Recently there was a post in TechCrunch regarding Facebook’s hype. One comment to the post was that Facebook was already passe and “the new hype was being already developed by three guys in somebody’s garage”.
I recently wrote an post regarding Innovation In Technology and the process of creating new technologies; from the need to solve a problem, through making existing technology better, and creating new markets by “discovering” new ideas. I also wrote about companies generating fresh ideas and implementing them, and how these new ideas improve the bottom line. The problem of innovation affects us all, at all levels. From technology through education, stopping along the way in government and politics, healthcare and medicine, and economics.
“Three guys” in a garage can do some very powerful and life changing things. Think Steve Jobs and Steven Wozniak, Bill Gates and Paul Allen. Yahoo!, Google, Hewlett Packard and countless other companies started in an actual or figurate garages. These people took everything they had, had the charisma to raise funds and attempted to execute on their dream and would not relent, are to be applauded. Even the ones that did not succeed; because on the shoulders and ashes of every failed company, a new idea is born with the potential to change our lives.
But is hype life changing? I mean, does a company like Facebook have the potential to change the way we live? Yahoo! and then Google did change our lives. So did Microsoft, Apple, Amazon, Dell, etc. Even Friendster and MySpace have had an effect on how we communicate with the ones close to us. Linkedin and Facebook made this communication innovation their own and improved on it. But are they themselves life changing or disrupting enough? Both companies have the potential to be life changing or provides a change in a commerce paradigm the way eBay or Amazon have, for example. And there is no need to go into how Yahoo!, Google, Apple, Microsoft, etc., have indeed change our lives. But potential is not enough. There has to be value for ALL users for that change to happen.
I am going to come clean: I like LinkedIn and extract some value from it, and I do not like Facebook because I do not extract “any” value from it. But strategically speaking, I think that Facebook has had some brilliant ideas and has executed well on them. So, I tip my hat to them. Their technology AND business innovation, as far as I know, has been converting their product into a platform where people can develop application for it; thus, extending the feature base at little cost and by that, perpetuating their freshness. However, and again, in my opinion, unless there are some true productivity applications developed for it, to me there is no value to Facebook.
Let’s be clear. What does it mean “to me there is no value to Facebook”? As a user, there is not much in the product and additional deployed applications that entice me to go back with any regularity. The only draw that the site has on me is when somebody posts a note on my wall or sends me a message or IM and the sites lets me know. I am curious to read it so I go back to the site. Otherwise, there is nothing yet that I have found of any interest to me.
On the other hand, If I was analyzing the company as an investor, there is ton of value (but $15B worth?):
First of all, because I may not find value as a user, it does not mean that others will not as well. The fact remains that hype or not, Facebook is drawing a lot of traffic and keeps on increasing. Then why would Google buy YouTube when they had Google Video? The answer is traffic and with it, the ability to experiment in different ways to monetize that traffic, within the context of the property. Facebook faces the same ability to experiment on different models of traffic monetization; especially with the Microsoft investment and the rumored additional funding.
Second, the Facebook platform is another traffic draw, perpetuating the point above, but beyond that, it provides the potential of added value; the potential to draw me back as a user; the potential to leverage not only the data in the so called social graph, but the social graph and the connections. Whether it is apparent to people or not, it is clear to me that we are in the midst of a paradigm change in computing and computing services, services in general and how all these are combined. Apple with the iPhone and iPod Touch is good evidence of this. As stated above, Facebook has the potential to be a contributing party to this change. I will go more into this last point in another post already named “Social Networks and Cloud Computing”.
In the end, as fun as it is to think of three guys working on their parents garage on producing the next hype, I would rather think of three guys creating the tools and means to usher the new way to interact with technology and once again, change the world.