Master of 500 Hats

How to Take Down Facebook -- Hint: It Ain't Twitter. (aka: An Open Letter to the Next Big Social Network)

I've held off writing this post for a long time, because I couldn't quite get my head around all the issues.  It wouldn't be accurate to say there's something "wrong" with Facebook, and it's not like I don't spend a shitload of time ego-whoring around on Twitter too. Let's face it: I'm completely & utterly addicted to social networks & tha Interwebs.

but: Something is Still Missing. Something is Wrong on the Internet and it's keeping me awake at night.  however, i think i finally figured out what "IT" is...

Assertion #1: Facebook doesn't get Intimacy.

Facebook is full of my "friends", but it's not a great place to hang with my BEST friends (aka "BFF"). 

Now before you lose your shit, i know many of you are saying:

a) Dave, you're full of crap -- intimacy doesn't come from a computer, or
b) Dave, you're full of crap -- Facebook has *plenty* of intimacy, or
c) Dave, you're full of crap -- the only thing that might kill Facebook is Twitter, which is the exact opposite of intimacy (true)

or last but not least:
d) Dave, hey WTF happened to all the crazy fonts & colors?

None of these are the right response. (altho I do promise my next blog post will once again be replete with wild-ass colors and funky fonts, just u wait).

Let me back up & explain a little bit.

Once upon a time back in 2005 when i first joined Facebook, it was a "small" social network of less than 10 millions users.  But I was still rather late to the party (altho at 39 i was the oldest cool kid on my block).  Since pre-2006 FB was only available to users with a college email address, I had to contact the alumni association at JHU to get a valid email address (ending in ".edu") to register on FB. This resulted in a very odd & lonely initial FB experience where I was ~10-15 years older than almost everyone in my college network (please no PedoBear jokes, kthxbai).  Gradually I found a bunch of folks on Facebook that I knew -- mostly VCs or early employees at FB & PayPal it turns out -- and before I knew it I was hooked on poking like every other undergrad across the country. (wait: that's not what I meant... oh never mind, that's true too).

fast forward 2-3 years: Facebook cracks 100M users, then 200M, then in quick succession 300M, 400M, 500M users.  And we're coming up on 600M users soon.

Holy. Fucking. Wow.

Half a BILLION users? Unbelievable. What the hell happened? Where did all these "friends" come from?!?

Well, they didn't come just from college.  Facebook figured out how to open up the social graph and gather people from all walks of life -- every age, every sex, every color.  FB has college kids.  FB has college grads.  FB has high school kids, FB has parents.  FB has the white-collar workforce, the blue-collar workforce, and even stay-at-home moms. Hell, FB even has GRANDparents!  FB has desktop users, and FB has mobile users. And FB has them in the US, in Europe, in South America, and in SE Asia.  Except for a few places like Brazil & East Asia, FB pretty much has every Internet-connected user on the planet by the short-hairs.

With an always-shiny-and-new combination of pokes, wall posts, photos, videos, apps & social games, tagging, and newsfeed distribution, Facebook has firmly fixed itself into the fundamental fabric of our friends & families. Except for Twitter & Zynga, Faceboook appears to be an unassailable, unstoppable JUGGERNAUT that absolutely DOMINATES our online experience -- and will likely continue to do so for the next decade... right?  Well I'm not one to bet against 500M+ fanatic users & The Unsinkable Mark Zuckerberg... but there's this one little problem:

I've got too many goddamn friends on Facebook.

yeah, that's right: i've got over 2,000 "friends" on FB, and it's fucking KILLING me.  Now admittedly most normal folks don't have *that* many Facebook friends -- true: i'm tremendously insecure, an only child, & a pathetic people pleaser -- but regardless a lot of "normal" people have the same problem with only a few hundred friends. and i'm guessing neither they nor i want to share our most jealously-guarded deep dark secrets with *everyone* on Facebook.  but they might just share it with a smaller subset.

