
Facebook's Culture Problem May Be Fatal - percept
http://blogs.hbr.org/cs/2010/05/facebooks_culture_problem_may.html
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ccc3
Facebook is doing more than just taking away something from their users,
they're being downright dishonest. Until recently Facebook's pitch to users
was that it was a way to connect with people that you actually know. They were
deliberately closer to the closed/private end of the spectrum. And back when
they had real competition (myspace), privacy was one of the key
differentiators. I still think privacy is one of the big reasons that
Facebook's popularity took off like it did.

Now they're pulling a giant bait-and-switch. Attract users with privacy, kill
competition, then kill privacy to gain easy profitability. This alone is
pretty disingenuous, but to make these changes behind users backs (for
example, pictures that were once private became publicly viewable) shows a
blatant disregard for the trust that users gave Facebook when they signed up.

~~~
jacquesm
I think you've nailed it, bait-and-switch is the frustrating bit.

That said though, I wonder if there is a way a big corporation can avoid this
path, they'll have to monetize somehow and once they're monetizing they'll
have to do better and better every year of they will look like they are
stagnant.

So the only way to maintain that - and for facebook monetization has always
been an issue - was to squeeze the lemons a bit harder.

Some of them will squeal, but as long as the majority stays you can't really
fault them, no matter how sleazy it is.

Network of friends = lock in, lock in => abuse.

It's always been like that.

~~~
tansey
Facebook was monetizing just fine. They had simple ads that were generating
millions in revenue and profit.

The problem is that they are trying to hyper-monetize. Zuckerberg turned down
a $2BN offer from Yahoo, so clearly he believed he could make the company
worth more than that.

~~~
anamax
> Zuckerberg turned down a $2BN offer from Yahoo, so clearly he believed he
> could make the company worth more than that.

I thought that Yahoo offered $1B and Microsoft (later) offered several (15?)
billion.

Note that Zuckerberg may have interests other than money. For example, he may
be happier running a company worth $3B than having $5B.

~~~
ctkrohn
Microsoft didn't offer 15bn... they invested a couple hundred million (~250mm,
if I recall) to buy a certain percent of the company. That led to a 15bn
valuation.

~~~
anamax
From
[http://money.cnn.com/2010/05/06/technology/facebook_excerpt_...](http://money.cnn.com/2010/05/06/technology/facebook_excerpt_full.fortune/)

 _But Ballmer had come with something more sweeping in mind. "Why don't we
just buy you for $15 billion?" he replied, according to a very knowledgeable
source. Zuckerberg was unmoved even by this offer. "I don't want to sell the
company unless I can keep control," said Zuckerberg, as he always did in such
situations. Ballmer took this reply as a sort of challenge. He went back to
Microsoft's headquarters and concocted a plan intended to acquire Facebook in
stages over a period of years to enable Zuckerberg to keep calling the shots._

Zuckerberg also rejected that offer. The deal that was struck was for $250M at
a $15B valuation

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edw519
_A business founded on the values of a generation, such as Facebook, has to
keep up with, and respect, evolving lives and needs._

The classic example of a company intelligently growing up with a generation is
McDonald's and baby boomers.

First, cheap food at drive-ins where teenagers can hang out, check out cars,
and find dates. Then happy meals for their kids, who can stay in their car
seats in the drive-thru. Now, healthier choices and high end coffee.

~~~
stanleydrew
But Facebook is really only 6 years old right? That's not really enough time
for a generation to grow. I think what we're seeing is that Facebook's user-
growth is being driven by older and older people.

~~~
bradgessler
I'd argue that the HRB article is right in that people who signed up with
Facebook in college six years have since moved on to a professional career,
got married, and/or had kids. These are pretty big changes in peoples' life
and what they demand changes respectively. People that were sharing keg stand
pictures 6 years ago today want to share pictures of their baby running
around.

~~~
sophacles
Six years is a lot longer for a 20something than the same six years for a
50something. Both in overall life percentage and in major life changes during
that timeframe.

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silkodyssey
I think facebook is a perfect example of what happens when businesses are
created "by accident", where a product is created first then a business model
is grafted on afterwards. As the article mentions the needs of the users are
in conflict with those of advertisers and it's a problem.

