hooked on using someone else's servers to do really simple things, so we can manipulate them and try to make money in subtle ways, indirect ways. We don't just charge fees for use, because we know we'd be undersold. Everything is "free", to the frustration of some would-be enterpisers. And why is that? Because the cost to provide these "services" is near zero. Someone else who knows UNIX can do the same thing. Even more, today the user could do it themselves with just a bit of know-how.
Stop trying to manipulate users and let progress proceed. Let them use the full power of the devices they have purchased.
VC is chasing social networking right now because consumers are moving toward social networking vs other forms of entertainment. Some VC will make good guesses at the direction things are headed and make some money... some won't and will suffer the pain of being wrong. A lot of hype-sensitive VC will make the mistake of overplaying the social networking trend and that's a good weed-out mechanism in the economy of the Valley.
It doesn't mean that funding for cancer drugs has stopped or even slowed down as a result. Even if you could attribute a slow-down of cancer funding to FB, it doesn't mean that funding for cancer drugs won't resurge and maybe increase after this trend subsides.
Another thing to consider. The author mentioned Elon Musk as being one of the few sources of a "disruptive startup" in the last few years. Well where did Elon Musk get his money? Hint: not in the Space or Automotive industries. He is a brilliant guy who made money on the Internet then applied his problem solving skills and vision to other fields where he thought he could make a difference.
Likewise, Facebook has converted a whole bunch of smart people into rich people in Silicon Valley. It's likely that some of them are going to take their money and apply it to new ideas in non-social-networking endeavors and we'll be referring to them years from now as innovators in those industries.
Money flowing into Silicon Valley smart problem solvers is a good thing.
Maybe some of them should. Sure, the direct experience of most of the YC partners is web-centric, but they're connected enough in SV that YC might be a big benefit, especially if any of those teams are amenable to a 3-month build cycle.
I remember listening to your office hours at TC Disrupt, when you were talking to the guy from Omniplaces. You said: "This is commercialized research? Ouch. It’s often a solution in search of a problem..." (Of course, that was part of a broader commentary about how the startup shouldn't be competing with Google in search, which I don't necessarily disagree with.)
But I think that's what he's talking about. Sun, Google, Cisco, Akamai, VMWare, and a variety of other technology companies came fairly directly out of commercialized university research in systems, databases, networking, virtualization. Are there YC companies that are commercialized university research? Such companies at the very least seem very different from companies like Airbnb which seem like they evolved from a consumer problem rather than innovative technology. What's more, it seems like basing investing decisions on current consumer behavior and problems seems much more sensible than doing so based on technology, which is what Blank seems to be arguing and what you seemed to be arguing at Disrupt.
http://techcrunch.com/2011/09/12/tc-disrupt-office-hours-wit...
Has anyone tried to solve that publicity problem?
... material science, sensors, robotics,
medical devices, life sciences, etc...
VCs whose firms would have looked at these
deals or invested in these sectors, are now
only interested in whether it runs on a
smart phone or tablet.
We wouldn't have arrived where we are today without building what we built, so I hesitate to call it a mistake, but PG was right in the end :)
That said, I don't believe you can make the point the other way round. whereas social start-ups can have an easier going there is also more competition. On the other hand the next apple might face different problems.
I think Steve Blank has in mind the level of ambition of the stealth fighter program.
Such a venture would involve putting in many orders of magnitude more money than YC invests in a single startup.
Today's equivalent would be investing in a new Intel corporation.
Last time I checked, YC sponsored much smaller ventures such as bed-and-breakfast exchanges and online backup systems.
So why would you be involved at all in such ventures, let alone aware of the trend?
The microprocessor was invented in the 60s to be the wing controller for the F14. The F14 was rolled out in the 70s and deployed in the 80s, and in service till a few years ago.
So the government was funding integrated circuits for multi-decade deployment, decades before it intended them to be used and between 5-10 years before silicon valley got in on the action.
Last time I checked, VC funds are 10 years, and most VCs want an investment to return within 3 years. (As Steve Blank is complaining about).
By my understanding, even if somebody got seed funding for a project with an F14 level of ambition, the money would be peanuts compared to what it would take to make meaningful progress, and then the VCs would think it too far from a liquidity event to invest in anyway.
How could YC invest profitably in such a venture? What am I not understanding?
I think you'd need to find a source of follow-on financing that would be much longer term than either Wall Street or Sand Hill Road (again what Steve Blank is complaining about).
Seems you get more disruptive bangs per buck now than you got some time ago.
And it's not just social media that's low-hanging in the Valley -- that'd be an oversimplification. It's also the plethora of in-your-face B2B and B2C opportunities, thanks to the pervasive connectivity of business and individuals (which unlike the 90s is very real this time).
If you walk around America visiting businesses and industries you get a sense of how rudimentary most processes are, and how amenable they are to software automation. Companies like Square and OpenTable are examples of non-social ventures that are disrupting markets. Of course it's not science, but who cares? They are innovating and disrupting just the same.
