Is Facebook at the Peak of its Hype

Posted by Udayan Banerjee on December 29, 2010 · 3 Comments 

The record of Facebook so far is impressive … in fact it is unprecedented. Facebook with $40 billion valuation & 500 million users – Mark Elliot Zuckerberg, the youngest billionaire & Time “person of the year” … the list goes on. So, where does Facebook go from here? Are we looking at the tip of the iceberg or are we standing at the top of Mt Everest?

Here is a 2007 May Fast Company article – Facebook’s Mark Zuckerberg: Hacker. Dropout. CEO. It makes interesting reading. The article goes on to says “…TechCrunch posted documents said to be a part of an internal valuation of Facebook by Yahoo. The documents projected that Facebook would generate $969 million in revenue, with 48 million users, by 2010…”. They have been wrong by an order of magnitude on the number of users!!!

Going forward, here are five possible scenarios for Facebook.

1. Next big thing happens: A new and innovative entertainment channel opens up and becomes very popular. Though Facebook continues to enjoy a huge user base, total time spend by users on Facebook saturates and starts declining.
2. Remains a social networking site: Their user base grows to about 1 billion and also gets a fair share of advertisement revenue. It remains, by far, the largest social networking sites but fails to expand beyond that. People continue to spend time on Facebook to socialize and play games but not for anything else.
3. Encroaches into others territory: It builds up a loyal user base that uses Facebook of almost everything. It encroaches into the territory of Craigslist, eBay, Amazon, YouTube … and creates its niche. Significant portion of SMB completely depend of Facebook of all customer interactions.
4. Seriously threatens Google and others: Proves that knowing people is vastly superior to understanding web sites. Business of all sizes starts to flock around Facebook for advertisement, sales and customer relation management. All internet segments are affected. Google sees a significant decline in ad revenue.
5. Achieves complete dominance of the web: Facebook impacts every facet of our life and becomes synonymous to web. Majority of our web interaction happens through or with the aid of Facebook.

Can Facebook really reach level 3 and move beyond?

Here are some of the challenges that need to be dealt with.

• Currently, Facebook does not recognizes the nuances in relationship (see this great slide show by Paul Adams who is slated to join Facebook from Google) – question is can this nuance be introduced without sacrificing the simplicity of interface?
• Facebook is blocked in most large enterprises – and wining over enterprises is always a big challenge – Google is learning it the hard way. Even in SMB survey indicates that half of them don’t allow access to Facebook.
• So far Mark Zuckerberg has unilaterally defined the rules of the game. Not the best way to take the rest of the world on – it requires alliance – it requires collective thinking. Tim Berners-Lee, the creator of the web standard has called Facebook a Walled Garden in Scientific America (here is the original article)
• Knowing people and behavior is important but not everything. The importance of data – information – knowledge cannot be ignored and today in the area Facebook depends totally on Microsoft. Here is an interesting analysis – What Social Signals Do Google & Bing Really Count?
• Privacy concerns – monopoly concerns – government concerns … these are real concerns and more voices will be raised as and when Facebook spreads its tentacle. This post (Facebook’s Anti-Privacy Monopoly) summarizes the current concerns of people.

Finally, here are some thoughts on where social web is going:

• Gutenberg Meets Zuckerberg: Publishing In A Social Web
• The Future Of The Social Web
• Apple`s Steve Jobs Earned ‘Person of the Year` Title: 10 Reasons Why

Udayan Banerjee on Google+

Filed under Social Media, Web 2.0 · Tagged with Facebook, Google, Social Networking, Web 2.0