ASSERTION #2: The stuff that's really valuable in my social graph tends to the extremes -- very public (ex: Twitter) or very private (ex: email).

look, it's either Gaga, Shaq, & Glee (extremely public, better on Twitter than Facebook) or else it's only my closest buddies (u know, the evil VCs I collude with at Bin38 to fuck over YC startups).

The stuff that's meaningful -- NOTE TO STARTUPS: MEANINGFUL=MONETIZABLE -- that stuff is either better on Twitter, or better with a much more private & select subset of my friends on Facebook.

the very public: well here it's pretty obvious Twitter has an advantage over Facebook. the asymmetric follow model and constrained, lightweight communication make it MUCH easier to engage aspirationally with celebrities & famous people on Twitter than on Facebook.  Now FB does realize this and is fighting back with Like buttons and a revved Group structure, but they may be at a disadvantage if Twitter starts to catch up with them in users/usage. Currently Facebook is a more familiar experience for larger audiences, but that may change over time. while I don't think Facebook is threatened by Twitter that much, neither is Twitter at much risk of Facebook stealing away the famous people. so Twitter probably wins on celebrities & other beautiful / rich / famous people.

the very private: now, here you'd think Facebook has the upper hand -- and they do, but they're at risk of being upstaged by a more private & meaningful social network (or perhaps via some subset or abstraction layer on top of FB, if they can move quickly).  this could come from Facebook modifying their existing environment to support closer subgroups, or algorithms that preference newsfeed items only to close, strong, specific connections.  Or maybe it just works better with email groups & selective filtering.  Or maybe it works better on an entirely different social graph that emphasizes family, close friends, and small workgroups (Yammer? LinkedIn? maybe, but i don't think so). but somewhere, there's going to be a smaller more Intimate conversation that enable a different type of sharing... lots of it.

let me explain.

maybe I only want to tell a few close buddies about that episode with the VERY BAD bean burrito. maybe your girlfriend only wants a FEW honest opinions from her CLOSE friends on whether that new dress makes her ass look fat. and maybe your frat brother only wants to tell a few buddies about the AWESOME house party he's throwing next weekend, when he's planning to invite the smoking hot new freshman sensation over with 3 of her equally sizzling BFFs. and finally, maybe I only want to share that airfare deal on a Final Four Vegas roadtrip (& the pictures!) with my set of close friends. what happens in Vegas stays in a very tight and private social graph... you hope, anyway.

now what's going on here?  in each case above, there's a specific tight circle of connections I'd like to draw on, but they aren't always the same.  some of them pull from long-time, frequent & familiar associations.  others are based on a select, NEW set of acquaintances that meet a high bar of interest.  still others are based on some shared trait or interest or activity, where I've spent time with someone before around a specific context or depth of experience... or perhaps also, a specific [social] commerce context. like something I bought, but would only share info with a small group.

which brings me to my 3rd and final point.

ASSERTION #3: Intimacy depends on Context, Connection, & Continuity...  which determine Closeness... and ultimately, drive Commerce.

One might suggest that Intimacy is determined by:

1. Shared Context (ex: basketball, school we went to, fans of Glee)
2. [strength of] Connection (how much we like each other, how strong)
3. Continuity (how long we've known each other, how freq/recently we connect).

For any possible social interaction, and for any potential subset of friends within your social graph, these factors determine a minimum critical level of Intimacy required to initiate & sustain the conversation around that interaction.  Too little Intimacy, and the conversation stops. But with the right amount of Intimacy, the conversation literally explodes with information. 

Our desire to share our experience is explicitly determined by the level of Intimacy available within (and perhaps constrained by) a social network. Ultimately, this level of available Intimacy may indeed determine the overall relevance of the social network to its participants... and perhaps, whether related commercial transactions might be relevant as well. which is something Facebook probably DOES want to make sure it gets right.

...and THAT is why Intimacy should matter so much to Facebook.  it's the ONE place where they have a huge advantage over Twitter, but also the place where they are greatly at risk of someone else coming in and stealing their cheddar. 

