Six Pixels of Separation - The Blog
February 3, 2012 9:16 AM

Expect Big Changes At Facebook

Most companies change dramatically after their initial public offering.

There is a reason that Facebook is going public. And while many are speculating as to the reasons by digging through the company's SEC filing, I think Facebook is going public because it needs to now compensate those who have built it to become the impressive empire that it truly is. It may be a simplistic view, but that's my view. The bigger question that is on everybody's mind is: will Facebook change once they are a public company? The answer is, without a doubt, "yes!"

Is that a bad thing?

No. Not at all. Let's face it: Facebook has been changing since it first started. Does Google look anything like Google before its IPO? What about Apple? The best companies, the most innovative companies are the ones who flow in a constant state of iterative change and evolution. Facebook's challenge comes from its size. The sheer volume of users and the sheer value of the valuation will make it have to perform unlike any company that has come before it. When you have over 800 million users (and closely approaching one billion users), any move (big or small) will ruffle feathers and create backlash within the user community. It's a part of the Facebook ecosystem and you can expect that to increase as the public takes stock in the business.

Applaud Mark Zuckerberg.

In preparation for the IPO, Facebook founder and CEO, Mark Zuckerberg, embedded a "letter to the shareholders" within the SEC filing (to read the full letter, please go here: Fast Company - Mark Zuckerberg Hacks S-1 Filing With Letter To Shareholders On Eve Of Facebook IPO) that stated: "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. We think it's important that everyone who invests in Facebook understands what this mission means to us, how we make decisions and why we do the things we do... We think a more open and connected world will help create a stronger economy with more authentic businesses that build better products and services." While Facebook may not have been created to be a company. It is now a company. A big company. And it's soon to be a company that will answer to Wall Street. I thoroughly enjoyed Zuckerberg's letter and said a silent prayer that Wall Street will listen to what he and the company would like to do. Yes, I'm still that naive (I'd like to think that I'm hopeful for change).

So, what can we expect from Facebook? (here comes the armchair quarterback...)

  • A change in people. Once the company becomes public a lot of people will become millionaires. The money will change a vast majority of these people. Some will retire, others will take the money to start their own ventures, many of them will lose their motivation and the majority of them will just go bonkers because they're rich (plastic surgery, fancy cars, big houses, etc...). This has nothing to do with Facebook and is much more an indictment of humanity. It happens in every other business, it will happen at Facebook. They are going to have to replace or augment many of the people who have been there for a long while. This will change the culture and possible product development.
  • Mobile. To stay competitive, Facebook is going to have to up their game when it comes to both mobile devices and smartphones. This is where Twitter was making the most advances and now Facebook is going to have to ensure that the mobile and smartphone Facebook experience is as good (if not better) than the Web-based one.
  • Touch. While many people simply access Facebook via the web browsers on their iPad and tablets, having a native app that works with a touch navigation (and all of the powerful and different usability that comes along with it) is going to become a much more important component of how Facebook evolves. We are quickly moving to a touchscreen world and Facebook will need to become a leader in this charge.
  • Beyond the wall. It started when Facebook started allowing people to embed the "like" button anywhere and everywhere, but Facebook is going to have to open up the platform beyond its walled garden. This may not get as extreme as having true data portability, but with the pending slew of connected TVs, Apple television, Google TV and more, people are going to want to access Facebook within many of these new environments and Facebook should welcome the opportunity to be anywhere and everywhere.
  • Currency.  I Blogged about this extensively in March of last year (F-Commerce - Rise Of The Facebook Consumer). With close to one billion connected people, Facebook is not only more populated than the majority of countries, but they have the ability to develop and use their own currency system. It may sound crazy, but one look at Facebook Credits and we could be seeing the very nascent stages of an entirely new monetary system. The idea of people spending money in Facebook and having Facebook provide both the security and transaction to do so is not so far-fetched of an idea anymore.
  • Marketing. The dollars mentioned in the SEC filing says it all. Facebook has been profitable for the past three years, and a good chunk of the coin has been from advertising revenue. Facebook is much more than a media channel that can fill slots with advertising. The marketing opportunities behind this engine have yet to truly be developed. It is a rich land full of powerful data that knows a lot about people - from where they are and what they like to who they are connected to and what those people are doing. If you think - for a second - that it's only about advertising, you would be sorely mistaken. Facebook and the marketing that comes along with it will be one of the biggest opportunities for the brand... while at the same time it will create the most discussion from the users.

