It’s fair to say Facebook’s most loyal cheerleaders are those who practically built and “grew-up” with Facebook: early twentysomethings. In light of my most recent post touting the opinion that MySpace is better than Facebook, I received the loudest disapproval from this very age group.
It’s OK. I’m not a Facebook hater. Go back to your Fall Out Boy and relax. I understand the love. It must be how I still feel about Google.
And in thinking about my affection for Google and a younger generation’s love for Facebook, it got me thinking of similarities and important differences between the evolutions of each company.
Around four years into its existence, Google needed to produce significant revenue. The B2B action wasn’t cutting it. The two founders had hoped to sellout to someone like Yahoo!, but failed to do so. The magic bullet, however, was pay-per-click advertising. They didn’t invent PPC, but they sure made it work like no one else before. And since then, well, the rest is history.
Facebook, by most accounts, hoped to sellout to Yahoo! as well. No go at the alleged $1 billion pricetag. As a result, Facebook finds itself the pretty girl at the dance who felt she was too good for everyone and may end up going home alone. And instead of a home run revenue play, they’re currently stuck making ends meet printing out photos and running banner ads. I assume Jobster is paying them a hefty sum as well but can’t confirm.
Now, before you say, “Well, where’s MySpace’s money?,” MySpace is currently 1 percent of a much bigger gorilla. They can afford patience. Facebook is 100 percent of, well, Facebook. Big difference.
But here’s the kicker: Unlike Google, Facebook has no magic bullet.
Social networking sites are easy to replicate. And they’re going to become even easier considering all the APIs which will freely release such technology to the masses. As a result, most social networking sites will become specialized, particularly focusing on local markets and supporting sites whose primary means of existence is not social networking. For example, I can envision many job boards embracing a social networking component to their current offerings. Here’s a good example of such support, compliments of (oh no!) MySpace’s ownership.
Google, in contrast, is not easy to replicate.
Pay-per-click advertising? Sure. Superior search results? Not so much. Damn those PhDs and their algorithms!
In the end, time will tell. It always does. Neither social site could make it out alive. My opinion regarding Facebook isn’t personal. They could be acquired or go public and see everything change. In the end, I think it’ll be a successful niche site with a loyal following, having no more than 25 percent market share at its height.
Remember, it’s not show ‘friends’; it’s show business. Until I see something the market can’t easily duplicate, supported by real revenue and/or significant financial backing, my money’s on (by far) the current market leader with deep pockets and even deeper connections and possibilities.
Sorry dudes, that ain’t Facebook.
February 16th, 2007 at 8:14 am
The trouble with your argument is that Search doesn’t have much of a barrier to entry, either. Here’s how you know this is true:
(1) History. We have seen so many search engines die in the path to Google (Inktomi, Alta Vista, etc.). To be sure, Google has the edge NOW, but disruptive changes in hardware and algorithms do happen.
(2) Google’s behavior. If they really had a barrier to entry on Search, they wouldn’t have to be scrambling to do so much more (building their own private internet; introducing new products such as GMail, Google Spreadsheets, etc., etc., etc.). There is probably some fear of repeating the mistakes of the past in the Google upper echelons. I wish them luck, but history tells us that it is incredibly difficult to keep the advantage.
The same could be said of the social networking sites. Facebook users may seem loyal, but let me say one word: Friendster. The speed at which an entire community jumped off to find a new tool was remarkable. It will happen again.
This, then, is a huge risk for Jobster, both in terms of their general business plan (they have no barrier to entry for their competitors, either, and they obviously can’t execute, which is what can differentiate companies that all provide the same service), and in their partnering. If Jobster really wants to make money, the smartest thing Jobster could do right now would be to lay off another 60 people. Honestly, it only takes a few engineers to run a software product with so few users. Go ask Craigslist.
February 16th, 2007 at 9:42 am
Google’s algorithm easy to duplicate? Surely, you jest.
February 16th, 2007 at 9:55 am
Some interesting points and I think that I must agree with the twentysomething age group that are in to facebook. My problem is just that I think that Myspace in comparison to facebook fails dismally. Not to mention the numerous awards Myspace has recieved for being the worst site in the world (very subjective in the end).
