Wednesday, June 13, 2007

Facebook's Plan To Hook Up The World

Facebook's Plan to Hook Up the World

The company's boy-wonder CEO wants to take social networking out of the dorm room and make it a platform for new businesses, reports David Kirkpatrick in a Fortune exclusive.

By David Kirkpatrick | May 29 2007 | 5:29 PM EDT |

NEW YORK (Fortune) -- Imagine that when you shopped online for a digital camera, you could see whether anyone you knew already owned it and ask them what they thought. Imagine that when you searched for a concert ticket you could learn if friends were headed to the same show. Or that you knew which sites - or what news stories - people you trust found useful and which they disliked. Or maybe you could find out where all your friends and relatives are, right now (at least those who want to be found).

[This is an expanded version of a story in the June 11, 2007 issue of Fortune]

This isn't fantasy. Facebook might make it possible, and soon. Yes, the social-networking site college kids spend so much time on - the one you thought was just about hooking up - could turn out to be more important than any of us thought.

In late May, the company's 23-year-old CEO, Mark Zuckerberg, got up in front of several hundred journalists, analysts, and industry leaders in San Francisco at an event the company called F8 (think of it as "fate") to say that Facebook would no longer be just another social-networking site. Instead, he said, it aims to be the place where you can involve your friends in everything you do online. The company has 24 million members (less than half of whom are now in college), and it is adding about 150,000 a day. [snip]

In advance of the announcement, which had Silicon Valley buzzing, Zuckerberg and other executives spoke to Fortune about the strategy. "We want to make Facebook into something of an operating system so you can run full applications," Zuckerberg told me. He said Facebook is becoming a "platform," meaning a software environment where others can create their own services, much the way anyone can write programs for Microsoft's Windows operating system on PCs. Facebook, he explained, is a technology company, not a media one.


Take those examples of community-empowered applications at the start of this story. At least two of them aren't even hypothetical. A company called Digg already allows people to share and rate favorite news stories online. Now it is offering a version of its service on Facebook, which could allow it to accumulate users more quickly. And a company called iLike launched a service at F8 that allows members to connect at concerts. [snip]

Today, social networking is fragmented. There are networks for dating, for philanthropy, for pet owners, for parents. But each has its own ways for members to register, describe themselves, communicate, and interact. Facebook aims to make much of that unnecessary. It will provide the underlying services - a platform - and offer access to its prerecruited pool of members. [snip].

The platform expert has taken notice: Microsoft (Charts, Fortune 500) is Facebook's biggest business partner. [snip] Microsoft's own workplace network within Facebook has 10,000 members. At F8, Microsoft announced tools to make it easy to create links between Windows applications and Facebook's network.

Microsoft's imprimatur is a big first step in transforming a company that until now has been just another social network - albeit a hugely successful one, second only to giant MySpace. Neilsen/NetRatings counted 14 million unique U.S. web visitors to Facebook in April, compared with 57 million at MySpace, though Facebook is growing three times as fast. [snip].


Zuckerberg uses one term constantly to describe the core value of Facebook: the "social graph." The programmer-turned-CEO says he means this "in the mathematical sense of a series of nodes and connections, with the nodes individuals and the connections the friendships." This is the essential asset that Facebook will now make available to others, he says.


Zuckerberg has an unwavering certainty that what Facebook is building is important, even historic.[snip]


The early applications appearing on Facebook suggest that many companies see the huge potential of such a system., a site that enables people to lend each other money at negotiated interest rates, launched a Facebook version. Max Levchin, who co-founded PayPal, is CEO of Slide, which is putting its slide-show service on the new platform. "These guys are creating the opportunity to build Adobes and Electronic Arts and Intuits that live within Facebook," he says.


Before F8 Facebook hosted six applications of its own, which appeared on the left of a member's screen - Photos, Notes, Groups, Events, Posted Items, and Markeplace (a new classifieds service). It intends to continue developing its own applications even as it welcomes those from others, though executives insist their own will get no special treatment. At F8 the big news is the introduction of Facebook video. The impressive application will provide higher-quality video than YouTube, but will be used mostly for communicating among friends. [snip]


At Facebook, the sky seems very blue. Says investor Thiel: "Everything we see from the inside tells us this could be an extraordinarily valuable business, on the scale of a Yahoo or eBay or even a Google." Adds co-founder and VP of Engineering Dustin Moskovitz: "I have a note on my account that says Facebook will saturate the world population by 2010. It's not a joke." And Zuckerberg: "We're on a trajectory to be pretty universal soon if we can keep our growth going."



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