Facebook is dead. Long live Facebook.

 Posted by on January 17, 2011 at 22:02  internet, startups  Add comments
Jan 172011

The inflection point at which large companies start to flat line is very close in time to the point where their revenue goals drive their roadmaps more than their users drive their roadmaps.  Facebook is there.

FB is now a huge company. To grow even small percentages annually will require massive absolute growth.  For FB, massive growth means mainly enabling more third parties to have better and deeper ways to monetize more Facebook users.  That grows revenue but won’t always provide more value to Facebook users.

  • When talented FB engineers work on a revenue-driven initiative, what’s the opportunity cost?  Many features that provide users with great value don’t start that way – they iterate.  If the grandfather of feature x isn’t released now then the killer feature grandson will be birthed elsewhere.
  • When FB makes changes or adds feature for revenue, how many of those will annoy me from user perspective? How muddy does the FB water become over time? We’ve seen FB do this already but so far they’ve survived each storm of user protest – but very few, no matter how strong, can weather too many of these storms.
  • How many times will dirty words like self-cannibalization and competing interests enter design discussions where they don’t belong?  Big companies like Amazon have brilliantly avoided this for the most part – but that will be harder for FB with their revenue reliance on third parties and advertising.
  • On a micro-level, would FB have done an Instagram two years ago?  On a macro level, should FB have a mobile platform that’s in the ballpark with Android and iOS?
  • How many things would FB have done without a second thought as a small startup that they wouldn’t be willing to do as a large company with more hierarchy, bureaucracy and legal considerations? 

FB won our social graph by being the best for basic online communication, social discovery and media sharing. FB hit those use cases within a simple, powerful, engaging, interactive, social user experience.  Not easy and FB crushed it, and as a result now own our social graph.  But the world changes:

  • How many good choices are there now for those use cases?  How many of them are in your pocket on your phone?
  • How much of what used to be done on Facebook is now done on Twitter, Instagram and mobile IM?  How much will be done on GroupMe, Beluga and The Next Big Thing? 
  • How different is what you would have done on Facebook four years ago to what you’d do now with the amount of eyeballs and APIs exposing that data to third parties?  How will FB competitors take advantage of that?

Facebook does own our social graph, but even that is under pressure as we really have social graphs, plural, and will demand control of each.  FB could potentially innovate in key adjacent areas such as mobile, virtual goods, gaming, analytics and location.  They obviously have very talented employees, good processes and an excellent foundation.  They should have some funds to buy external innovation. But I think Facebook – the original Facebook juggernaut – is dead.  If Facebook is to survive, they’ll evolve to a different company than the one we know today. Not many big companies pull that off.

Disclaimer: I pronounced Facebook dead a few years ago too, and being wrong then was one reason why my startup failed (more startup learnings here), so maybe I should move on to being wrong about something new.