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Have you ever heard of Friendster? If you live in the United States and are under the age of 20 then probably not. Anybody in the social media space knows Friendster as a metaphor for a great success gone awry. Friendster was the first site to make social networking mainstream through an invite only system which attracted millions of users during which time the founders turned down a $30 million acquisition offer from Google.
Every successful social network has received an offer from Google and other internet giants at one point or another and Facebook is no exception. MySpace and Bebo both eventually caved to the pressure of larger offerings worth hundreds of millions of dollars. Both companies are now losing traffic to Facebook which has become the largest global social network. Don’t call Facebook a social network when you are with Facebook employees though … especially around Mark Zuckerberg.
The phrase “social network” has been tainted with failure and Mark Zuckerberg wants no part of that. Instead they prefer to call Facebook a “social utility”. The hope is that Facebook can continue to experience growth for years to come. With Facebook surpassing 225 million and on track to surpass 300 million this year, one has to wonder when Facebook’s reign will come to an end. Even more important than ongoing user growth is continued revenue growth.
The company is expected to post more than 100 percent revenue growth this year according to numbers that have been floating around over the past few days. It will be important to continue that trend. Some of that growth may come from displaying ads on Facebook Connect sites as he told Reuters. One issue currently is that Facebook’s eCPMs are still dismally low which won’t be much help to most web publishers.
Then again Facebook’s ad platform is just evolving and ultimately if the company can retain users and truly be the center of their “social graph”, Facebook could be sitting on a breakthrough innovation. The only key now is retaining those users and given the rough history of social networks, Facebook will need to be the first to buck the trend. If Facebook can buck the trend than a public offering “in a few years” is in fact a possibility. If it can’t, it will truly be one of the most spectacular failures ever.
No matter what ultimately ends up being the most profitable revenue model, Mark Zuckerberg’s determination to build something massive is clearly strong. The company continues to push ahead and no error so far has been able to knock the company off its rapidly growing pedestal. Now we’ll just have to wait and see what the future holds. One thing is clear: Mark Zuckerberg is in for the long haul, one of the longest hauls any Silicon Valley startup has experienced prior to going public.
“Social utility” versus “social network.” Meh. I say tomato, you say tomAHto. It’s all just semantics and the fact of the matter really is, trends, which Facebook is, burn out. I used to think Myspace would be vital to the rest of my life. Until last December, that is, when I realized I’d grown so bored with it I deleted it (a concept which was blasphemous to me one short year earlier.)
I guess I’m just saying that no matter how ambitious they are, when it comes right down to it, there’s only SO MUCH Facebook can be. As much as I love it, to me, for example, it really is just glorified, visually stimulating email and secondary photo storage/sharing. And in all the changes and upgrades I’ve seen, it still hasn’t changed my perception of that. And some day I will tire of it, I’m sure (I’m already feeling it a bit, in fact.)
The “bigger” it gets, the more it will just BECOME the Internet (search/find/communicate) and ironically that will inevitably cause Facebook to vanish.
Friendster probably should have taken that 30 million when it had the chance. Who knew what would happen though.
I remember the good old days of Friendster. All social networks (or utilities - whatever) seem to have a life cycle. We’ve seen a HUGE movement towards smaller niche social communities, largely driven by the emergence of Ning, but also on the private development side.
Facebook is much different in my mind though:
1. Massive adoption, and for some of the early users, long term adoption. To use a poker term, FB users are pot committed. They’ve dumped too much content to abandon the site completely.
2. Your friends already live there. Zukerberg made a smart move in creating an environment where first and foremost, existing communities of offline friends could connect. The network now becomes a practical communication tool just like texting and cell phones. Starting a platform on the premise of empowering better communication among stronger relationships has been a big win. This has been a key component in what has helped Facebook blow past the chaotic environment of MySpace.
3. Facebook Connect - enough said. I’m a marketer and the WOM and viral advantages that Facebook Connect provides is will be a critical factor in cracking the sustainable revenue model.
Will Facebook eventually die? Maybe. But it will be a long long time before any other network will convince so may users to switch. Just my $.02…
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Well, eventually all things come to an end, but Facebook has been more prepared than recent social networks of “the life cycle” of this sites, facebook has made them self´s somehow indispensable for other “web ecosystems” that will keep them up for a while, but thing is clear, the know they have to continue evolve and set trends, that way the might stay for a long, long time.. will see…
and $ 30 mill?? well.. jajaja better luck next time, ALWAYS ALWAYS IN YOUR ENTREPRENEUR ENDEAVORS, have and exist plan, strategy, and money targer.. remember that..