I didn't perceive the author's comments to be discouraging but if anyone else is feeling bummed out by the Facebook juggernaut, keep in mind what happened to IBM, Microsoft, and Google.
When IBM built the original PC, they let Microsoft keep the rights to the operating system software. In hindsight, it was a massive miscalculation as Microsoft's "software-without-the-hardware" business went on to earn more profits than IBM's hardware. IBM's later weak attempt with OS/2 to beat Windows failed.
Microsoft's then CTO Nathan Myhrvold (who Bill Gates considered one of the smartest guys on the planet) was on a phone call with Larry and Sergei and yelled into the phone that "Search is NOT A PRODUCT!!!". (Probably their MSN hubris speaking.) Microsoft's later attempt with Bing has hardly dented Google's search marketshare.
Google didn't notice the importance of social networking before Facebook did. Google's later attempt with Google+ Circles failed to trigger a mass exodus from Facebook.
Facebook.... <story is yet to be written> but the same thing will happen to them. Somebody will come up with something that blindsides them. Or it might not even sneak up on them. Mark Z himself may look at the early-stage product and conclude that it's not anything special.
There are plenty of untapped business ideas that Facebook will misjudge and dismiss, leaving others to win that market.
But to the author's point, it will suck if you create a product that paints a bullseye and it lines up in Facebook's crosshairs. Microsoft couldn't beat Intuit Quicken with MS Money but they did crush Netscape with IE. They lose some, they win some.
That's basically the wonder of capitalism. An accelerated form of Darwinism. People try random things, until someone tries the right thing at the right time, and it succeeds and takes over. That person is then labelled a genius, everyone think he knows what will happen next, he thinks of himself as a genius, and he will give his opinion on everything, until someone else hits another sweet spot and takes over...
But, I also want to add that I believe you can start a very profitable business with careful planning that relies less on luck and more on your hard work!
In my opinion people behind high-profit-margin startups that were bootstrapped with no venture capital and were profitable from day 1 are the real business "geniuses".
Example: my good friends at basecamp.com
Edit: I like to add why I think Basecamp is a good example... first of all they are not my actual friends, I just like their take on how to do business.
In case you don't know one of the co-founders (David Heinemeier Hansson) is the creator of Rails. They are all about creating a profitable long-lasting business from start and I very much admire that.
If only people could realize the insane role (good/bad) luck plays in life. I believe it is often a difference between American and European culture: the former very strongly promotes individual responsibility, so when you succeed it's all to your merits, and when you fail you can only blame yourself.
Yes, but I think there's also something to be said for learning to swim in life's ocean of ups and downs, making the most of your situation. For me, a successful person is someone that knows how to swim, not someone that caught a once-in-a-lifetime tidal wave. Usually it isn't very glamorous, but it's what I personally aspire to.
> not someone that caught a once-in-a-lifetime tidal wave.
Those often celebrated in the media as whiz kids or geniuses often do just that.
In addition, even if you are a "legitimate" business/founder, there is still a massive amount of luck, way beyond your control. Imagine for example if Elon Musk had founded X.com slightly later that he did - probably wouldn't have the funds or track record to do Tesla and SpaceX due to the lack of exit opportunities with PayPal. Or if Paul Graham had founded ViaWeb slightly later, perhaps no YC.
Most likely, and I think both would've been successful regardless. But their success and impact would've likely been greatly diminished if they were not in the right place and right time before the dotcom bubble popped.
Quite true, and it's also important to make the most of your breaks when you get some, or roll with the punches when you need to. So there definitely are skills to gain and efforts to make. You got to play the cards you are dealt, and you can play them well or not, but at the end of the day, on a short timespan as human life, the dominant factor remains luck, by far.
Taleb nails this in The Black Swan. He describes how capitalism is NOT meritocratic, it's more like it encourages people to blow huge sums on improbable ideas and, occasionally, they work.
Just remember that Darwinism is a morally neutral process: evolution only cares about the survival of the entities in question. Likewise, capitalism thrives when businesses thrive; everything else is just a means to an end.
Not saying it's bad... just neutral. And it may have very good consequences for society as a whole. The only danger is believing the process is "good" in of itself.
Capitalism isn't morally neutral because it concerns collectives of moral agents (companies), their goals and the goals of their customers and those they interact with.
Evolution operates on genes, an amoral physical process.
Capitalism is the operation of people, a morally-laden process.
The only thing evolution and markets have in common is that the terms 'selection process' and 'organism' apply to both. And even then, they mean different things. Don't take the analogy too seriously.
IDK for him it may be more of a commodity: he buys it low and sells it high. Unfortunately once you've traded yours to him for some beads and colorful trinkets, you can't buy it back.
They don't buy low-sell high like a simple trader, they are more like a manufacturer buying the raw material and processing it by adding context and selling the material as a finished product.
"Facebook.... <story is yet to be written> but the same thing will happen to them." -amen! Their big screw up is not supporting a vibrant market for apps. Zuck says he wants "to be electricty" but it seems he also wants to tightly control what is plugged in and how it's used. How come I can't access messenger with a 3rd party app? Why can't all kinds of cool startups build their business on the FB "platform"? Why not be more open, when Apple allowed Google Voice in the App Store all the carriers had to hasten their move to data based pricing... it was a revolution but Apple allowed it. Facebook will not ever let their power, position or business model be challenged by apps in any serious way.
The real question is whether I can access and present a Facebook newsfeed via 3rd party application. For example: Can I create a "1337h4x0rbook.io" that contains a hacker-focused social network, but feeds / filters based on things that are tech-y.
This is the choice of the group so, of course, the content is not publically available via API. If a user logs in to your app with facebook credentials, you can access private group contents via API.
this is not the choice of the public group... any user of a public group can choose to have their data not available when someones query the API of that public group...