In the end, I'm hopeful that Facebook will change dramatically... but for the better. What do you think?

By Mitch Joel


Comments Comments Feed
  • Posted by Drew Hawken
    Mitch Joel

    I share your optimism!

    Change is the only constant (trite I know). My hope is Mark's words do form the glue that binds these changes together. I believe that google is a fairly strong example of a company that has grown massively but still, arguably I know, maintained their humanity.

    I also believe that consumers have much more power esspeically over these brands to hold them accountable that ever before

    Reply
    • We're always skeptical of a company maintaining their humanity when they get big, aren't we. I know people are hard on Google, but I am still an evangelist for them (and Facebook) through and through.

      Reply
  • Posted by Mark W Schaefer
    Mitch Joel

    I am an observer of Facebook, not a student of Facebook, but I partially disagree with you. In the reporting on the IPO, the one thing I have read over and over again is the remarkable amount of control Mark Z has been able to retain over the company. For this reason, I think facebook will continue to evolve (as it does every MONTH!) but it will not veer drmatically from its current trajectory.

    I also agree with you about the Facebook credits. In 2010 I predicted that this wold be a mega-trend and could ultimately be Facebook's biggest contribution to the Internet economy. This is the long-awaited micro-payment system we have all been waiting for!

    Thanks for the great post Mitch.

    Reply
    • I hope you're right, but the truth is that my list was more "wishful thinking" than anything else. I'm hopeful that this injection of funds and public offering will help them advance the products and services.

      I'd offer this up as a topic of debate on the next Podcast, but something tells me we would be agreeing more often than not.

      Reply
  • Posted by Lauren McMullen
    Mitch Joel

    I also share your optimism. Facebook is a platform whose time had come and I am grateful that Mark Zuckerberg did not chose to play
    small because he could have squelched its growth.
    Will there be issues? Of course there will as in anything of this magnitude but I think that social media and the will of the people will keep it on track.
    There is always Google+ waiting in the wings to take over if Facebook
    loses its way.

    Reply
    • This is a common line of thinking: that being public and so big will keep them on the "straight and narrow" - I'm not sure if this is a good or bad thing. We do want them to radically innovate and we definitely don't want them simply pandering to the masses. It will require some balance.

      Reply
  • Posted by Cassie Witt
    Mitch Joel

    I think your predictions are pretty spot-on, though they are a bit wishful. I, too, have high hopes for Facebook since most of my business is setting up and managing pages for clients. However, I have been disappointed by Facebook before.
    I don't believe that going public will keep them on the "straight and narrow" either. That seems a bit naive to think that this will happen. I do hope Facebook doesn't just "follow the money" because that could take them down a rabbit-hole their users might not want to follow them down.
    Anyway, it was a good post with a lot of food for thought.

    Reply
  • Posted by Clyde Banks
    Mitch Joel

    I hope the change will be a good. When i look at the ads of Facebook there's much to improve, like better targetting on your audience. I will wait and see what they will do with their increased budget when the go public

    Reply
  • Posted by Lauren McMullen
    Mitch Joel

    I agree that change is the only constant (especially with Facebook). I also hope the letter Mark wrote to his shareholders will serve to guide the direction of the change. That said, I don't have very much faith in Wall Street so I hope that we the users will be vigilant and involved and vote about all the coming changes by weather we continue to use the site or not. We have a lot of power if we do not become complacent.

    Reply
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