I first met Facebook founder Mark Zuckerberg a few years ago at a World Economic Forum meeting in Davos, Switzerland. He and his partner Matt Cohler wanted my advice on how to take their fast-growing company to the next level. I gave my views: The way to make a successful business with massive revenue was to create a Facebook for enterprises. I argued that social networks could become the new operating platform for the corporation, government, innovation and wealth creation, and that enterprises actually pay for software services.
They were unimpressed, saying that their vision was to become the telephone of the 21st century. With fewer than 100 million users at the time, they estimated that they had only 5 per cent market share, and the challenge was simply to grow.
So they ignored my advice. After reading David Kirkpatrick’s new book, The Facebook Effect, I have a better understanding of why. I had misinterpreted the question. Zuckerberg and Cohler weren’t asking me how to build a big business. They wanted advice on how to change the world.
All this comes through clearly in the book. It was well known among industry insiders a couple of years ago that Kirkpatrick’s manuscript was overdue. Some felt he’d lose the window – that Facebook’s 15 minutes of fame, like those of Myspace, were coming to an end.
Kirkpatrick ignored them, spending another 18 months researching. Good call; the book appears just as Facebook has become the most popular destination on the Internet.
Our obsession is justified, as Kirkpatrick points out in the most meticulous and exhaustive exposition to date. Facebook has gone “from a dorm-room novelty to a company with an unbelievable 500 million users.” It defies the conventional wisdom that social networks are here today and gone tomorrow. It has become “a technological powerhouse with unprecedented influence across modern life, both public and private.” Facebook has the capability to do everything from linking us with friends to saving lives in the Haitian disaster. It may “be the fastest-growing company of any type in history.”
Yet, as Kirkpatrick notes, it has many wondering. What is happening to our privacy, to our social relationships, to our children? Are we turning into a world of exhibitionists, conformists and narcissists? Are we losing contact with the real world? Can one really have 500 friends? Are we counting on them too much for information, thus becoming less informed? Should the world be so reliant on one company?
Yet we keep signing up in droves. And a couple of weeks ago, the much ballyhooed, worldwide “quit Facebook day” was a resounding flop as more people joined than left.
Why? Facebook has become nothing less than the communications utility of the digital age. For Kirkpatrick, Facebook is now the over-arching common cultural experience for people worldwide, especially young people. The company owes its success to “the Facebook Effect” that happens “when the service puts people in touch with each other, often unexpectedly, about a common interest or problem. Facebook’s software makes information viral … rushing through groups and making people aware of something almost simultaneously, spreading … with unique ease like a virus or meme.”
Kirkpatrick was once Fortune magazine’s top technology writer, and his instincts naturally led him to an entrepreneurial narrative. He tells a gripping tale of how the company was created and came to such dominance. As someone who followed the story almost from day one, I was still enlightened, entertained and sometimes dumbfounded by the rich detail and juicy goings-on.
Kirkpatrick seems on a mission to rehabilitate Facebook founder Mark Zuckerberg, and to a certain extent he succeeds, suggesting Zuckerberg’s reputation as the petulant, erratic, power-tripping brat who doesn’t give a damn is misguided. Rather, he is a very moral person who deeply cares about improving the state of the world.
A poignant story makes the case well. In 2005, Zuckerberg had a handshake agreement with investor Don Graham. Days later, at a restaurant meeting, Zuckerberg received a much more attractive offer. He excused himself, and when he didn’t return, Cohler found him cross-legged in the bathroom, crying, torn by the moral dilemma. Rather than accepting the better offer, he called Graham, who was enormously impressed that a 20-year-old would behave like this, and let him off the hook.
One of the best stories details Zuckerberg’s controversial decision to turn down a $1-billion offer for the company. In 2006, Facebook was being courted by executives from Viacom, Yahoo and other companies. Zuckerberg kept resisting their offers and a deep rift developed between him and the venture capitalists who stood to gain a tenfold windfall. Everyone had agreed that if the bids got to $1-billion, they would consider a sale; sure enough, Yahoo came up with the magic number.
However, Zuckerberg, who controlled the five-member board, realized that “I don’t want to sell the company.” The VCs were furious but could do nothing.
Today the company is valued at somewhere between $10-billion and $30-billion.
However, Kirkpatrick finds a potential dark side. Take privacy, the issue that has plagued the company and angered countless people.
Reading the book, I had a stunning revelation: Facebook thinks that transparency is not just an opportunity for companies and other institutions to disclose pertinent information, and in so doing to be more trusted and effective. They believe it’s an opportunity for individuals to do so as well.
Facebook’s founders, Kirkpatrick says, believe that “more visibility makes us better people. Some claim, for example, that because of Facebook, young people today have a harder time cheating on their boyfriends or girlfriends. They also say that more transparency should make for a more tolerant society in which people eventually accept that everybody sometimes does bad or embarrassing things.”
Facebook does have good privacy controls (not used by most) and Zuckerberg believes that people should have the right to decide what to reveal. But we learn that these are more a means to an end, helping uneasy users feel comfortable as they make the inexorable transition to being more “open” with their personal information.
Kirkpatrick would have done well to elaborate on why this is dangerous, and why informational privacy is the foundation of a free society. In fact, transparency of institutions and privacy for individuals go hand in hand.
Kirkpatrick dramatically chronicles many of the company’s amazing contributions to solving social problems, from fighting kidnappers in Colombia to Barack Obama become president. One is left with a clear picture of the positive power of one of the most significant communications revolutions ever.
> …Facebook’s founders, Kirkpatrick says, believe that “more visibility makes us better people.”
that's the point I guess. This might sound weird but the web 2.0 is bringing us nothing less than “digital karma”.
I like Bob Thurman's TED talk a lot about interconnectedness – http://ow.ly/27iF1
Jan A. Poczynek
Fantastic post, it's this open approach like wiki that warrants and accepts the brilliance of our fallibility and human condition. I once saw a fantastic interview with artist duo Gilbert and George who said,
“Tolerance because of chaos we like; when life is limited people become very intolerant. When everything is there, the only way to live is to be kind and gentle. It’s much better.”
We need to be exposed!
Thanks for the great post and indeed congratulations to Kirkpatrick for a well thought book.
A few notes on the topic :
Yes Social networks have changed the world and they will do it further. Let me doubt however that it will be Facebook. Remember the browsers that changed our world 15 years ago, none of them is still really around. Facebook is so naïve about the identity of members and looks so much like hubris in the face of changing the world that they may well fall the day a better social network ecosystem comes up. Already they are a minor player in countries like China and Japan (for very different reasons) that this should send a warning signal.
But the most important factor is not there. It is in the advice you gave them a few years ago. You advised them to build a business model based on real services brought to real customers and lets recognize it this was a good advice. But their idea of fortune is the one of Google: making money on a service not via the service but via the advertizing made possible towards to the users of the service because by using the service they give (willingly???) information on themselves. In other words they are after a market cap not based on the NPV of a real business but based on the attraction of data that were not originally given for advertising purpose. I seriously doubt that a system relying fundamentally on using data in such a skewed (and partially dishonest) way can be fundamentally trusted in the long term. Facebook as a company is doomed from the start because of this approach and you will see the emergence of other Social Networks that will change the world just by applying other principles.
Don, if its any consolation, Marc Benioff at Salesforce.com sees the world like you do, and is in the process of trying to execute on your advice. Great writeup – thank you.
That quoted segment also caught my eye — but for a different reason. Is the takeaway that transparency and visibility are synonyms?
I liked your advice Zuckerberg to consider marketing their system to enterprises. In fact there are others doing so.
Thanks for the compelling write up of Kirkpatrick's book