The Graph API has not longer the ability to retrieve the /home endpoint which contained the newsfeed, since v2.0. The only this a app can retrieve is the user's own posts.
Stopped working with Pidgin for me, switched to Trillian and it works fine. Caveats being it doesn't work with messages that include links and also group messages. 99% of cases it's fine.
Twitter is a full step worse to developers than FB is. Sure it's rough for Zynga, but can you name anyone who's built a real business on top of twitter?
A lot of companies have, and then Twitter shut down their access. Twitter is the poster child for "Don't build software in another company's backyard."
I'm actually getting pushed away from Facebook. Nothing in my feed is particularly interesting anymore to me, it's about 50% political opinion, 20% ads, and the rest is usually nonsense. Facebook is generally a place where people post to show off about something, it's not entertaining anymore. I'm sure over the next few years, there will be alternatives that will schism the markets so there is always an opportunity for a startup with a good, catchy idea.
After I unfollowed all the irritations, I too found myself simply irritated with my facebook feed. I started asking myself, "Did this experience make my life better in some way?". After a few uses, I determined quite quickly that my life was indeed not better with it.
I haven't deleted my account, but I did remove it from my phone because it started aggressively notifying me of bogus status updates after it noticed my absence.
After a few days, I asked myself, "Is my life better without it?" Yes, no irritations from ego, politics or ignorance anymore.
I only follow groups where people post pictures of their pets. After a few weeks of exclusively interacting with posts from those groups, my feed is 95% cute dogs/cats and 5% close friends. My life is __definitely__ better for seeing all those animals, the happiness I derive from it is palpable.
Similarly, FB has kept me due to its platform for music. Not music itself, but most artists use FB as a central hub. Further, the events are spectacular for me. I have found no better way to discover events than crowdsourcing it, aka scrolling my FB feed.
Facebook has its uses (acquaintance address book, private message with people you know or knew, local groups) but don't try to make sense of the feed because it's hopeless, no matter how many tweaks they do to their algorithm it can never be more than an amalgamation of the lowest common denominator, IMO. Though I guess YMMV if you have extremely interesting acquaintances, but I'd be surprised.
I imagine even if you have extremely interesting acquaintances with interesting things to say, they are more than likely saying those things places other than Facebook.
Heh, I still remember how much I disliked the Feed when they introduced it. In retrospect, of course, I was wrong: no matter how much I thought it was a disaster, it was a huge reason for Facebook's rapid growth.
It'd be a bit amusing if what has been the reason for their growth eventually ends up being the reason for their decline.
That WhatsApp acquisition ($19 billion) must have been made exactly because Facebook was thinking that WhatsApp really could have been their Facebook (for Google), their Google (for Microsoft) and their Microsoft (for IBM).
I would argue that was more of an expensive land-grab. Whatsapp was/is not an existential threat to Facebook.
If a messenger could overcome FB, snapchat might actually have a chance, but the key value proposition that FB offers is that it's your online persona. You have pictures up from all the years you been around, you have your friends' profiles to go check out at will, you can start a group, or make an event and know all your friends are already on Facebook to see it.
So why buy? Messengers have the highest retention rate. You can see them expanding upon it by integrating FB profile + allowing you to install "apps" or "plugins" that do X/Y/Z. There is a Chinese company, WeChat, that has made billions on this model. I'm sure FB would like to as well, but with it integrated with FB login etc..
Downvoters: Genuinely curious how I'm wrong if you feel like throwing in your 2 cents.
I don't know, WhatsApp actually has mostly replaced Fb in my friends and family circle at least. I think it was a smart and timely acquisition (whether overpriced, I cannot say.)
> You have pictures up from all the years you been around,
In practice, people care very little about this - they want the world to know they were in the Taj Mahal last Sunday or their baby started walking yesterday, but older pictures are generally forgotten, and sometimes even a nuisance for various reasons.
> you have your friends' profiles to go check out at will,
and yet almost never do
> you can start a group,
as you can on WhatsApp
> or make an event and know all your friends are already on Facebook to see it.
This is one use case that is indeed better on Fb, though just posting and gathering replies on WhatsApp seems to suffice in 80% of cases.
You make solid points, but just as people's attics become cluttered with crap that they never use but are reluctant to throw out, I think you could argue users innately feel the same with their personal photos / friends / posts on FB.
I was confused about downvotes because I was at -2 for awhile (maybe I offended snapchat employees ;), but I appreciate you rebutting me. I do believe if there was to be a huge contender to Facebook, it would need a messaging component to grow out of. However, I still do not believe FB made the purchase primarily out of fear of competitive threat. I think FB Integration in a tencent model can make them more money than FB ads (while driving more targeted FB ads).
Why couldn't WhatsApp just (yes, the tech is hard, but getting massive amounts of subscribers is way harder) build a social network for all it's subscribers? Migrate photos, don't abuse your users like Facebook....I think it was a legit threat.
I think it also addresses a very crucial point often overlooked: the market will adopt & adapt the easiest tool to satisfy a need, rather than the best tool for the job. Databases are far better suited to maintaining - say a membership list, and FB Groups are far inferior, but are much easier - hence will be adopted, tweaked and repurposed in a hacky way to accomplish the task. The tool is adapted to the job at hand because you already know how to use it. Yes, it is true - when you have a hammer everything does look like a nail.
> Google didn't notice the importance of social networking before Facebook did.
Google Buzz? Wave? Orkut? Don't remember the exact timeline for all of those (maybe some were slightly after Facebook?) but I find it difficult to suggest they were late to the game. It was more like they didn't figure out how to play it well.