Because Facebook has chosen to emphasize growth over monetization these past few years, they have de-prioritized close, meaningful connections over broadly relevant ones with a larger group of friends.  While this will help them get to a billion users faster, and increase their share of brand spend on advertising (where Facebook is really killing it these days), it may create vulnerability to another social network player who focuses on a more tightly-defined social graph with only a few, specific & meaningful Intimate relationships.

Intimate relationships that might just monetize more powerfully with 3 close friends, than they do with 300 acquaintances.

Better be careful, Zuck. maybe there's a reason Facebook should care more about Intimacy & Privacy that has absolutely nothing to do with government regulation, and everything to do with simply making more Meaning... not to mention more Money, as well.  

Subscriptions are the New BLACK. (+ why Facebook, Google, & Apple will own your wallet by 2015)

I'm on a redeye to NYC, supposed to be working on a presentation i'm giving in a few hours... but fuck it, i can't get this outta my head, so here we go.

(note: extremely raw, uneven, long, 1st draft publish & shoot; will revise l8r) 

ASSERTION #1: The default startup business model from 2000-2009 was based on growth (aka acquisition) and CPM- or CPC-advertising 

Over the past 10 years, we have seen a massive shift in advertising from CPM to CPC-based advertising.  This basically started happening when the 2000-2001 dotcom implosion blew the market cap of Yahoo to smithereens, and display advertising went into the shitter.  Altho CPM subsequently recovered, Google's IPO and the gradual emergence of CPC as a higher-quality advertising medium has been the dominant story of the first half of the last decade.  There's still a lot of page views and CPM advertising out there -- and YouTube & Facebook are making sure that doesn't change -- but as we VCs like to say:
    "at the end of the day, Yahoo is now Google's bitch".

Let me say that again with emphasis so you don't miss it. 

Google's ABSOLUTE FRIGGIN' SEARCH DOMINANCE has made CPC advertising the defacto monetization standard for the web.

Google is now making a ridiculous amount of samoleons: $2.5B free cash flow last qtr, or roughly $10B a year (a billion here, a biilion there, pretty soon that's cash-money, G...) -- and appears likely to continue doing so for the foreseeable future.  Although Microsoft, Apple, Ebay, & Amazon are all minting money too there's no question Google is an unassailable Internet JUGGERNAUT, at least in Search.

But what has all this Don't-Be-Evil-AdWords-Click-Happiness done to the internet & startup ecosystem?

It's made us a bunch of lazy, ad-happy, Web-Tards with crappy ROI. 

So crappy in fact, we should be ashamed to call ourselves entrepreneurs & venture "capitalists". Why, Schumpeter is probably rolling over in his grave at how little Creative Destruction we have rained down upon crotchety incumbents.  It's a goddamn travesty that some aspiring startup or greedy hedge fund hasn't pummelled Yahoo and eBay into a hostile takeover by now, and Microsoft has made itself almost irrelevant in the consumer internet space -- helloooo Mr. Ballmer? please tell me how you own hundreds of millions of users and more than half the browser market and you HAVE NO VISIBLE 3rd-party distribution or monetization strategy? -- Srsly, we have monkeys driving some of the biggest trains on the Internet at the moment.  

Lead, Follow, or Get Out of the Fucking Way.

And while there's been something of a Startup Renaissance going on since around 2004, all these little web 2.0 wannabees have spent an inordinate amount of our attention on ad-driven business models resulting in a big steaming 2-Founders-1-Cup of FAIL.  Everyone seems to have assumed that since Yahoo and Google were giants in internet advertising, therefore all internet startups should be using some form of CPM or CPC ad-monetization.

THIS IS A VERY LARGE LEMMING-LIKE ERROR IN LOGIC THAT MUST BE CORRECTED IMMEDIATELY. 

We have largely WASTED an entire web decade of time, energy & venture capital on extremely inefficient revenue models.  There have been a few interesting examples of startups acquired in the 00's for large amounts due to amazing growth (eGroups, MySpace, Skype, YouTube) or advertising potential (aQuantive, DoubleClick, AdMob, RightMedia).  However, mostly the decade has been an uninterrupted string of uninspiring business models and small-time acquisitions of Web 2.0 startups filled with rainbows & unicorns, rather than those based on simple, transactional revenue models.