An increase in value for advertisers means a decrease in value for users.
Users want privacy, advertisers want everything in the open. Facebook in an
attempt to sustain growth has effectively forced users to accept people within
their networks that they aren't really close to and this makes users less
comfortable in their own space.

Facebook is at a critical juncture and its future depends on how it manages
the problems they are facing now because the house of cards can come tumbling
down at any moment. What they have going for it though is that there isn't
really any clear alternative at the moment that users can turn to. What clear
though is that people do want an alternative but till then I suspect most will
bear with it till the alternative comes to their rescue.

~~~
maxniederhofer
The same things is happening with Twitter. It was just a cool little thing to
do at the beginning, then they had issues scaling, now they're just co-opting
whatever worked well in the ecosystem. It's the same bait-and-switch, just
with developers around the API as the losers.

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vaksel
I think the biggest problem with facebook is that Zuckerberg is jealous of the
Google guys and wants it to become a Google size company.

This started with the crapton of funding they've taken on. Which led to them
hiring hundreds of Google level engineers. Which led them to needing even more
funding to stay afloat.

And now that they have so many obligations to investors they need to monetize
it at any cost to justify the valuation.

So they are doing it at the cost of user's privacy, since that's one commodity
that most people don't really care about.

~~~
acgourley
Your first sentence, in particular, is a great observation. Although it may
not just be Zuckerberg, but the board in general.

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maxniederhofer
I wonder if Facebook would have done better if they had started charging power
users. If users were the customers Facebook would have avoided this whole
mess. Assuming a reasonable $10/month per power user, a conversion rate of
2-3%, at 500 million users they'd be generating $1.2-$1.8 billion in high-
margin revenue. Instead, users are the product. Advertisers are the customers.
And Facebook is generating maybe $1B in lower-margin revs. Admittedly the
growth prospects of being the big display advertising/lead gen platform are
better than being the leading social network.

On the other hand, isn't this great for HN users? Facebook is screwing up in
some core areas. Up and at'em, I say!

~~~
stralep
Interesting... How would you define power user? (In this context)

~~~
danohuiginn
There are several groups they could go after:

a) people, often students who run their entire social lives on facebook, have
1000+ friends, and spend a long time every day on the site. Often students.
Probably don't have much money -- but you might be able to get them hooked
with small payments. Also, market it as a gift thing. Your uncle doesn't know
what to get you for chrismas, but knows you spend a lot of time on facebook
and has no problem spending $20 for a present. Also something to buy for the
girl you're flirting with (and yes, it likely is that gendered). Livejournal
made this work very well. In this situation it doesn't matter _what_ you offer
for the paid account, just that it exists as an option.

b) anybody using it profesionally: event promoters, venue owners, bands, etc.
May not deeply like or understand FB, but getting it right is worth serious
money to them. Simplification, information management, statistics, maybe tech
support.

c) Professionals who know nothing about facebook, but feel they should have a
presence there. Sell them a service with lots of hand-holding, maybe
integration with tools they already use.

~~~
stralep
Thank you :)

Just here's link for a) <http://www.livejournal.com/paidaccounts/>

------
gruseom
This article is one of the more thoughtful ones on this.

I think Facebook is running up against human nature. Yes, humans are social,
but we are also exclusive. Software that provides an outlet for the former but
not the latter is betting against human nature. That's not a strong position
to take, particularly when your success was built on both of those factors.
Relying on lock-in to support these changes is hoping that the superstructure
will compensate for removing a girder. It may work, but the fundamentals are
against it. And there's a tinge of recklessness about it.

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donaldc
If facebook, with its more than 400 million users, and all the time its users
spend on the site, can't figure out a way to make money on that without
breaking privacy, then it deserves to fail.

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garply
People keep mentioning alternatives to FB but I feel pretty locked-in. I would
be interested in joining a site that was a superset of Facebook... that is, a
site where I could control and access my Facebook data but also interact
beyond Facebook.