Google launched Orkut at almost exactly the same time as Facebook, and it was initially much more successful. (Google was a huge company, not a dorm-room start-up, and nost people couldn't join Facebook even if they wanted to.)
Friendster and, later, MySpace were popular before Orkut and Facebook, so social networking was already a thing.
Facebook was just much better than MySpace, Orkut and G+. And it still is.
>[M]ost people couldn't join Facebook even if they wanted to.
This was the brilliance of early Facebook. By initially limiting membership to only hip young influencers, and only gradually expanding to less hip/young/influential groups, they successfully created scarcity and huge word of mouth. It made the news every time a new group was allowed to join Facebook. People were coming banging at the gate to be let out of the "MySpace ghetto." People want what they can't have; Bernie Madoff created the most successful Ponzi scheme ever by making people have to come to him and beg to be allowed to invest.
The other brilliant idea of early Facebook, unlike Friendster/MySpace/Orkut, was that it was a disguised dating app (remember pokes?), but one that eliminated the gender ratio issue by being disguised, and the creepy old guys problem by limiting its membership to young people and limiting most interactions to "friends." Later, only after it had built up a critical mass of a large and loyal userbase, it was able to become even bigger by gradually pivoting to becoming a more traditional social network/blogging platform. And Instagram now exists to fill the disguised-dating-app role in their product portfolio. Snapchat is pivoting much the same way, albeit more jarringly.[0]
> limiting membership to only hip young influencers
That may have been an unintended consequence, but the genius move was to bootstrap the online social network with existing offline social networks (and getting the date integration - email addresses - for free!). Somewhat ironically, privacy (such as it follows strict exclusivity) was a central feature of early Facebook. No other social network did anything like it, they were all free-for-alls.
It actually wasn't limited to "hip young influencers".
It started with people who had a Harvard email address (including staff). It expanded via Ivy League universities, then all US universities and colleges, then US high schools, before finally opening up to the public.
It seems like you just listed off the segments of the population that tend to be considered the "hip young influencers". Did you not? College and high school students. My guess was the parent probably was speaking in generalities a bit, students were the vast majority of users.
Well, there are nightclubs that you can only get into if you are a hip young influencer. Facebook didn't require anything like that, just an .edu email address. That let in a lot of very un-hip people, and a smattering of oldies.
If you were running a nightclub, I think you'd appreciate the distinction between "let in hip young influencers" and "let in anyone with a student library card". ;-)
Facebook won, because Murdoch (Time Warner) bought MySpace and started to milk it, instead of investing more money. MySpace was written in the ill-fated Coldfusion language and web framework and porting MySpace to a newer dotNet based Coldfusion version paved their way to a slow unstable server platform, years long stagnation, very high Microsoft product license costs and so. MySpace stagnated, that's why Facebook had the chance to win. And MySpace had the chance early, because Friendster stagnated because they could scale their website to keep up with their growth.
As someone who uses both Facebook and G+ occasionally, I find Facebook to be vastly inferior in terms of interface, functionality, and mobile applications. The main reason G+ or any other company will have trouble competing on features (which are easily added) is simply userbase and lack of interoperability.
With something like webmail you can switch providers based on your preferences but nobody else needs to do anything. You can keep emailing the same people like you always have. But with Facebook-style communications networks, you have to use their service to communicate with people on it. And since Facebook was the first to really get everyone to join (not just the teens and twentysomethings who had Friendster and Myspace pages), it has that critical mass of users.
So even if I think the G+ app runs better and looks nicer on my phone or the service does a better job of letting me specify who sees my posts, it won't make a bit of difference if I want to have a group chat or event planning page with 10 friends and Facebook is the only platform we all have in common. I don't own Google stock and I'm surely not going to start pestering friends and family to pull up stakes and move to G+ because I like it better. And that will be the case for a while I think...at least as long as the closed-network Facebook-style services are concerned.
I don't see them being unseated until something new really takes off the way the current form of social networks replaced mass email chains for people sharing links, pictures and weekend plans with friends and family.
Google didn't launch Orkut. Orkut did. Google only acquired it later, from what I recall. And then they let it rot and failed to see what they had.
Friendster was initially quite popular and not a bad product. But again, it was left to rot and it became slow, like unusably slow, and uncool. And then MySpace took its audience.
I remember getting pulled into Facebook because classmates tagged me in photos. Then when I signed up, it was extremely useful because you could see and meet other people in classes for study groups, etc.
It was also great at delivering status updates, well at least until people started saying "John Smith is." lol.
The other powerful thing Facebook did that no other social network did was handle growth. Friendster and Orkut, they were painfully slow to use even in their early days.
Very very true. Orkun was HUGE in Brazil. I had immigrated to Australia when it became popular and no one in Aus had heard of it, Facebook started surfacing a least 18 months later and for a time I had Brazilian friends on Orkut and everybody else on Facebook. What convinced most of my Brazilian friends to switch was the ability to tag people in photos and poke people.
No, their (main) product is search. Advertising is how they monetize it. The Tribune Co.'s product is news, monetized through advertising. Conde Nast's product is magazines, monetized through advertising.
Just because advertising pays for the operation of a service, doesn't make the service not the product.
And yeah, I understand that Google also sells advertising as a separate item from their search engine, but that's not what parent anecdote was referring to.
Not really - their search product is optimized to be better for advertisers - not for consumers. If it wasn't about advertising, search would put a lot more advanced capabilities for analyzing the index and the results into the hands of users.
In the early days of Google, they used to be a `link:URL` option which returned pages that link to URL.
e.g. `link:https://news.ycombinator.com` would return search results of webpages that link to HN.
I had to abandon a project when they stopped supporting that...
Indeed, there seems to be some support for `link:HASH:URL` search operator, but only works for very large volume websites, e.g. it works on news.ycombinator.com but not on small and medium websites.
