Ever since Facebook and Goldman Sachs have announced their courtship (basically, GS has invested nearly $500 mil. into FB, and gave it a very generous evaluation of $50 bil. worth), both the financial and media worlds haven’t stopped speculating. What does this mean for Wall Street – is the disgraced financial firm coming back with a sure-win product? Is the famously-elusive and private Mark Zuckerberg finally ready to take his baby public, and rake in real dollars to replace all the imaginary estimates and evaluations? Is the social media giant ready to be owned by mortals like you and me? Or is it just a simple cash-in: inflate the value, have an outstanding IPO week, sell, sell, sell – retire on an island at 26?
If you guessed, all of these above questions are rhetorical (at least I hope the tone conveys that). If you want to read in-depth analysis with real-life examples, factual info and analogies, please go ahead: Business Insider;Quora; Launch.is; NY Times; CNN.com; UK Telegraph. And these are just the ones I find both informative and light on bullshit. For the full media circus that is “Facebook evaluation”, just Google News the terms. Thousands of posts, plants, spins, so-called opinions, trying to convince their target audience that this is either totally evil, or absolutely the right move. But that’s not the point here. Frankly, I’m still trying to understand Facebook’s business model, and its future as a global company.
Yes, the appeal to young kids and elderly (under the guise of easy communication tools – which is not true) is clear. Two huge segments of population (who probably just don’t know any better) are spending day and night on that network, sharing their lives, content, opinions and all kinds of information that really should stay private. Indeed, Facebook’s stance on privacy of user information has a long history of being … very open. And I’d be happy to debate the legality of that policy, but again, that’s not what I’m interested in.
I want to know what Facebook can offer me as a user beyond stale picture sharing, thumbs-ups and commenting? Instant communication and custom content channeling – Twitter does that out of the box; business discussions, coaching and hiring – LinkedIn has been attracting employees and employers en masse; even the stuggling giants – Yahoo, Microsoft (Bing) and Myspace have found a way to innovate, adapt and bring better/targeted services and functionalities to the masses. Granted, smaller masses than Facebook – but more loyal, and more engaged. And this is not including dozens of “smaller” portals that do just one thing – but very well – Skype, Tumblr, Battle.net, Netflix, Groupon, Foursquare, WordPress … the list goes on.
The digital world is still a mosaic of thousands of niche services, and most of them are evolving with their core service, and target audience. I, as a user, can pick and choose what service(s) I want, and most of these companies allow me an easy interface, developer-friendly API, and reasonable privacy conditions to ensure that I can be both ‘connected’ to just about everyone else who uses these services, and at the same time – protected from them. It’s like a supermarket of content, communities and functionalities, and I can drop anything I want into my shopping cart – browser (or smartphone). Why on earth would I continue to use the one (albeit big) service that attempts to do it all – but in a mediocre fashion? And to top it off, it won’t tell me how my data is managed, who looks at it, and how it makes money?
To use an analogy, I see Facebook as the CBS and ABC of the web world. Big, popular, full of spin-offs and comfortable, convenient, safe choices. It’s not original, and it’s not focused. And, like those two big and popular networks – it regularly screws with its audience and content in the name of better ratings and ROIs. It will make its money (either through an IPO, or private investment), and it will continue to have a mass following – but it’s largely based on its size and reach in the media – after all, it’s not every day you get Aaron Sorkin and Trent Reznor on board for a fictional (yes, fictional) re-telling of your origins, and it’s not every day Time Magazine names you a Person of the Year. Again, I won’t debate the validity of these PR accomplishments, let’s go back to financial announcements.
The courting of Wall Street is obvious – Facebook needs capital, and probably realizes that in order to grow, it needs to spend. Enough building and coding in-house, time to buy up those “small” companies listed above, and time to integrate better functionality into a platform that is – face it – stale and grandma-friendly. There’s a very good opportunity for FB to make right business choices, bring in the correct mix of new people and ideas, and evolve as a better, more-fulfilling user experience. You got the (alleged) 500 million users. How are you gonna keep them when they turn 25 years old, and need something other than poking and “liking”?
Or, like any other bloated self-promotion, it could all just be a cash-in. But I really hope that through new capital, Mark and his team can go beyond big numbers on paper and embedded ads in the right column (admit, you don’t click on them either), and build, or rather assemble from existing APIs, a truly worldwide network that is open, flexible, and respects its users and content. Right now, in early 2011, I don’t see it.
I just see a company that behaves (and thinks) as if it was much better than it actually is. Wake up. Stop thinking about the IPO. Think of the day after. And think of who else is breathing down you neck with a fraction of costs, but more focused offering. Good luck, Mark, I’m going back to Twitter, Gtalk and LinkedIn.
Today’s guest post is written by Dmitry Beniaminov. He is based in Toronto, a web technology consultant, 10+ years of experience. Working with magazine publishers, small businesses and production agencies. Social community nut (from message boards to forums to UGC to FB+TW); CMS expert (Drupal, Joomla, WP, custom platforms); technology analyst and web project manager. Assisted in multiple site revamps; UX improvements; back-end upgrades. Love to learn about the most effective/efficient techs and methods, and love to train/educate clients to push their online content further, and get more eyeballs doing that. Respect realistic budgets and reasonable expectations. In free time I garden/camp.