ATTENTION u ASSHATs on Sand Hill Road & u HIPPY-DIPPY Startups in SOMA -- This Shit Stops NOW.

[fast forward to Twenty-Ten & the Soul of a New Machine: Subscriptions.]

ASSERTION #2: The default startup business model for 2010 & beyond will be subscriptions and transactions (e-commerce, digital goods).

Newsflash folks: The Internet does NOT want to be FREE... It wants to GET PAID on Fucking Friday, just like everybody else on the damn planet.

Yes there is a role for Freemium, but unless you missed the TPS report the FREE part is only a loss-leader for the MEE-YUM part -- it's a test-drive before you buy something. If your users are just kicking the tires then you need to kick them to the curb eventually (unless of course they are your viral bee-yotches, in which case it's ok to have a few invitation whores as freeriders).

Free is not Forever, unless you never want to be in control of your own fate.

Gradually we are discovering that the default revenue model on the internet should probably be the simplest one -- that is: basic transactions for physical or digital goods, and recurring transactions (aka subscriptions) for repeat usage.

Let me say that one more time so you don't miss it.

Get Dem Bitches to *PAY* You, G.

Ok, so there's only one problem with this.  It's called the Penny Gap.

Surprise, surprise... most people don't like to pay you squat unless they have no other choice.  And aside from the user's disinclination to pull out their wallet, there's also the problem of wallet friction itself -- payment conversion is shitty for many reasons other than just price.  Mainly it's because we can't remember our password.  I'll repeat that about a million times in this post so you don't forget.

WE. CAN'T. REMEMBER. PASSWORDS.

This is incredibly important, and i'll explain why in just a little bit... but now, let's talk a brief walk down Memory Lane past my old workplace, PayPal.

Password Friction: Where's the Login K-Y Jelly?

Here's one of the not-so-flattering secrets of the PayPal Mafia you've probably never heard: The far-and-away #1 customer service problem -- and cost -- at PayPal was something called "forgotten password recovery".  That's a nice way to say that people can't remember their fucking password. 

It's the biggest goddamn problem on the Internet, but at PayPal we made it even worse by tying a payment instrument to the process, and then locking out the payment instrument if they couldn't remember their password. What a Brilliant idea!  Let's see.... why don't we fuck over all of our n00b, first-use customers by forcing them to create an account they have no significant motivation to maintain yet, and then hope they don't give us a fake email address or fail to remember that password the next time they drop by... which might be 1, 3 or 6 months later.  Bingo, way to create the biggest HateStorm in Internet History: make it super simple for people to make their payment method unusable by simply forgetting their password.  Oh and i forgot to tell you we occasionally froze their account so they couldn't get access to their money.  That was a real winner too.

PayPal was one of the classic stories of viral growth, however in this instance we also experienced viral growth in customer service: at one point more than 2 in 3 employees worked in customer service.  And i'm guessing somewhere between 10-20% of first-time customers never used the service again, primarily because they forgot their password.

Look, no online service is perfect and there are often good reasons why account recovery shouldn't be too easy -- sometimes it's not YOU who wants to get access.  But Password Friction at PayPal led to an unfortunate series of events which caused some signicant percentage of our users to HATE us with a PASSION that is usually reserved for politicians and lawyers.  Since i was often on the front-lines running our PayPal Developer Network, i got to hear first-hand from Merchants and Developers about how this password friction caused problems with payment, and with user frustration.  I got to know the folks in customer service pretty well, and i used to do my best to resolve some of our users pain.

So why am i bringing up all this bullshit now?

Well because as we transition to a Startup Ecosystem driven by direct payment & subscription business models, i want to make it clear how IMPORTANT it is to make sure users don't forget their passwords.  If they forget their password, and/or can't recover it, then guess what MoFo -- YOU DON'T GET PAID.

Which means you don't get Laid, you don't get Acquired, and you sure as friggin' hell don't get to Go IPO.