Search is not a product for Google since they do not sell it. No matter how much everyone in the world might (including Google) categorize it as such. Products are sold. The only product they sell in relation to their search engine is an advertising platform. That is by definition the product.
Correct me if I'm wrong, but I believe a product is something produced. They produce a search engine, they serve ads on the search engine. Advertisers produce the ads. The ads are a product other than googles unless it is a Google ad.
Advertising "slots" are google's product, just like physical billboard installations are a product of ClearChannel etc. AdWords is the mechanism Google uses to sell this product.
Search is one of Google's products and not all products are sold directly as a revenue source.
A product is anything that can be offered to a market that might satisfy a want or need. That nobody actually pulls out their checkbook and pays for a Google search doesn't mean it's not a product and that there's not a market for search.
A TV network's product is television content, their monetization strategy is advertising. The delivery mechanism is cable / airwaves.
Sure there are secondary economic effects and markets that complicate the picture. But the basic business model of a television network isn't all that different than a regular company that sells their products directly.
If that's true, then what's their programming called?
Programming is their product, and customers buy it by paying attention (or to netflix, hulu, comcast, etc more directly). Attention is the currency, and ads let them exchange attention for USD.
So AMC and HBO are making different things? No, of course not. They both produce content and distribute it through cable networks. One of them charges advertisers to deliver the product to viewers, while the other one charges the viewers directly.
To be fair, if you're an advertiser, then the product is eyeballs. But if you're a pair of eyeballs, then the product is the content. They're not mutually exclusive. Same with google. If you're a searcher, then the product is results. If you're an advertiser, then the product is relevant searchers.
Okay folks, Google's one and only product is TRAFFIC.
Search, Maps, Mail, Android are given away free as their competitive strategy of generating huge volume of traffic.
Google's business model is to charge their customers the possibility to redirect some of that traffic. And because advertising is speculative they can reach high profit ceilings.
It's an old-school dot-com point of view. Own eye balls, monetize clicks.
Facebook went and ate Google's lunch by following their playbook and improved upon it by focusing their product around SOCIAL ACTIONS.
Facebook produces huge volumes of interactions. Every like, every heart, every comment, every follow. By the time Google got around moving the battleship they've already lost.
You want to be the next big thing?
What is that one thing everyone does all the time? Catch that.
Yeah, I've heard that line before, but it's about as useful as insisting that movie theaters' product is overpriced popcorn and soda. The movies just happen to be there to drive traffic.
Yeah, all of that is true, but it misses the point entirely. The product that is 100% responsible for people going to the movie theater is movies. The product that drives everyone to Google is search. The fact that the revenue isn't directly related to the product doesn't make the product not the product.
Yep. In an absolute sense, Google's search engine is nothing but the honey that attracts what Google is actually selling. More or less a tourist attraction (albeit useful in its own right). This is supported by the fact that Google has started to diminish the integrity of the results to "sell" more to advertisers (by adding more sponsored results over time).
People I know under 18 seem to barely even use Facebook. They instead heavily use more segmented apps like Snapchat and Kik to constantly engage with their friends. This is just my observation, but perhaps Facebook will soon be thought of as something only used by the out-of-touch older generation.
But will they do that on Facebook, if none of their friends are on it? Possibly, but that's not a given. Hm, maybe, they will get on Facebook because that's what the grandparents know and use, and Facebook will draw in a generation of parents that way??
Hard to say. I can actually see it happening at the moment (my son's school friends are having babies now). Whether that will transfer to the next generation is another matter, but Facebook's user base and engagement levels are still growing.
Something with 1.5 billion users isn't likely to disappear in a hurry.
Since Facebook already owns Instagram, WhatsApp and Oculus Rift, and can afford to buy any startups it wants, even a decline in core Facebook use wouldn't be terminal.
Of course, Microsoft itself bought into many markets once upon a time. While Excel isn't one where that was the case, its sister app PowerPoint started as Microsoft's first major acquisition.
The point is, you can have that vision for a while, but eventually the market changes such that the threat (or opportunity) to your business isn't so direct to be obvious like Instagram was to Facebook.
Yup. Classic example of innovator's dilemma. These are the opportunities startups need to constantly find and solve.
Proof that simple ideas seem so simple on the surface yet become these big opportunities. What you do with the idea/initial success is what separates these successful companies.
As far as I'm aware of the data, Bing's mostly been eating non-Google market share, e.g. Yahoo, rather than denting Google significantly. Back in 2008 Google was also at 64%, but Yahoo was at 20%. Now it's Bing.
Yup. I don't know if anyone researched it, but I bet it highly correlates with browser usage. On a couple of websites I run, I notice that IE market share is much higher in the US than Europe.
This is surprising, I guess having it has an IE default really has more of an impact then I expected. I wonder how much the amazon gift card thing helped as well.
Not really. Before Bing had 20%, Yahoo had 20%. Now Yahoo search is powered by Bing. MS pretty much bought the marketshare with the Yahoo deal and Yahoo was happy to have someone else do the heavy lifting on search. I believe Yahoo search is also the default on Firefox now.
It has a well-deserved bad reputation now, but Internet Explorer 3-6 were, pretty indisputably, far superior products to the competition from Netscape. And not just because they were free and bundled with Windows. Of course the undead Netscape-as-Firefox would later end up for its own part becoming far superior to IE6 back in IE's near-abandonware period.
Whether you do or don't believe it, it's whether they did, and yes they did. Users overwhelmingly chose to not purchase Netscape products which killed their revenue and shut down the company. The competition was free vs paid, and as often happens, paid will fail. If it was free vs free, maybe Netscape would have had a shot.