I agree that in the end, social networks are soon to become very accessible to very specific markets and I personally think that is fairly exciting.
Thanks for the post.
February 16th, 2007 at 1:24 pm
Your comments on Facebook, Google, Myspace, etc. make a lot of sense. I agree with you that social networking is becoming a function that organizations can deploy for their own purposes, creating specialized communiities for themselves and there are increasing number of services out there that offer this to interested parties for small money or even free. In other words, there is nothing unique or differentiating in being a social networking site. Utlimately, the only thing Facebook will have to sell is the quality of its community.You could probably say the same thing about Myspace with the difference being, as you point out, that someone already bought it.
February 17th, 2007 at 1:18 am
Before they partnered with Jobster, I’d have bought the argument that Facebook had potential like Google. But the Jobster partnership (which makes little sense to me) and the deal with MSN leave me to believe that Facebook might not have the same decision-making skills (or luck) as Google. Before the MSN deal, Facebook was an awesome source for college recruitment. You could target text and banner ads to specific majors, colleges, geographies. The MSN deal leaves them with MSN’s targeting which does not allow anyone to go that deep. Jobster will add little value to the members of Facebook. Currently Facebook is an amazing, but very expensive, resource for employers looking to target college students. I’m going to assume that Jobster will offer something less valuable to employers that will compete with the Featured Groups that Facebook currently offers. Which is bad for employers. Employers need to learn to navigate (and accept) the social networking space, not use some watered-down Jobster-version of Facebook. The one thing that Google has never gotten away from is it’s commitment to it’s users. Providing value to searchers and advertisers. I don’t think the Jobster-Facebook deal was about adding value to users. So I’d say the jury is out on whether Facebook is like the Google of 2001. But Jobster with all of it’s strategy shifts is reeking of 2001… but more like Pets.com.
February 17th, 2007 at 1:07 pm
I did some of the investigator work about Facebook while I was at Jobster. Here are the conclusions I had about their business and what they could offer a company like Jobster:
1. There is a definite barrier to entry. Yes, the technology is replicable, but speed is the competitive advantage on the web - and critical mass is achieved by getting millions of people wrapped up in their functionality to a point that makes it impossible or at least unlikely to switch. The people who use Facebook are religious about it and are building up connections, affiliations and content. What’s also interesting about Facebook is that people are constantly updated and drawn back into the community (people I observed use it almost as much as email).
2. They don’t have a magic bullet right now, but that’s OK. Lots of sites build up traffic and then figure out interesting ways to monetize that traffic. It sounds very 1999, but that’s actually working these days given the critical mass of the web.
I think you have every right to remain skeptical until they show you something really big. But I do believe that indispensible tools (like Google) have big monetization potential, and in the web game I don’t think you need the big pockets of News Corp to exploit them.
February 17th, 2007 at 5:05 pm
Dave makes some good points. However, my my option, social networking and professional networking aren’t the peanut butter & chocolate (two great tastes that taste great together) combination everyone thinks they are. I think they are more like chocolate & wine - both great - but best enjoyed seperately. We’ve not yet mapped out how someone “grows up” in the digital space. Do you wake up one day, decide to get serious, and take down the pictures of you shotguning a beer and the pictures you took of yourself half-naked in the mirror? I’m not sure the upcoming generations will do this. They are a generation that wants to be accepted as is. And I’m not sure HR is ready to accept it. I think this culture is what will make the job board/professional network and social network combination hard to navigate for a while, which I think will make it hard to monetize these deals. I think Jobster and Facebook’s best chance for making this a successful deal is figuring out a way to allow employers to target very specifically the candidates that they are interested in - either through ads or email. I know a lot of employers who would pay for the ability to augment their hiring strategies by doing some very targeted advertising.
February 19th, 2007 at 11:37 am
Two years ago my sister joined facebook at about the same time I joined Myspace. At the time facebook was useless to me, I searched and there was NO ONE I knew. Now she is 22 and I am 26 and facebook is just as useless as it was 2 years ago- I was initially very turned off at their elitist “college” club angle (even though I had recently graduated) and to this day I have all of 2 friends on facebook. My point is that to people born before 1984 (as far as I can tell) facebook just isn’t practical- is it? am I totally off the mark? Maybe I should log in again and poke around…