So listen up & i'll share a little secret with you -- there is one very simple way to avoid forgotten passwords.  Basically, it's this:

Make a Frequent-Use Product.

That's it, you say? 

Yeah, that's it Sherlock.  Make a brain-dead simple, frequent-use product.  If users login a lot, then they don't forget their password.

Now think about that for a second...what services have users login a lot?
1) Social Networks
2) Email & IM
3) Games, Music, & Entertainment sites

Which leads me to my 3rd & final observation.

ASSERTION #3: In 2015 the default login & payment method(s) on the web will be Facebook Connect, Google Gmail, or Apple iTunes.

Now i'm not suggesting PayPal and Amazon are going to disappear overnight -- both probably have hundreds of millions of users (well, at least double-digit million *active* users anyway).  And in fact, they will likely still have dominant positions in the market.  But i will say this: if they rely *purely* on purchase behavior, they are fighting a losing battle against other services with more frequent usage, whose users will be more likely to remember their passwords.  Like a Darwinian evolutionary experiment, only the fittest passwords survive -- and in this case, the fittest passwords will be the ones used most often.  That is, the ones we use for core services like email, IM, games, music, videos.  And guess what?  Most of those services happen on social networks like Facebook, which currently has over 400M users and is growing like crazy internationally.

Well at this point i hope you've pieced it all together.  The key to success -- one might even say DOMINANCE -- in payment systems is to begin with the foundation of frequent-use products, so that users won't forget their passwords.  Whether intentional or not, Facebook has played this game to perfection.  Not too far behind is Apple with iTunes, iPhone, and other related frequent-use media & entertainment products, and an App Store that people use regularly.  And even Google has a shot here, with both Gmail and YouTube as two very large, frequent-use products, along with the upcoming Android platform.  Twitter is probably a dark-horse here, but if user #'s continue to improve they could also have a shot. And i'd also keep an eye on Skype too, which still has a lot of frequent users and value.

Bringing up the rear pathetically here are Yahoo, Microsoft, and AOL.  All 3 of these services have hundreds of millions of users (via email & IM alone, not to mention other services), and yet they haven't figured it out.  Yahoo had previously developed a payment product called PayDirect, but shut it down in 2004.  FAIL.  Microsoft had the right vision with HailStorm, but their UX was absolutely friggin' terrible (see Password Friction again), and they didn't stick with it.  AOL similarly has been shedding users for a decade, and never realized how valuable their original email user base could be.  It's unbelievable to me none of these Internet Giants has figured out what is going on.  They have neither acquired nor merged in a payment service (Amazon, eBay) nor have they acquired a large social network.  Unless MSFT develops Xbox into a widespread payment system, or acquires eBay (for PayPal), Amazon, or Facebook i just don't see them climbing back into the ring.  All of those deals would be very difficult and unlikely, even for MSFT.

So that's it folks, i'm spent.  This has been a complete ramble and i don't have time to edit this shit, so i'm leaving it as it is.  Sorry for all the swearing and uneven pace, but hopefully some of you will take away something useful.

DMC Metamorphosis :)

I feel like i've hit a turning point in my life.  Something has happened in the past 6 months, in the past 3 years since leaving Simply Hired & PayPal.  I'm not sure when it all clicked, but i've been fortunate to have a lot of wonderful things come my way lately.

Those things include but are not limited to:

• working with / investing in great startups like Mint (thx Aaron), SlideShare (thx Rashmi & Jon), TeachStreet (thx Dave), and many others
• running conferences like Startonomics SF (thx Debbie), Graphing Social Patterns (thx Gina & Tim), and Web 2.0 Expo SF (thx Brady & Jen)
• creating the now-infamous Stanford Facebook class (thx BJ, Yee, Jia, many others & our students!)
• coming up with Startup Metrics for Pirates AARRR! (thx Hiten, Andrew, Eric, *SO* many others) 
• getting Startup2Startup rolling last year (thx Leonard, Brian, Kat, Saar, & MANY friends/sponsors)
• joining FoundersFund this year (thx Sean Parker for giving me a shot)
• launching FF Angel LLC and investing in some great startups (thx FF, also Jeff Clavier & many other angels & VCs for great advice)
• retooling fbFund & creating the fbFund REV incubator program (thx Cat & folks at FB, Accel & FF, many others)
• kicking off GeeksOnaPlane Asia trip (thx Christine, George, lots others)
• putting Finance4Founders together & ready to rollout (thx Dan & others)