IE won the competition on Apple Macintosh where both browsers were competing on even footing. (Neither was associated with the OS maker; Apple shipped both on system CDs.)
I 100% believe IE 5 was a far superior product than the competing Netscape 4.x. Previous to IE 5, maybe it's debatable.
I don't know if you were around then, or just speaking out of MS hate... but in the late 90s IE was the superior product. So much so that I often missed it because I was a Linux user and so didn't have access to it; Netscape had gotten really really terrible. Until Firefox came out the better option was IE.
I worked in a shop in 2000/2001 that was doing early Ajax type stuff (for a dashboard that controlled some embedded
hardware.) It wasn't possible to port it to Firefox even at that point, even at that point IE had some leg up.
Later, MS let IE6 bit rot forever. And it was loathsome.
But this does not mean that the Facebook will fail in its current use case.
You are most likely currently using an IBM-compatible PC running Microsoft Windows on which you run Google for searches and Facebook to reach friends.
There are some losers in those stories and they are losing to direct competition: IBM is losing on profits because they made their system open and anyone can build IBM compatible PCs, Microsoft is losing because people were for some strange reason ok with Apple creating a closed operating system (iOS) where they take 30% of any transaction that runs on it. Microsoft are trying to change this with Windows 10 and UWP, but hopefully it will fail just like Bing.
Facebook has been doing a good job trying to disrupt itself. I"m talking about the acquisitions of Instagram, WhatsApp, and, probably most importantly, Oculus.
You're right -- this has always been true. The only people bummed out by it are the people trying to recreate Facebook's core value proposition (maintaining a digital representation of our meatspace relationships) themselves. But the reality is that the available market space for "social" is very small because Facebook occupies so much of it with a very general purpose product.
This has always been the case in the startup world too: you always look at markets over $10B with caution, because that's big enough to interest AGAF (Apple/Google/Amazon/Facebook) if they're already in an adjacent market. Your only hope is to target a less-profitable sub-sector of that market, develop expertise and hope that AGAF didn't bring their A game to that market (in which case, your company makes an excellent acquisition target at crazy valuations as AGAF bid against each other!)
Facebook is already being displaced by Snapchat, people don't want to share their lives with every single person they meet, Snapchat solves this problem. It's also a mobile-first social network and difficult enough to keep the older crowd away, while building a massive user base of the younger generation. The facial filters feature will 100% try to be copied by Facebook with their recent acquisition of MASQRD, but it's too late, because they don't fundamentally think of social networking the same way. I was at the airport and I spotted at least 3x as many people using Snapchat over Facebook. If you don't have it already, do yourself a favour and read this http://www.bloomberg.com/features/2016-how-snapchat-built-a-...
> In hindsight, it was a massive miscalculation as
Assumes the OS would have been as widespread as it was w/o the licensing that MSFT ended up doing (and it would not have been). That is what it made it the defacto standard operating system.
Meh? Their business is getting your attention so they can sell it to advertisers. They're also not stupid. That attention doesn't have to exist on FB. They can just acquire it - whatsapp, instagram, etc.
I read a dozen books about Google's origins many years ago and I thought I got it from that. Searching for it today, the closest equivalent source I could find was Myhrvold talking to Joe Kraus in 1995[1]. It's possible that Myrhvold repeated that lecture again to Larry and Sergei which I read in the Google books, or I misremembered and shifted the target of that quote from Excite to Google. I didn't read any book specifically about Excite so not sure why I would have done that. However, it's also possible the authors writing about Google weaved in a side note about Excite which my brain merged into the "Google story". Hopefully, my imperfect recall does not detract from the point that the smart guys at Microsoft misjudged what "search" could become.
> Facebook.... <story is yet to be written> but the same thing will happen to them.
One thing to consider is that Mark is very aware of this based on his purchases of companies like Instagram. At the moment it seems like facebook wants to try and buy anything they perceive to be that new up and comer.
Speaking as someone who does restore and modify old cars I can say as a FB user that there are really no groups with any in depth practical help.
FB tends to be a 'look at the car I just bought' or 'look at the project I just finished' or 'the event I was just at' ego space. The vertical, model specific forums continue to be the place to go if you are diving into detail via searches of existing threads and people helping each other in response to specific questions and more importantly problem solving.
IMO FB tends to be the place to share the superficial, and to reduce sophisticated ideas to ephemera. A significant challenge on the internet generally and particularly FB is uninformed advice - youtube for example is full of parts life endangering how-to videos.
FB is more of a casual after hours clubby bar atmosphere rather than a serious forum in my experience, and i wouldn't go there for advice.
It is really Facebook's own fault. The way their comment system is setup is awful compared to anything else out there, even Digg's version in 2006. And searching by page or group for a topic is just useless. It is just people's profiles, and pages aren't separated into subpages like forums are. Everyone I know uses forum software like phpbb or Wordpress comments to connect. Facebook is mostly just for family photos and baby pics.
That's pretty much precisely the problem that afflicts Google+ Communities as well. They're all but useless, with the exception of small, and usually private communities set up around a specific focus.
For specific task-oriented project support, if you're not part of StackOverflow/StackExchange, it's pretty much old-school BBSes. I've also found blogs are quite active for discussion.
"Social" ... is oversold, and actively kills multiple potentially useful categories. It does however point to massive holes in discussion and discovery across other platforms.
1. I joined a couple FB group for American expats in the country I live in. I quit them both when I realized that most posts are people complaining about the people and food options here or pictures of their recent booty of American junk food. I joined with the naive assumption that people actually moved here with the same amount of enthusiasm I had when moving here. I was quite wrong.
2. I joined a gluten-free group along with my wife. We both quit when we realized that 95% of the posts were just people asking "is this gluten free?", with pictures of the ingredient list on the side of boxes.
