5 minutes with Brad Storm

Facebook Inc. is the cinderella story of Harvard student Mark Zuckerberg who started out with an idea of digitizing the Harvard student yearbook in 2004 but ended up with disrupting the way people all over the world interact, communicate and share their life stories by 2008.

Today (April 2009), about a quarter of the Norwegian population are members of facebook, about 15% of the Canadians as well. Demographics show that the age group of 35-54 is the largest growing group on Facebook with 276% growth. More than 50% of Facebook members are visiting the website once a day or more. About 60% of the users are females. Members find long-lost friends, invites to parties or concerts, or simply share events from their real-life with their FB friends. Further, Facebook has become a platform for 3rd party developers to create social applications where members dig into music, share their favorite actors or food, or use dating services.*

Facebook is also the story about the kid (Zuckerberg) who turned down a 10 million dollars for the company 6 month after launch from (now defunct?) Friendster but kept developing the company. However, Zuckerberg got famous for turning down another offer, this one from Yahoo for one Billion dollars(yes, $1.000.000.000, or 6.500.000.000 Norwegian Kroner), in 2007! Microsoft speculated a price of $15 Billion mid 2008 but most experts thought this to be ridiculously high. Nevertheless, a remarkable story considering the company was worth nothing only 5 years ago.*

What has Facebook done? What will they do? And how will members react???

Facebook goes “public” (2006): Meaning, Facebook opens up their networks for anyone with an e-mail address. And grows rapidly. I have no idea why Facebook caught the “wave” while sites like Friendster or Hi5 didn’t (to the same effect). But it’s a true example of the “network” effect… facebook has no value to members if no one else is participating fully. The message “friend request” was an exciting part of any Facebook members life! Facebook was still not a platform, it had something called a “wall” and the most intriguing thing you could do was “poking”.
“All my friends are on Facebook, what now?” (2007): Yes, the time would come when a Facebook member didn’t have  5 or 6 friend requests a day and the growth accelleration of members seems to slow down. How could Facebook maintain momentum and keep people on Facebook? New features got launched, better usability, video sharing and some applications, sharing pictures, opening up Facebook API’s for others to develop apps. But Facebook is faced with another problem: how do we make money from all our members? The company turns down an offer for $1 billion from Yahoo and forces the company to rethink their business plan to validate such a decision.
“Hey, my mum is on Facebook! Yuk!” (2008): But the member growth didn’t stop. Instead, the “laggards” joined Facebook in full force: The age group of 30-60 becomes a rapidly growing group. Suddenly, Facebook users have dilemmas. Do they want to be “friends” with parents, their colleagues or someone they hooked up with one wild night at the bars that is better forgotten? What about some of the fringe “friends” they no longer want to show their updates to? Facebook responds by improving user control over what information is shared and with whom. However, the usage is still not good enough implemented for not-so-technical people to understand. In fact, the default setting that shows your entire profile to anyone in your network (what’s a network?) is still there, and needs to be turned off manually, if you can figure out how. Facebook also makes an improved advertisement system and launches their developer network in full, looking for new ways to make money.
“My photos are mine, not Facebooks!” (2009) Facebook make design changes again and members roar. It’s their “Facebook”, not Facebook! One member compares it to renting an apartment and then suddenly one day the owner comes in and starts rearranging all your stuff. A new terms-of-use contract removes rights to pictures, postings from members to Facebook. Again, members roar! After three years of use, Facebook has become extremely personal to its members. One question remains unanswered: who really owns the information published on facebook and what happens to it once you delete your profile?

What will replace Facebook (or, is Facebook Disruptive?) I don’t think there will be a new social media site replacing Facebook. However, when Facebook falters it will happen as quickly as it rose. But keep in mind that Facebook didn’t replace anything similar - it became a new tool for social interactions we didn’t have before. Facebook has disrupted the way we e-mail, do instant messaging, text messaging or even use our phones. It disrupts the number of friendly calls we make. It disrupts our conversations (”how is Jenna these days” is replaced with “did you see what Jenna’s doing on facebook…”) This goes straight into the heart of Clayton Christensens “Disruptive Technologies” idea. In the same manner, something else, something very different, will disrupt our use of Facebook, and the way we socially interact. But it will not be another social media app as we know it. The replacement will be something simpler, easier to use and with a potential that supercede Facebook.
Will Facebook compete with Twitter, LinkedIn? No, I don’t think so. And I see no purpose to it either. I guess most of the users of LinkedIn or Twitter are already using Facebook, so there are few “new” members to gain. Twitter doesn’t compete in the advertisement space either. LinkedIn is a professional site, Facebook is a social site. However, all the different social medias will all benefit if they mash-up or collaborate! It will increase vaule to members, and increase value to each different site.

How will Facebook develop? Who knows? But at some point in time, Facebook will become greedy and want more money from the amount of members - new models will appear, new payment services. Facebook will keep expanding their platform strategy, trying to fit as much of your “daily” life into Facebook as possible. Maybe online banking, ticketmaster or options for grocery shopping? On the other hand, we already have something for that, called the WorldWideWeb. One thing is for certain, Facebook needs to keep up momentum or daily visiting members will drop below 50%… the downhill curve can be immensely steep. But with the increase in older facebook members - a stronger consumer group - new business models will emerge.
Why should we bother using Facebook anyway? Simple: because most of your friends are. That means they’re sharing something you’re not part of if you don’t. Some people don’t care about it, true. But yes, we did manage pretty well before Facebook. But Facebook has a challenge when it comes to “useless” information. Some people love it, but most people don’t want to spend too much time on useless squat - Facebook can therefore drown in information that has no value. And when Facebook looses momentum or our way of doing social interaction changes, Facebook better keep up or we will be talking about Facebook as “that’s sooo 2009″.

Will Facebook - the movie be any good? Don’t know but it will apparently be made by West Wing Director Aaron Sorkin. I guess we have to wait and see http://www.theregister.co.uk/2008/08/28/facebook_the_movie/

Sources:

Crunchbase: http://www.crunchbase.com/company/facebook

Techcrunch http://www.techcrunch.com/2007/11/21/facebook-is-almost-23-women-and-other-stats/

* All numbers are not double checked or validated. They’re picked from different sites and may bot be accurate so don’t cite me on them. Nevertheless, that’s not the point either. They’re there first and foremost to tell a story, so as long as the number is on the same ballpark as the real number I’m happy! Everything written here is my interpretation of sources I read and how I evaluate this information. Take it or leave it