while this may seem like a laundry list, the one common thread in all of the above projects has been the amazing help of my friends & colleagues.  there is no way i could have accomplished any of these efforts without the patience, tolerance, brilliance, and sheer hard work of my home boys & girls.  you folks really do rock.  (and i know how much of a pain in the butt i am to work with!)

seriously: how lucky am i, to be blessed with so many incredible people in my life, who have given me so much, created such tremendous opportunities... while i remain the lazy, ADD, easily-distracted, crazy sonuvabitch i've always been, who barely manages to make rent each month. i mean, it's nothing short of a miracle that i can find my ass with both hands in the morning, and yet somehow after so many years in the valley i have found a nice little groove. how cool is that.

these days i actually wake up early & excited to do the work i'm doing, happy as a newborn puppy to spend time working on projects with people i like, and i keep pinching myself to make sure this shit doesn't disappear tomorrow.  well even if it did, i would treasure the moments thus far...

lastly, i must acknowledge the folks at home who help me find purpose and reason amidst all this insanity... thank you to my wife and our two beautiful kids.  you are the light of my life, and your smiles & laughter are precious beyond the treasure and measure of mortal men.  

truly, i am a very lucky person.  thank you to everyone :)

MediaMemo: PAID is Not a Dirty Word

i may swear a lot on this blog and in person, but the word "PAID" is not a dirty word (altho strangely, it *is* a four-letter word ;)

here's interview i did at SXSW with Peter Kafka of Media Memo / AllThingsD:

note to Mom: didn't drop any F-bombs, only a few choice curse words. oops.

Reid Hoffman Kicks Ass, Takes Names, Envisions Future.

Not many people labeled as Visionary really deserve the title.  

Reid Hoffman definitely does.  

He's proven it multiple times, both as an EVP at PayPal & founder/CEO/Chairman at LinkedIn, and as an insightful & early angel investor at Facebook, Digg, Friendster, Flickr and over 60 other startups.

Here's a recent video interview below Reid did with Charlie Rose (who seems to be meeting with all the top geeks in Silicon Valley lately), and also a link to Reid's op-ed piece in the Washington Post on the proposed Stimulus bill ("It's The Startups, Stupid").

i've had the privilege to work with Reid briefly at PayPal, at Simply Hired as a LinkedIn partner, and more recently as a "friend of the company" at LinkedIn (not to mention an incredibly addicted user). Reid has always been thoughtful & generous with his ideas, and very kind to offer some great advice & feedback the few times i've been lucky to receive his mentorship.

hope i get the opportunity to stay within his occasional circle of influence in the future; he's really an amazing person on so many levels... thanks Reid!

Integrating Facebook Connect & Facebook Newsfeed (Developer Screencast)

Just ran across this Facebook Connect Developer Screencast (via Dave Morin):

from last month

nice job guys. these are very watchable, even for an ignorant ex-programmer like me.  more info available on the Facebook Developer wiki.

Image via CrunchBase

Using Facebook / Social Platforms + NewsFeeds + Apps + Facebook Connect to Drive Content & Commerce

This past summer, I did a presentation called "Facebook Big Pimping" for some entertainment execs down in LA.  The presentation was about using Facebook, social networking platforms, news feeds, & apps to drive content distribution & commercial transactions.  It was fairly basic & high-level, but it was useful to help explain how Facebook works to create ambient findability / awareness / discovery. I also make some speculative guesses about how Facebook Connect might be used to help enable "social commerce", depending on if/when Facebook rolls out a payment system (theirs or others). 

