Barrett Garese

What Value Hath Facebook?

It’s oft-repeated that Facebook has captured one seventh of the world’s population. It’s a staggering accomplishment, and a statement that successfully evokes the kind of scale at which Facebook operates. Facebook is more than a social network, it’s the social network. It’s become a bedrock of connectivity that crosses generational, commercial, and personal lines.

Facebook is also at the crossroads of what their recent IPO means, both internally and externally, and what each of those mean for the future of the company. Lots of smart people are asking somewhat philosophically-inclined questions like “what does Facebook mean?” and “Where do they go from here?”

The questions, despite their wording, all ask the same thing: Facebook has been successful up until this point, but their current advertising-and-privacy-based business model is bumping up against the connected population of the planet. With that in mind, what does the company hope to accomplish from here on out?

After a couple discussions with entertainment executives - who always remain fascinated with tech in much the same way that some people are fascinated with scaring themselves shitless at horror movies - investors, friends, and my father, I decided to lay my own thoughts out here on what we’ll see from Facebook in the near future. To clarify, I have no inside knowledge, and could be completely wrong on every single point here. That being said, I don’t think it’s too far of a stretch to connect the dots. 

Facebook has a problem with being taken seriously. Some people, no matter at what scale the company operates, just refuse to look at Facebook as anything more than a bubble-based shell game run by kids playing in the adult world of business. It’s a reality that any company eventually needs to “grow up” and that Apple, Google, Microsoft, and Nintendo all went through the same phases of inception, adolescence, and eventual breakthrough into being taken seriously.

My Dad is one of those people in question. His point was that while there are as-close-as-matters a billion Facebook accounts, some of those accounts are effectively empty shells. He, for instance, doesn’t feel the need to have any personal information attached to the account, and can’t envision any reason why Facebook should need or want his email, phone number, and contact list, amongst other personally identifiable information. To be fair, it’s absolutely accurate that some portion (I have no idea how many or few) of Facebook’s many accounts are exactly like his - devoid of any reliable contact or personal information.

This is Facebook’s challenge, and the onus is on them to provide a service compelling enough to entice people like my father to grant them access to his personal information. Facebook has traditionally done this in a number of ways, most of which target either convenience or the new economy of social experience and peer pressure.

Obviously “connecting” with peers, business contacts, and old friends only goes so far, and “finding new things” bumps up against the reality that most people are fairly shitty curators of information outside of the shared interests of their immediate peer group. This is the lens through which Facebook is seen by most investors right now. But I think the real insight into the company’s value comes if we look beyond the “networking” aspect of Facebook and examine their other products like Facebook Connect.

Connect attempts to solve the widespread problem of having to remember or write down multiple pieces of personal information (email, login, password) for every additional social network or service on the internet. Instead, it allows you to simply click a button, login with your Facebook account, and you’re good to go. Granted, in some cases it also brings in the social experience (tell everyone about what you’ve just logged into! Peer pressure!) but the main (consumer) draw is the simplicity that comes with eliminating login attrition, and it only works if you have an active - if not actively propagated - Facebook account. Better said, you need to be logged into Facebook for it to work - but if you are, it’s an incredibly convenient and useful product that genuinely makes your online experience better.

So with that in mind, where does Facebook go from here? What should they do considering the aforementioned statement that for their business to continue to expand, the onus is on them to develop compelling products and features not just for me, but for people like my dad?

Facebook is a company built on connections. They’ve got a good business going right now connecting people to relevant advertising, but that’s a tough business to scale and a tough business to expand - especially if they’re as committed to having their ads “not suck” as they say they are. The reality is that effective ads and good user experience are generally diametrically opposed to each other. But there’s a better platform for Facebook to base their product around, and it just so happens to directly solve many of the issues in question.

As I said, Facebook is a connections company, and connections are hard to maintain. Right now, think about how much of your address book is out of date. How many outdated emails, phone numbers, addresses, etc. do you have taking up space and making you double-check to figure out whether that person’s switched companies, moved, or is otherwise now unreachable? If you’re really brave, open up your address book and quickly calculate how many hours - or days - it would take to bring everything (temporarily) up to date.

Up until now, this has just been the reality of human connectivity: we all have multiple points of contact that we use for different types of communication. We have multiple email addresses, multiple phone numbers, we change jobs now and again, and we want certain people to have access to some info but not others. While these points of contact offer convenience to us personally, it makes it more difficult for both other people, and for each of us to maintain. As quickly as you may be able to bring your address book up to date, the larger it is, the more you rely on it, and the more quickly it gets out of date.

So let’s get back to the above Question: Where is Facebook’s value aside from a trendy and efficient mechanism to deliver advertising? Where’s the long-term value that the market desires?

Here’s the answer: they solve the communication problem by making every other method of communication require Facebook.