~~~
marltod
Someone needs to create a standardized Social Network file. Then users could
"download their facebook" then upload it to another social network.

~~~
donaldc
At the rate facebook is currently going, in a couple years all data on
facebook will be world-readable. At that point it should be easy for anyone to
download their facebook to another site. One could then clone facebook, and at
an agreed-upon date, everyone could move over to the new site.

I say this only half in jest. One can't get 400 million + people to move, but
niche sites could certainly peel off a substantial number of users over time.
And facebook itself started out as a niche social netorking site...

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somebear
My biggest issue with Facebook is that it is so incredibly buggy. It seems
like they don't run any testing before doing changes to the UI or releasing
new features. Basic functionality seems to only be working off-and-on, and
sometimes you just get periods where Facebook becomes totally unusable, for
instance when your news feed (or "News Ahoy!" as it says on mine) is sorted
completely randomly and only shows old updates (and no, I'm not talking about
the "Shiniest booty" here, but the "Fresh booty").

Yes, I use Pirate as the language on Facebook, can you tell?

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blizkreeg
On a side note, does anyone think that given all this Facebook backlash, there
will be greater user resistance to signing into a website using Facebook
Connect?

At some point, I was starting to perceive FB connect as this holy grail that
would finally bring some convergence and eliminate multiple logins and so
forth. Of course, there are alternatives like OpenID, Google Friend Connect
but they seem to be on the fringe still in terms of adoption and usage.

I run a site where the only way to sign up (as yet) is using FB connect,
primarily to improve the authenticity of members (and it also reduces fake
profiles by order of magnitude).

This backlash is definitely making me question if it's the right thing to do
anymore.

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natrius
This article basically says that Facebook is making its product worse for
users to make it more valuable to advertisers. I don't think that's the case.
A Facebook where users share most of the things they post with everyone but
restrict the privacy of the few items that they don't want everyone to see is
a more useful and interesting product to use. They just need to make it clear
who will be able to see the item you're about to post instead of hiding it
behind the lock button. A more open Facebook is more valuable to advertisers
_and_ users.

------
iamdave
_This was the technology platform they were born into_

Erm...no. The technology this generation was born into was the internet, and
it wasn't until barely 10 years ago that the social web became what it is. The
aspects of social activity is the technology this generation was born into,
and the only reason this is relevant for discussion is that just like we
evolved out of IRC, ICQ and are moving away from AIM, too they will move away
from centralized, top-down hierarchies of managing social interactions.

------
jpdbaugh
"A business founded on the values of a generation, such as Facebook, has to
keep up with, and respect, evolving lives and needs."

I don't think the problem was with keeping up but rather staying the same
service. Facebook needed to not evolve and remain the same way it always was
when it was first conceived.

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barryfandango
While we all argue, accuse and bemoan, my parents, grandparents, non-technical
friends, and the rest of the world continue logging into facebook every day to
post baby pictures and invite people to parties. They care not for _any_ of
this.

------
ashishbharthi
You know my take on this whole facebook privacy issue?

"Use Twitter Instead!"

------
terra_t
I don't have a lot of sympathy for people who expect to have a private
playhouse online where they can say anything without any consequences,
particularly if they want it as a consumer product.

If you're going to boast in public that you like to drink a Sparks for lunch,
violate the open container law, and walk by the police station, don't be
surprised if the cops notice.

In fact, if you're going to say something that you don't want to get out,
you'd better be really careful of how you protect it. Nixon learned that
lesson the hard way.

~~~
ajju
Are you saying that if I explicitly set my privacy settings on Facebook to be
fully private, it is still o.k. for Facebook to make my data public because I
should have no expectation of privacy on the Internet?

~~~
jat850
Doesn't sound at all like that's what the parent poster is trying to say.
Sounds more like a caution against posting anything, anywhere, that could be
harmful or damaging to oneself, while harbouring the unreasonable expectation
that it will remain private for eternity. Whether that privacy breach comes
from maliciousness, or negligence, the same cautionary principle applies.

~~~
raganwald
The challenge is that there are two orthogonal issues here: Sympathy for users
and criticism for businesses.

If someone spends thousands of dollars on hair implants because they believed
an informercial telling them that they will get laid every night of the week,
I would sit them down and have a long talk about tooth fairies, santa clause,
bridges, and swamp land salesmen.

But I would still despise the businesspeople preying on the gullibility or
naivité of their customers.

So perhaps it is a very good idea not to put anything online that would ruin
you if it leaked. But it's still reprehensible to leak things after setting an
expectation that they are private.