Just this morning, i reviewed the same presentation with some people from AARP (via remote online videoconference using TokBox & SlideShare).  My friend & former Facebook App class co-teacher at Stanford BJ Fogg was running a small conference for tech (& non-tech) folks at AARP to educate them about using online tools, social networks, internet video, mobile devices, etc.  BJ asked me to speak about how to use Facebook, newsfeed, people-tagging, and other social networking actions & behaviors to enable online communication -- in this context, as it might apply to the AARP audience in either senior-to-senior or family-based communication (parent-child, and grandparent-grandchild). 

As a parent of a 3.5-yr old boy + almost 2-yr old girl; with grandparents who live 6,000 miles away (Tokyo) or 2,500 miles away (East Coast); this is something i've been doing a lot over the past year or two.  We use Skype video to chat with grandparents, share photos & video using Flickr, YouTube, and Facebook, and my mom follows (stalks? ;) me on Facebook, on my blog, and on twitter to see what i (or really, her grandkids) might be doing.  it's really pretty amazing, and i can't imagine how different our kids would experience their grandparents without that communication.

anyway, here's the presentation (i posted it a few months back as well... plagiarizing myself again, again).

Facebook Big Pimping: Using Social Networks & Platforms to Drive Content & App Distribution

View SlideShare presentation or Upload your own. (tags: social network distribution)

also, the last slide has links to some previous posts i've done on Facebook & related topics, and a few links to other people who do some great writing on social networks & platforms. (btw, i had previously guessed Facebook Payments might be released this year; that now seems rather incorrect and not sure if we'll see anything there for awhile yet... maybe mid-2009 perhaps; who knows?)

Successful Developer Platforms Have 3 Things: Features, Users, Money.

[note: this post was originally a comment on TechCrunch post summarizing Max Levchin's panel on web platforms from the Web 2.0 Summit, with Facebook, MySpace, Google, & Microsoft.  i decided since my comment went past 3 paragraphs, i should probably expand it on my own blog...]

this is gross over-generalization/simplification, but platforms are successful if/when they have:
1) code libraries / feature abstraction -- so developers don't have to build everything
2) customer distribution -- so developers don't have to market everything
3) monetization -- so developers don't have to implement/collect payment

it's arguable there are many other platform issues & requirements -- security, scalability, standards, metrics, user authentication & support, etc.  however these 3 primary aspects are what make platforms tick.  sometimes platforms can be successful if only 1 or 2 of the items above are working, altho if you want a dominant platform it's helpful to have all 3.

Here are my incredibly unscientific and from-the-gut "Platform Bookmaker Odds" on Dominant Future Platforms:

Facebook (3:1) has arguably been the platform leader in the past year or so, at least in terms of innovation & inspiration.  They've done an excellent job with the first 2 points, but largely failed in terms of monetization to date.  And because their distribution incentives were creating a negative user experience backlash, they decided to dial back distribution & revise User Profiles in ways that dramatically limited the # of platform app winners (but there are still winners).  Also, until FB has payments in place, and has setup aligned monetization with their developer community, they are likely to be reluctant to really open the floodgates on distribution.  If/when they have payments rolled out, expect them to spin up distribution again, probably through 3rd-party news feed stories.  And people still underestimate how much power they can bring to bear if Facebook Connect starts working.  People were too hyped up on Facebook when they launched (maybe me too), but now they're too pessimistic.  Facebook will start kicking ass once they get Connect & Payments figured out... tho might be mid-2009 before that starts happening.  But the DNA of this company is all about Platforms & Developers... i'd be very surprised if they don't do very well over the long-run.

