Thursday, February 2, 2012

The Facebook IPO & the Hacker Way

Mark Zuckerberg
The wait for Facebook's IPO is over - Facebook today confirmed its plans to go public in a deal that could value it at up to $100bn, and Mark Zuckerberg's personal stake at $28bn. However, Mark Zuckerberg is at pains to point out that Facebook doesn't "build services to make money; we make money to build better services...These days I think more and more people want to use services from companies that believe in something beyond simply maximizing profits."
   Zuckerberg goes on to say, "Facebook was not originally created to be a company. It was built to accomplish a social mission — to make the world more open and connected.It's guiding ethos is "the Hacker Way," which in an open letter, published in the Guardian Zuckerberg explains, "is an approach to building that involves continuous improvement and iteration. Hackers believe that something can always be better, and that nothing is ever complete. They just have to go fix it — often in the face of people who say it's impossible or are content with the status quo."
   What is not clear though is what Facebook's long term future is. It's profits are 1/10 that of Google and in another article in the Guardian Juliette Garside points out that there are clear signs that "Facebook's membership is reaching saturation point in its biggest markets. The number of UK monthly visitors fell 2.2% to 32m from November to December, while US visitors declined 2.1% to 166m, says web measurement firm ComScore. Its worldwide audience is still growing, however, adding 1.4m visitors from November to December, boosted by rapid growth in Brazil and India. The deep level of penetration in small or remote nations like the Falkland Islands (75% of inhabitants are users according to research site Socialbakers) and Iceland (68%) suggests that in some communities Facebook has become not just a pastime but a social service, integrated into the fabric of everyday life. For some users Facebook is the internet."
   Facebook is certainly here to stay for the foreseeable future, and unlike the dotcom bubble of the late 1990s and 2000, at least Facebook is turning a healthy profit before its IPO. It remains to be seen if Facebook is a good investment at $100bn.
    The development of Facebook is described in chapter 11, "Web 2.0," of my book The Universal Machine, whilst the dotcom bubble is the subject of chapter 9 "dotcom."