Now I hear what you’re thinking: there’s no way you’d ever use Facebook as your primary method of communication, and no way in hell you’d let yourself be forced into doing so, but if you give me three minutes I think I can convince you; the real secret is to see it in the frame of Facebook Connect, not of their existing networking products.

Connect is convenient; it solved an existing problem in a way that encourages usage of the platform as a whole. It didn’t kill website logins or profiles, it just made them infinitely easier for me - as a consumer - to deal with. It removed the onus of attrition on me, by taking it on themselves, and in doing so made the relationship invaluable to me. Facebook can do this with other methods of contact as well.

Here’s how it would work:

Facebook already has IM, email, VOIP, video chat, and location products. You already have the option - albeit not the necessity - of providing accurate contact info for each of these products. In some cases they’re built into the platform, and in other cases they’re working off of email/phone/etc. information you provide. Regardless, they’re already covered so far as the majority of human technological communication goes. So they’re in a perfect position to really shift the landscape by placing themselves as the middle-man and using Facebook to connect the points of communication.

Let me give an example of how the could put this into practice: Let’s assume that you’re using a phone whose address book actually connects through Facebook - as opposed to using raw contact information; no phone numbers, no emails, no other information, just a name and a medium by which you’d prefer to contact them. So when you choose to call “Dad,” you don’t have to pick home, mobile, or work, it just reaches into the contact information that Dad has provided, and connects me with the number(s) he’s already specified. If I want to email Dad, he’s got me grouped as family, and that passes my emails along to his personal email address. If he ever changes numbers or email accounts, he doesn’t need to notify 1000 people, he just changes his personal information on Facebook.

Communication becomes transparent, because someone else is dealing with the hassle of making sure everything’s routed and handled properly. I don’t need to know those numbers or addresses, Facebook does. I don’t even need to provide them - Dad does. I just need to connect with Dad, specify the relationship, and Facebook handles the rest.  My sole requirement to keeping my entire address book up to date consists of ensuring I keep 4-5 pieces of information up to date, and encourage other people to do the same.

Additionally, Facebook puts the onus of correct information on their users by providing a service that solves a number of current problems elegantly. They put themselves in the middle as the human connector, and over time it becomes worthwhile to ensure that your Facebook information is accurate and up to date so you can ensure ease of communication. None of this communication needs to happen on the platform - just like I don’t need to spend any time on Facebook to log into Fitocracy using Facebook Connect - but it does happen through the platform and makes my life simpler and better for using it. I’m still emailing, calling, and voice-chatting with the same people, and maybe even using updated versions of the same programs, it’s just massively simplified for me.

Here’s a problem though: Facebook’s not a hardware company. They don’t know networking, mobile tech, and don’t have that infrastructure in place to let me pick a name on my phone and make that call happen. Since most problems have solutions, here are a couple quick ones off the top of my head:

1. Facebook buys RIM or Nokia (which are both pretty cheap right now) and starts selling their own hardware with a complete Facebook OS and UI.
2. They partner with Apple (more likely) or Google (less so) to integrate into their existing OS and replace the address book, phone, text message, video chat, and email programs, much to the chagrin of the telecoms.
3. They branch their own version of an open-source OS (like Android.)

There’s another big problem here that I haven’t addressed: the issue of control; of letting one company have so much control over connectivity, personal relationships, and communication. I don’t have a solution there that will please everyone, to be honest. Some people have a stricter or looser sense of comfort when it comes to a company like Google, Facebook, Apple, or Microsoft having deeply set hooks into their daily life. What I can say is that on a personal level I’m willing to allow access in some cases, but only if I get something really great out of it. This would be something worth me giving up a bit of control over, but would require permission, trust, and an agreement not to abuse that access. If those terms are met, then I’m game, and I expect others would be the same.

So within that context, what’s that company worth - a company that has a thriving off-platform hardware sales and/or software licensing division, in addition to a widely utilized web platform that continues to expand with the expansion of human connections? That’s the opportunity that Facebook has right now, but it’s on them to prove that value. They’ve gotten by on about 1/3 usefulness and 2/3 novelty up until this point, but novelty fades. Right now Facebook has to prove that they can still do big, ambitious, world-changing things.

Changing and simplifying the way that one-seventh of the world’s population communicates with each other could be one of those things. That’s a serious opportunity, and a very serious business. If that happens, people will stop questioning the company’s ideas and start questioning their execution - here’s the thing though, you only question the execution of things that you believe could be great. If it’s a good idea, you wonder if it can be made well; if it’s a bad idea you simply wonder why.

That’s where I see the value and the opportunity in Facebook - solving the problems that come with connectivity on a social and societal level. But as I said before, the onus is on them to do so. People like me find enough value in Facebook where I may pare down my usage of the platform but I’m not likely to delete my account. People like my Dad, on the other hand, see an account as frivolity that can be discarded at a moment’s irritation. Their job now is to make a product so good, so convenient, and so ever-present that he feels the same way that I do.

Honestly, I think this would do it.