At this point, FB is a news aggregator for me and only keep the account just to avoid drama with certain people.
Interesting - I find the same thing is true of filmmaking groups.
Facebook conversations tend to be very ephemeral - requests for help, "yay we got into X festival", etc. If you want in-depth discussion, you need - again - old-school forums or at a pinch Reddit.
I've always looked at many of the subreddits as a potential for different products or a channel to access customers of that interest.
For example:
* r/RedditGetsDrawn -- Marketplace for artists and users
* r/SomebodyMakeThis -- Request for product
* r/DataIsBeautiful -- Collection of people passionate about data visualization
* r/IAMA -- Ask Me Anything -- many other community sites have copied this concept.
It would be more accurate to call r/DataIsBeautiful a collection of people passionate about data visualization + 5.2 million people who were automatically subscribed when they joined Reddit. It was made a default subreddit and now most of the posts are simple line graphs which support a popular opinion or ideology.
Revenue is not everything. There are things on the internet, old as country roads, operating on minimal revenue, still alive; while younger things which believed revenue is the way to go, are long forgotten.
Then reddit is doubly a competitor, because they're apparently stable with 0.05% of Facebook's revenue. Facebook might falter if their financials go south, reddit has no where to go but up.
If your customers don't buy your product because they can get it for free on reddit, it doesn't matter how much they pay reddit for it.
I meant that Reddit is another Excel-esque competitor to your startup. Or another way to look at it is that Reddit is your early validation for demand.
Eh; Reddit has a huge user base but many of them are cheap and Reddit advertising is more of a niche than a household name at this point. Additionally, Facebook is much much MUCH more interactive than Reddit; most of the users on Reddit are lurkers. I think that something like ~10% of the DAU actually post content, which is really, really low.
With the Excel metaphor, I wonder if a better comparison might be craigslist. That's more of a utilitarian swiss army knife that's generally overlooked, but which a lot of social services are indirectly competing with.
I agree. My first startup I worked on while in college was "beating cragslist." We looked at it and laughed and said this is so old! As we went about our business, we realized there was no way we could reasonably change the world's habit of going to craigslist for {X}. That was ~8 years ago and it's still going strong.
Many a start-ups have come and gone trying to revolutionize house/apt hunting. If they try to incorporate craigslist, craigslist shuts 'em down; if they try to get organic listings, craigslist beats 'em.
Craigslist still has a lot of traffic but it's dying a death by a thousand blows. AirBnB ate the temporary housing section, OKCupid and Tinder etc. ate the dating sections, and the 1099-companies like Homejoy ate the services sections, StubHub ate the ticketing sections. Now I find myself going there mainly if I need to buy something that doesn't need a company guaranteeing the transaction, and doesn't make sense to buy online, like a vintage stereo amplifier that I can inspect on the spot.
You're not wrong, but I don't think organic shopping with other strangers is under any threat (currently). For example, I just sold my PS4 to some stranger for cash. I would be intrigued if a company could beat them there because that would likely be the final blow.
My impression is that craiglist is still rather US centric. For selling my PS4 (if I had one), I'd probably turn to the national variant (in Norway, that'd be http://www.finn.no - similar to craiglist in that it for the longest time was horribly ugly and clunky -- it's somewhat better now, but still pretty bad from a technical standpoint) -- or ebay.
Out of curiosity, why craiglist and not ebay? Is ebay "too big" (you're not advertising to people in your city, that you can meet and do the handover in person, but rather to the world -- and will likely have to deal with shipping)?
I think this is a serious overestimation of how much people use Facebook as a piece of professional software. And no serious business is going to have a Facebook page without a website -- your competitor there is self-hosted WordPress, not Facebook.
I know many small physical businesses who get almost nothing from their website, and a huge amount from their 10,000 followers on Facebook. Coffee shops, tradesmen, bars.
Facebook isn't a competitor to most B2B products, but it's defintely the Excel of the B2C world.
This is completely anecdotal. I could just as easily argue that the vast majority of businesses across cultures, demographics, socioeconomic factors use a variety of tools to promote themselves. In Canada, we have plazas, traditional websites, and more to get the word out. B2B, B2C, whatever you want to call it.
For the other cases you mentioned: Groups to collaborate, Events to organize - these are all completely underwhelming alternatives to other market products. The biggest tragedy of Facebook is that it has enormous scale but it can't write comprehensive products that satisfy all of that scale uniformly. You get the lowest common denominator, which is why customers go for niche alternatives.
Excel is not Facebook. Yes, Facebook is big. Excel is big in its industry. However, Excel has just enough of a balance between niche and scale. Excel is about computation and reporting. It solves a very specific need that is fortunately applicable in all types of applications. As soon as you try to go outside the bounds of what Excel can do (large data analytics, more customized reporting, interactive applications) you stop trying to rationalize Excel and start using other tools. People do the same with Facebook. More people do it with Facebook because Facebook doesn't effectively solve as many core needs.
Unfortunately especially with restaurants i am seeing more and more have only a Facebook page. I really don't like this trend. For example the format is stale and the information is often poor - many whom only have a Facebook site don't even publish a menu!
But they have a need: publish content for free because screw website and domains and servers and all that crap. They know how to facebook, they probably know they won't win a website award but their need is satisfied (come up on google for restaurant in x that does y). They are better served by million other things, but they know facebook. Check them out and you'll find they probably won't have a verifyed listing on google or tripadvisor.
There is a vast untapped market of digital semiliterate that only waits to be tapped. See also: medium. Why that and not wordpress.com? Because they speak the right language.
I can't argue with stale format other than to say that if you're visiting restaurant websites wanting a unique browsing experience then I expect you're in an extreme minority. Would you happen to also be opposed to bootstrap?