I say go build your apps, whether social, B2B, etc. Find those low-hanging opportunities first. All signals say Go: connectivity is increasing; devices are selling like bananas; software companies are making real revenue; and most opportunities are yet to be exploited.
And in parallel to all that let the government/large risk takers support more pie-in-the-sky ideas, and when the opportunities are depleted let's refocus and aim higher.
But there's nothing wrong with enjoying a delicious fruit without having to climb trees.
For instance, I would like to see more speculation on making web apps that behave like apps in the browser instead of being web pages that try to act like apps. But I guess the native apps on mobile devices is already addressing that plus the other usual suspects in the space that are trying their best with what we have now.
But it is anyone's guess at this point. The people who are working on the next big thing, at this stage, don't even know it yet. These bubbles are born out of people exploring new spaces, with, once a market has been proven, everyone else jumping in to try to take control of that newly discovered space.
I think these bubbles are apt to continue so long as new mass-markets for software continue to be discovered, and will continue to pop once a definitive leader for that market has been chosen.
The article fails to make the distinction between companies actually making money versus frothy investors climbing all over each other driving up valuations. Of course Instagram doesn't help my case, but that's just the knock-on effect of Facebook's valuation.
Whether you want to call it a bubble or not, what's going to happen over time is that the amount of actual money in social will start to be revealed. Once the winners such as Facebook and Twitter squeeze the most attention they can out of the public, and once public privacy expectations (and laws!) settle, and their monetization stabilizes, then the upside of "social" is going to disappear and the funding will dry up overnight.
At that point the value of individual attention will be much better understood than it ever was in the golden age of television advertising, and "social" will just be the refinement of the advertising industry. VCs will then start looking for the next big thing in other areas. Sure Facebook might be disrupted down the line, but it's gonna take a decade just like it almost took Facebook a decade to get where it is today, and in the meantime they're not going to be making any more Instagram-level purchases.
"Give the people what they want" is fine, but what if they don't know what they want? What if, more than yet another way to splash pictures of their dog in a dress across the Internet, they really want to see experience their web browser in full immersion VR? Or fold their computer into the shape of a pocket map after their done teleconferencing with Tokyo? I love my LAMP as much as the next guy (though my P has been more R(uby) of late), but come on, simple isn't always better, and that goes for code as well as ideas.
That's my beef. Not with Facebook or Twitter specifically, but with the continued support of mundane ideas rather than ideas that will put us into other solar systems, or computing at the quantum level.
Nobody has really showed the promise of making millions flying to space yet. When they do, money and media attention will start to flow in that direction and everyone will start fighting for their share of that market pie.
Nobody cares about the idea, just how much money it is going to make them. Right now, it is unknown if you will ever make money going to space. It wasn't that long ago that some brave people were making social networking websites that nobody cared about or wanted to invest in.
http://www.cbsnews.com/8301-205_162-57419801/asteroid-mining... http://www.armadilloaerospace.com/n.x/Armadillo/Home http://www.spacex.com/
I say: Let the people with big ideas and great implementation skills make all the money they can legally. They're the ones we want to fund so they can pursue new interests and create new markets.
That's because the general population has been for a long time overpaying for not going to space https://scottlocklin.wordpress.com/2011/07/22/good-riddance-...
The opportunity cost to mankind only existed because politicians and bureaucrats didn't get their funding and power from success at getting cargo and people into space economically and safely. They got it from overplaying their hands on past successes, diverting dollars to their constituencies and contractors to "bring home the bacon", and plain dumb government spending momentum.
In other words, the incentive model of the Shuttle Program (and of NASA in general) was broken and no one with sufficient power ever did anything about it.
But I do get what you mean. Preferably we would want to see people putting their minds into 'big' ideas, vast improvements in humanity (such as privatised spaceflight/mining). Facebook has value because it connects people, Instagram has value because it allows people to make their photos look good (and easily share it).
Do you know what Elon wanted to do before SpaceX? He wanted to put a greenhouse on Mars, just so people could get excited about space again. SpaceX isn't just about reusable rockets, it's about selling the idea of a space-faring civilization.
Sorry if I came across as a bit harsh, I'm just tired of people distilling products (that has value) into the parts, as if that is only what it 'actually' is.
The space-race produced several useful byproducts, while facebook is turning programmers into sheep who dream of writing instagram plugins.
-- a space nut.
I don't live in the US, but if I could wave a magic wand and do anything I wanted, increasing global space exploration spending x10 or more would be top of my list. The benefits would be enormous to everyone- you are pushing the very boundaries of what's possible, you are going to uncover some interesting new tech along the way. If the US got into a massive space race with China (sending a manned spacecraft on Mars for example) the benefits would be felt globally for decades. Pity it takes a rivalry to create the urgency for doing such ambitious projects, instead of doing them because they are worthy goals.
