Of all the contradictions and paradoxes in the short history of Facebook one of the most telling ones is how Facebook developed its business model and where founder Mark Zuckerberg was at the time. Mark Zuckerberg spent the company’s first few years focusing on adding features to the user experience and expanding the user base. He ignored those who kept pressing for a business model, a plan for how the company was going to make money. Growth first, he told everyone, and then worry about making money. Yet the every expansion of the user base and experience that he sought required more money, a conundrum Google had faced as well when the company realized that in order to expand their search capabilities.
Zuckerberg’s advisors had been pushing him to get a chief operating officer and especially one who was an expert in online advertising. Soon thereafter Zuckerberg met Sheryl Sandberg at a party. She was then an executive at Google and she had built its highly successful self-service ad business. Within a few months Zuckerberg had hired her. In his book The Facebook Effect, David Kirkpatrick describes Sandberg as a person of “immense experience with advertisers at Google and a deep appreciation of the importance and potential of ads on the Net.” (To read my review of Kirkpatrick’s book, which is just out in paperback, click here.) Yet he observed there was still a widespread ambivalence toward advertising at Facebook, an ambivalence fostered by Zuckerberg himself.
Within weeks Sandberg had planned a series of brainstorming meetings for Facebook management to define what business the company was going to be in and exactly how it would go about “monetizing” their user base, which is a roundabout way of answering the question: “How are we going to turn the user base into money?” These meetings took place over a series of weeks during which time Mark Zuckerberg himself wasn’t even in the country. He was taking a solo trip around the world—to Berlin, Istanbul, an ashram in India, Japan, and other locations. While it’s unclear whether this was a deliberate absence on Zuckerberg’s part, it seems obvious that he did not want to be a part of this “monetizing” process.
Yet even in his absence the management team worked under the assumption that Zuckerberg in the end would have to approve of whatever they came up with and that in order to gain his approval, the business model had to fit in with the founder’s long-term plan for Facebook. Thus, in need of money to support his long-term plans for improving the customer experience and enlarging the user base, Zuckerberg was forced to accept advertising, just as Google founders Page and Brin before him had to. In both cases, too, it was unfortunate because the youthful idealism of these founders was genuine. Yet the business cycle of Internet technologies appears inescapable. Innovation is necessarily followed by commercialization, even if going public is avoided, or at least delayed. And growth has other pitfalls, as Google’s path to success has already indicated. But more on this later.
Zuckerberg’s advisors had been pushing him to get a chief operating officer and especially one who was an expert in online advertising. Soon thereafter Zuckerberg met Sheryl Sandberg at a party. She was then an executive at Google and she had built its highly successful self-service ad business. Within a few months Zuckerberg had hired her. In his book The Facebook Effect, David Kirkpatrick describes Sandberg as a person of “immense experience with advertisers at Google and a deep appreciation of the importance and potential of ads on the Net.” (To read my review of Kirkpatrick’s book, which is just out in paperback, click here.) Yet he observed there was still a widespread ambivalence toward advertising at Facebook, an ambivalence fostered by Zuckerberg himself.
Within weeks Sandberg had planned a series of brainstorming meetings for Facebook management to define what business the company was going to be in and exactly how it would go about “monetizing” their user base, which is a roundabout way of answering the question: “How are we going to turn the user base into money?” These meetings took place over a series of weeks during which time Mark Zuckerberg himself wasn’t even in the country. He was taking a solo trip around the world—to Berlin, Istanbul, an ashram in India, Japan, and other locations. While it’s unclear whether this was a deliberate absence on Zuckerberg’s part, it seems obvious that he did not want to be a part of this “monetizing” process.
Yet even in his absence the management team worked under the assumption that Zuckerberg in the end would have to approve of whatever they came up with and that in order to gain his approval, the business model had to fit in with the founder’s long-term plan for Facebook. Thus, in need of money to support his long-term plans for improving the customer experience and enlarging the user base, Zuckerberg was forced to accept advertising, just as Google founders Page and Brin before him had to. In both cases, too, it was unfortunate because the youthful idealism of these founders was genuine. Yet the business cycle of Internet technologies appears inescapable. Innovation is necessarily followed by commercialization, even if going public is avoided, or at least delayed. And growth has other pitfalls, as Google’s path to success has already indicated. But more on this later.
RSS Feed