As for poor information, I don't see how that's the result of Facebook. Plenty of restaurants neglect all sorts of information on their websites. Add in that plenty didn't bother with websites before, but now have a Facebook page, I'd say Facebook has drastically increased the amount of information available on restaurants.
Restaurants need opinions from customers to influence other customers. Tripadvisor, and a bit less Yelp, are the main tools in internet to promote their business.
I'm finding more and more new businesses are avoiding the self-hosted Wordpress option.
People are increasingly aware of security as a problem - it only takes one business you know to have their WP install hacked and start distributing malware before you say "hey, maybe not" - and things like Squarespace offer very attractive themes, no need to keep updating the install, and a lot less technobabble.
(I must admit I'd almost never recommend someone without technical knowledge set up their business website using self-hosted WP these days. Go for a WP-specialised host that'll handle the caching and security, or go for something like Squarespace.)
The idea that partially-structured or unstructured Facebook could be a _serious_ competitor for a website that enforces some structure and provides services that can only work with that structure sounds a little stretch to me. It seems to me that the direction we are moving is towards more structured, purpose oriented websites that provide better services.
Yep. If you think in terms of the long tail, Facebook takes care of the people who have super generic needs on the spike side and they take care of the markets that are too small to pay attention to on the tail side but in the middle is a lot of space for competitors to do what you are saying and charge for a little structure.
Excellent article Alex! I'm actually rather amazed that this connection wasn't more readily apparent to me. Nonetheless, I think you didn't address the distinction between B2C and B2B business models. Excel is both a B2B and B2C product, where Facebook almost exclusively serves just B2C (who among us solicits business deals using Facebook?).
If your SaaS is targetting B2B then Facebook is a non-issue. It goes almost without saying that Facebook has no teeth to eat your lunch.
Excel is ubiquitous because, as noted, it is an incredibly powerful tool. Facebook is ubiquitous because of network effects.
It's not a straight analogy. Specialized use cases can coexist with Facebook, otherwise half the Social-Network-for-X or Facebook-but-not-Facebook startups wouldn't exist. Productivity applications in contrast have an uphill battle and tend to stray away from anything even remotely resembling a spreadsheet UI.
I think a lot of the successful Social-Network-for-X apps hit a critical mass before FB groups became popular. It's going to be much harder to do that now because now Facebook for X is the X group on Facebook.
"Facebook.... <story is yet to be written> but the same thing will happen to them."
I believe the story is already out there: FB saw the threats coming and just bought them. Whatsapp is a particularly clear example, I have about a dozen groups of friends, family, hobby, work, etc. On these groups is where we share pictures, memes, links; we plan meetings, meals, outings; we invite and are invited to events, etc. In fact: I already closed my FB account b/c I no longer need/use it. Then there's the fact that soon Whatsapp will be open for business, chat bots will come. Ordering food? Selling a house? Transferring money? Whatsapp is the new social net and FB already bought it.
So the story to be written is who or what will take over Whatsapp.
One thing about the success of Whatsapp mystifies me: it's tethered to a cellphone.
I have a four-year-old smartphone that's basically dead, but works for getting emergency calls. I also have multiple laptops, a tablet, etc. and keep encouraging people to use FB chat (since I've given up on converting folks to Slack) to talk to me.
I don't think the verification by postcard process is essential. Most Nextdoor users are confirmed through other techniques such as IP address geolocation, SMS, referral from existing users, etc.
I've gotten far more use from Nextdoor than facebook. I generally use it to find local services for my house, and whenever I have, I have gotten better service and lower prices than when I went calling around myself.
Excellent service, IMHO. The interface is a bit ... unpolished -- trying too hard to be polished? I only say that because of the high degree of polish I see elsewhere, but I guess that really isn't of that high of importance.
I guess, in the end, I want all services to work like reddit & HN, minimal and usable, maximum text on screen.
Facebook is unbelievably limited for any signs of creativity - even MySpace was like a generation ahead comparing to what Facebook is nowadays. Most creatives/content producers use it as a glorified Twitter; women use it for bragging about status/observing status of others and everybody else seems to have relegated it to the most banal things (hi family!). If you pay for ads, some strange Italian or Asian company does all the clicks on your ads, so unless you have a sure way to attract people with herd-mentality to your ads, B2C is useless as well.
For me at least this has been so since around 2008. I was working on a startup whose product was a "social network for travellers". Every single feature we came with, Facebook implemented it and reimplemented it faster and better. Likes, pages, reviews, photo albums, messenger, etc. You name it. At one point we would think "why bother", we couldn't compete with that with a team of 3 developers.
Obvious question, but which one of you here actually uses facebook groups and what for?
I'm sure I'm a member of a whole bunch, but aside from using them to coordinate society activities back at uni, I haven't really used them in years. I always found the interface to be ugly as hell, and if I want to join a large thriving community on topic X then I just go on /r/topicX.
The super smash bros melee tournament scene is pretty reliant on facebook. Every region/area has its own facebook group where people post about events and find each other. Tournaments (both large ones* and small, local ones) typically use facebook events as their primary page (I'd even go as far as to say that facebook events help drive up attendance. I've seen local tournaments get more attendance because the TO made a fb event). I think fighting game communities in general make solid use of facebook groups and events.
* smash.gg is also used heavily for majors as of late though
My local gym has running & cycling clubs and uses fb groups to coordinate events, provide a social area for members to share stuff, and maintains pages where they curate important information for the group.
FB isn't the only way to do this, of course, but it's certainly low friction for most members, since they generally already are guaranteed to have a personal FB account.
There is a Dutch Facebook group for determination of plants and animals, people post pictures there and there is always a real expert around who can actually identify your bird feather / tiny spider / insect / fungus / etc often down to the exact species (out of 800 in some group of beetles, say). It's a wonderful group to lurk in.
