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Ding Ding Mark Zuckerberg Gets It Right – Growth on Platform is Key Not Ad Sales October 9, 2008

Posted by John in Technology.
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I’m happy to see Mark Zuckerberg in the right frame of mind. Granted he is 24 years old but he’s got the right read on the roadmap of Facebook. He says in an interview in Germany … “Growth is primary, revenue is secondary.”

I wrote earlier in the week my concern for Sheryl Sandberg (who I’ve never met so I don’t have a good read on her vision) but all signs point that she is more revenue focused. As I was saying yesterday the best move for facebook is …“Personally I don’t think that they have to produce the monetization answer right now but instead just focus on the product leadership and key business development deals. I have no idea why Sandberg even entertains the monetization question at all.”

Mark explains the relationship between the CEO and COO Sheryl Sandberg ..”She is an excellent manager. She is very good in building our international organization. I’m focused on the direction of the company, especially of the product development, and the overall strategy. I spend a lot of time working with engineers and product developers. We work together hand in hand.”

Mark is focused on the direction of the company. Lets see the platform strategy – that is the key to success for Facebook. Get that right and the monetization will take care of itself. The ad model isn’t there yet sure milk the low hanging CPM fruit but don’t focus on monetization solutions that don’t work for users or advertisers – that is 99% of all ad models today.

Update:
From Alan Wilensky’s comment below I would add the following about Facebook’s prospects in this upcoming potential downturn…

I’m very bullish on Facebook. There is value there. I’ve lived through this movie and the outcome is not that bad for Facebook. Everyone was saying the same thing about Google in 1999 when search was in the dumps prior to the last massive downturn. Google focused on its product and bada bing they deployed the revenue model that worked for their platform. Same is in play here for Facebook. I’ve been critical of Sheryl because she should address the monetization piece because the growth and utility of Facebook is real. I would pour it on with advances at the platform level and add to the utility of the product as fast as I could …

No doubt Facebook will survive but how they do that should be on their terms… They can milk the low hanging low CPM revenue just on shear volume plus the cash on the books eliminates their risk of going out of business. The key to their utility is to continue to be relevant on the product side.

The only thing that might hurt them is a big risky move on the product side and their inexperience might contribute to that (I doubt it will be the case). One thing that is a red flag is the early guys on the product and engineering side are leaving… I just don’t get that.. the messaging that they wanted to do something else doesn’t work. All great companies had core teams that stayed on from the beginning (microsoft and google). Neither of those companies (Microsoft and Google) had this much exodus this early hence the red flag.

Update: Silicon Alley Insider has a good post on this topic.

Comments»

1. Alan Wilensky - October 9, 2008

I see a slow erosion of non-mission critical non-essential time sinks, such as Facebook. As we start looking at a complete reordering of the American productivity landscape towards real production and the IT utilities that support them. Goodbye Facebook and 1000 like it; or retool as something truly useful and productive.

2. John Furrier - October 9, 2008

Alan,
I hear what you’re saying but I’m very bullish on Facebook. There is value there. I’ve lived through this movie and the outcome is not that bad for Facebook. Everyone was saying the same thing about Google in 1999 when search was in the dumps prior to the last massive downturn. Google focused on its product and bada bing they deployed the revenue model that worked for their platform. Same is in play here for Facebook. I’ve been critical of Sheryl because she should address the monetization piece because the growth and utility of Facebook is real. I would pour it on with advances at the platform level and add to the utility of the product as fast as I could …

No doubt Facebook will survive but how they do that should be on their terms… They can milk the low hanging low CPM revenue just on shear volume plus the cash on the books eliminates their risk of going out of business. The key to their utility is to continue to be relevant on the product side.

The only thing that might hurt them is a big risky move on the product side and their inexperience might contribute to that (I doubt it will be the case). One thing that is a red flag is the early guys on the product and engineering side are leaving… I just don’t get that.. the messaging that they wanted to do something else doesn’t work. All great companies had core teams that stayed on from the beginning (microsoft and google). Neither of those companies (Microsoft and Google) had this much exodus this early hence the red flag.

3. Alan Wilensky - October 9, 2008

I see a fundamental difference between FB and Google. Google is essential, and has all but replaced Yellow pages and many other fingertip directories – just put many vertical hardbound directories out of business.

I don’t see the mission critical use case of FB. The platform might be valuable as an application delivery engine – but only if divorced from its populist and insubstantial ‘fun’ foundations, which will never return revenue.

4. John Furrier - October 9, 2008

I think Facebook has to earn the “essential” position in the mind of the end users…that is my point about focusing on the product benefits. Remember only a small fraction of users thought Google was essential in the early days…then Google earned it through innovation on the product and engineering side.. I speak to many people who use facebook and get a utility out of it. I certainly do…what is a relationship worth whether connecting with someone or keeping in touch ..these are amazing opportunities for FB to earn and keep user loyalty. If they become to much of a gimmick then they are toast.

I get the sense that Mark Z gets this and this early in the company’s DNA if new hires don’t “get it” then the overall guiding vision and principles of the founders will be lost… that to me is their risk…

You do have a good point on the application engine point… the ‘fun’ is overstated – fun is a utility for people who like fun (youner demos) and fun for older people might be business or keeping in touch… FB shouldn’t be in the business of determining what “fun is” for users…

enough free consulting for FB.

5. Speaking Of Facebook - It Needs Change Management of Customer Service - October 10, 2008

[…] There has been some discussion today of Facebook’s business model. […]


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