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December 30, 2007

I recently chatted with a VC that I'm friendly with regarding some FindMeOn restructuring. We spoke about FMO's issues for about 90minutes, and about the SNS & Advertising markets for another hour. A solid 40 minutes of that time was spent discussing Facebook's market position and how it relates to other SNS. If I recall correctly, we were in agreement with each other on all points - but approached the topic from different viewpoints. I decided to cover some of our analysis below. Because of some recent press coverage regarding FindMeOn & IP claims, I'm shielding his name.

The Userbase

• [VC] Facebook has a captive audience. Some people are willfully captive - they're addicted just like MySpace fans in the past. An increasing number are forcefully captive - where will they go ? So many friends / business / family have adopted FB. Its critical mass has made it the social network of social networks - you can message your MySpace friends or LinkedIn contacts on it -- they're all joining. If you want to leave Facebook, you can't - the people you need to contact have made that their preferred medium.

• [JV] Facebook has a virgin audience, which leads to brand loyalty. For an entire generation of college students, FB is their first social network. For many corporate adults, FB is the first social network too. The brand recognition and familiarity that Facebook offers these people as 'the first' social network means its harder to leave , and they'll likely come back. Think of your first car, favorite soda - its the same marketing allegiance. Early Friendster users still occasionally check their accounts, even though they never use the system. Early MySpace adopters still check religiously, even though they've moved on to Facebook @ college or Bebo with friends.

License to Confuse

• [VC] Facebook's stronghold on their users means that they can use them as guinea pigs. If another Social Network had a fiasco like their privacy stream or Beacon ads, they would be shuttered. Facebook doesn't necessarily need to worry about making mistakes, and can push-the-envelope to experiment on the userbase as a whole. What will people do? Leave Facebook? Not today - there's no better option.

• [JV] Facebook still has a 'young' feel to it. Despite being a highly valued mega-corp, it claims to be young & faltering, continually learning and adapting. The party line of "We're still getting our bearings straight", along with the newness of many members to Social Networking, means that people are quickly forgiving.

Smart Growth

• [JV] Their 'applications' and such allow people to customize their profile... as long as they play by FB's rules. MySpace will probably never redesign profile pages: a cottage industry popped up around profile customization and too many people embraced that; if MySpace were to substantially change their system, most profile pages would likely break - aggravating users and inciting abandonment.

User Appeal
• [?both] More users call it Crackbook than they called MySpace Crackspace
• [?] Friendster was about browsing; MySpace about messaging and commenting. Facebook is about peering into your contacts lives. It addresses the appeal of voyeurism and the want for instant gratification. You don't wait for a message or have to look for interaction of others - its all right there in front of you, in real time.

It's not built very well - and no one cares.
• [?] Servers time-out regularly -- even during non-peak hours.
• [?] Its buggy and patchy in places.
• [?] These aren't scaling issues - its just the basic architecture and protocols/design patterns. They fix & improve continually, but a lot of it seems to be the mentality of "well, it works for now..."

Its been 2 weeks since this sitdown, and I didn't take notes on any of this, so I've omitted about 2/3 of our conversation. As I remember more, I'll update.

Posted by Jonathan at December 30, 2007 4:08 PM

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