I'm a pretty avid cyclist and there are marketplaces for second hand bikes & accessories that I look at almost daily. I have also bought quite a few things through there too.
Interface has definitely improved of late - Facebook clearly are prioritising adding in functionality like being able to give reviews on sellers etc.
Interesting premise. Excel is my number one indicator for what could be a startup—if you find a complex spreadsheet that's an important part of someone making money, you have a good shot at doing it better. Businesses don't use Excel because its good at solving their problem. They use it because they don't know how to do it with anything else.
I mean this is true, but it's always been true of the internet.
Pre-web: Usenet
Early web: Bulletin Boards
Mid-Late 90s: Yahoo
Early 00s: Myspace/Livejournal
Now: Facebook
So, yeah, it's not so much Facebook is the new Excel as it's just the current "place where the average person is going to post things/look for things."
I agree with the comparisons given here until we get to Facebook. I think the main difference here is the increased saturation the internet in developed countries and the market penetration FB has obtained. Facebook has achieved 1.6 billion users a month compared to Myspace's 76 million at its peak. It will be hard to supplant such a behemoth that's willing to absorb the obvious threats it perceives (e.g. Instagram and WhatsApp).
No, that's kind of the point of the article. You might have a nice SaaS for someone to manage pot-lucks at the office, but if someone in the office just passes around an Excel spreadsheet, your startup is going to go.
I think we're both just re-iterating the point of the author--maybe slightly differently
Here's the comparison with Excel: it has eliminated thousands upon thousands of low-end coding jobs. But now knowing anything else carries a huge premium.
It used to be the case that if economists who wanted to do any quantitative analysis at all had to know Fortran 77 - and punch cards in batch mode. Now people in my field who know some Matlab are already seen as wizards.
I think Facebook is the new Internet [for many people]. The worst thing about this is not the competition with other companies but the competition with core Internet protocols and its meaning. All this while they have an embedded search engine that sucks!
That's been true for a few years now. We've faced it when trying to launch a ridesharing startup (before Uber was a thing); everyone was already organized around Facebook groups.
I successfully avoided ever working in Excel when I worked in quant finance, and I also do not have a Facebook account. So... for me anyway, the title checks out.
This article is bad. The "threshold of utility" that you have to cross is VERY low. If you previously could justify a startup that competed withe very minimal features of many of these facebook products, than that says more about the startups market than anything else.
It also depends on the region. In Germany, Facebook's market penetration is much lower than in the US. In my circle of acquaintances, only about half of them have a Facebook account, and even less admit using it regularly.
And to give some evidence beyond my obviously skewed social context, most restaurants have a simple static website with a menu and map, instead of a Facebook page (or in some cases, in addition to a Facebook page).
you didn't get any responses but I would venture to say that 90% of the people whose eyes glanced over your question (which is not necessarily who you intended to hear from, it sounds like you would have liked to hear confirmation from others who are the same) have exchanged at least 1 facebook message in the past week. Facebook has 1.591 billion monthly active users, whereas the grand total of anyone connected to the Internet in any way is 3 billion users, obviously almost all of them outside of the English-speaking world.
there was indeed a movement to "remove all social media" a couple of years ago, but it ran out of a lot of steam:
There are a lot of privacy settings you can utilize, and you are probably missing out on a lot of opportunities by not being on Facebook: it's costing you.
I was hugely against facebook for a very, very long time. But the fact is, some people simply do not use email, and you can ask for their facebook and communicate with them and build an acquaintanceship, or not do so. The opportunity cost to not using facebook is too much for me: I "can't afford" not to use it in fostering new acquaintanceships with people I meet in passing. Events are another huge thing that is exclusionary and costs me if I am not on facebook.
I'm usually an early adopter, and was for fb, but recently I noticed my life is much better without fb/messenger/Instagram on my phone. It's been 6 months and whenever I go to fb web to check out I have hundreds of notifications and messages, but never once lost something truly important. They have my number for that. I sense a social media burn out on a lot of people lately. We're not built for this crazy amount of interactions on a single day.
it gets better and better. I'm in my 2nd year without fb and haven't looked back since. Removing linkedin was great too. I never had instgram or snapchat. I had twitter but found it largely the most useless out of them all.
I use skype for chat. I like reddit and sometimes HN when there are interesting discussions going on.
I use the messenger part of it and I have a page to share stuff about the game I'm making, but I rarely ever use the timeline or other stuff like that.
When IBM built the original PC, they let Microsoft keep the rights to the operating system software. In hindsight, it was a massive miscalculation as Microsoft's "software-without-the-hardware" business went on to earn more profits than IBM's hardware. IBM's later weak attempt with OS/2 to beat Windows failed.
Microsoft's then CTO Nathan Myhrvold (who Bill Gates considered one of the smartest guys on the planet) was on a phone call with Larry and Sergei and yelled into the phone that "Search is NOT A PRODUCT!!!". (Probably their MSN hubris speaking.) Microsoft's later attempt with Bing has hardly dented Google's search marketshare.
Google didn't notice the importance of social networking before Facebook did. Google's later attempt with Google+ Circles failed to trigger a mass exodus from Facebook.
Facebook.... <story is yet to be written> but the same thing will happen to them. Somebody will come up with something that blindsides them. Or it might not even sneak up on them. Mark Z himself may look at the early-stage product and conclude that it's not anything special.
There are plenty of untapped business ideas that Facebook will misjudge and dismiss, leaving others to win that market.
But to the author's point, it will suck if you create a product that paints a bullseye and it lines up in Facebook's crosshairs. Microsoft couldn't beat Intuit Quicken with MS Money but they did crush Netscape with IE. They lose some, they win some.