The invisible theme of the article is that Facebook's stock is down today, about 12%; Facebook employees won't be able to cash in for at least 28 more days; It's a timed media piece with an invisible point that FB won't recover; and why should someone accept a slavery contract (Startup Employment) if they aren't going to be paid a king's ransom (>= what the ibankers are making)? Thus $FB kills silicon valley and makes wall street that much more attractive.
disclosure: I'm bullish $FB and bet it's likely to recover, although status in such uncertain climates only comes from short-term coups. So I may make 12% on my investment over a 28 day time frame, but at what cost? I look like a fool and am used like a tool in the media circus clown show. It's not worth it, but I'm not strong enough to bet otherwise.
Of course, that's not as sexy a headline...
I'm bullish on the internet as a medium, and teaching people how to use it, not Facebook or other "companies" selling smoke.
If Facebook ceased to exist tomorrow, I could still keep in touch with all my Facebook friends. That's because I have their email addresses. And there are now easy ways to move big files outside of email. We can use VOIP. We can stream big data to each other with today's bandwidth. It's all possible because of the advance of technology. (Not because of Facebook.)
When people know how to use the internet properly to do the things they do using Facebook (share photos, etc.), peer to peer, then we can get on with solving "real problems".
Apple and Facebook and others are not educating the population how to use computers and the internet. As far as I'm concerned they are not solving a problem. They are perpetuating it for their own benefit. Keep users dumb, track everything they do, feed them ads and try to sell them stuff. We have internet savvy kids whose only thought is "What's the business model?" Maybe there is none. Why should Wikipedia exist? What purpose does it serve?
We do not have to keep users dumb and feed them ads to move forward. Hardware is cheap, software is free, connectivity is cheap, bandwidth is cheap. Let's use the internet to help solve real problems, not pretend that keeping users dumb and showing them ads is getting us there.
Most VCs aren't stupid. They know that not every social media company will earn 100 million in three years. Most will never earn that kind of money. However, a lot of VCs back projects they're passionate about, projects like renewable energy, cancer research, and many others.
This article takes a complicated market (venture capital in SV) and makes sweeping generalizations.
Trend chasing and herding makes it harder to invest in the winners in a space at a reasonable valuation.
If VCs invest in 100 social/mobile start ups at $100 million valuation and only 10 reach $1 billion, then the VCs on aggregate are break even. Also, a VC has a 1 in 10 or 1 in 100 shot of getting that big hit because there are so many 'me toos' in the same space.
If a VC invests in the next spaceship, smartwatch (Pebble), or X less competitive field, there might be only 2 companies competing for that pie. So you have a 50% chance of picking the winner.
The economics are also more compelling for less crowded fields because customer acquisition costs, talent hiring costs and other costs are cheaper. They're not being driven up by the other 100 'social networking / Instagram' start ups competing for the same resources. Your market share of revenue is also higher because you are sharing it with 1 or 2 other players, instead of 100.
That makes the margins better for the the less crowded areas of technology.
If you started a social or mobile company in 2005-2008, your customer acquisition cost was close to zero and engineers were cheap so that made each VC dollar go very far. You also didn't have to compete against 10 other companies for mind share in your space.
That's not the case on social or mobile anymore.
Some smart VC firm will invest in a hardware, biotech or (insert non social / mobile) start up and make a ton of money. Then all the money will chase that area and the cycle will repeat. The VCs which invested in the 'me toos' will lose money and lose assets.
P.S. I want to hug humanity right about now.
Update 1: Downvoting? I can't even guess your reasons for that.
Update 2: Thanks for upvoting back. Downvoters still didn't give the explanation though.
Update 3: Replaced "Unified Matrix" with "The Matrix" (movie).
I just dropped word "Unified". It does not really add value I think.
BTW, I'm not joking about the Matrix. We are clearly on the way there and that's good.
That's why investing in social networking software is more important at this time (and therefore more profitable) than investing in other directions.
And data missing, I just don't believe all the money is going into software...
IOW I don't think the money that went to Facebook would go to life sciences. I think it would just go to other IT startups.
but i don't think he's looking for a return in monetary terms. he's looking for results of a different kind.
and that's the difference.
now, the question to ask is whether the investors that enable these sv startups have enough capital that they could fund projects to get non-monetary results, even if it means they might take a loss.
that's why things like spacex and such are different. it's not just about the money.
the worst part of this facebook ipo is it is totally unnecessary. they do not need the capital to carry the facebook idea forward. there is no reason they need to pass the risk on to the public.
when you invest in facebook you do so for one reason only: a financial return. facebook contributes little to society. it's technology that makes the contribution. this is hard for some people to process. but you can take away facebook and technology still remains. everything that we are doing with facebook is still possible. the network effect is still there.
After we make money from easier-to-start startups, we can be like Musk and Thrun...
Disclosure: myself included.