Microsoft (5:1) altho the platform Godfather historically, is far from having a functional web platform, primarily because they have not figured out a web distribution story for 3rd parties (nor a monetization story either, tho that's fixable quickly via acquisition or partnership).  while they have tremendous reach via Windows and the Web, they have not translated that into consumer internet platform distribution opportunities.  they also do not have a payments story (good reason to buy eBay/PayPal or Amazon, but don't hold your breath).  Still, given Microsoft's historical dominance & belief in platforms & developers, i'd expect them to get there eventually... but it may take years.  expect them to be a player, but i'd guess it may take a lot of acquisitions & luck for them to maintain the app dominance they had in the 90's.  They'll be around, but they're not leading the way right now. (update: Ballmer sez MSFT is planning to copy Apple's app store... not a bad idea.  again, like the GOOG, MSFT can KILL if they simply enable 3rd-party access to their amazing distribution & reach).

Google (2:1) certainly has the cojones & brainpower to do platforms, and they kick ass on features, but up until last year they were pretty piss-poor at developer evangelism.  However, you could argue Google's biggest "platform" is really just search (& indirectly SEO/SEM, and also analytics).   while they are a juggernaut in search, and their potential distribution is phenomenal, their initial platform efforts left a good bit to be desired.  But like Microsoft, Google certainly understands the benefits of a developer / platform strategy and there is good reason to be optimistic for the future.  OpenSocial has a long way to go, AppEngine is still fairly new, but Google is now headed in the right direction... and if Google ever *does* open up properties like YouTube and Gmail and the main search platform to developers, the sky's the limit.  Google has no lack of distribution, but again like MSFT it's mostly direct, not on behalf of 3rd-party developers.  Google also has Checkout for monetization when they get their shit together.  Expect them to put a lot of horsepower behind catching up to Facebook's surprising early platform leadership, and steamrolling ahead to a dominant position.  They're playing a bit of catchup, but they are certainly the odds-on favorite horse to win the long-term race.

MySpace (7:1) does seem to be following cautiously in Facebook's footsteps, and given their existing footprint in music & entertainment (not to mention their already significant spam issues with user communication), it seems appropriate for them to move slowly.  But they have shown progress over time, and if/when they implement payments they will likely attract a good deal of developer attention (and in fact, since FB dialed down distribution, MySpace has already drawn some of that audience in).  While i expect MySpace to primarily focus on their successful entertainment verticals in Music, Movies, Television, and perhaps an emerging presence in Games, they will likely do quite well due to their excellent distribution & monetization opportunities in those areas.  While everyone thinks Facebook is pulling ahead of MySpace, in fact MySpace is a much safer vertical play in entertainment.  They may only be successful in selected areas, but they will likely do quite well there.

not present on Max's panel / not mentioned in TC article or my analysis above: Amazon (2:1), Apple (3:1), SalesForce (4:1), YouTube (4:1), Yahoo (4:1), Mozilla (7:1), LinkedIn (10:1), Wordpress / Automattic (10:1), Twitter (10:1), FriendFeed (12:1), multiple other blogging platforms / social networks (15:1) Typepad, Blogger, Hi5, Bebo, Friendster, Orkut, other international players.  I'm sure i'm forgetting a lot here, but this piece wasn't meant to be completely comprehensive.

A few brief thumbnails on the other main contenders:

Amazon is the defacto platform leader in 3rd-party infrastructure.  They have yet to tie this back into the consumer Amazon platform in interesting ways -- largely AWS is completely disparate from Amazon.com -- but if they ever do, then watch out.  Amazon has been the quiet leader in personalization & e-commerce for the past 10 years.  If they decide to platform-ize that expertise, they will absolutely continue to be a very valuable company.  Only question is -- why in the hell haven't they been bought out by Google or Microsoft ?!?  They'd be SO much more valuable in either of those 2 larger players empires.  Answer?  Jeff Bezos isn't done having fun yet.  If he ever tires of that job, and decides to put the company up on the block, expect the mother of all battles by MSFT & GOOG to acquire that jewel.

Apple is kicking ass, but remains to be seen if they can parlay initial success in music & mobile into larger app platform success.  They don't have a terrific platform history, but the last 5-7 years they've done a great job on distribution, and recently on features & monetization.  Assuming they don't decide to screw the developer community into oblivion at some point -- always possible with a mercenary like Jobs -- then Apple will likely remain a force in consumer communication & entertainment platforms.

I'm not an expert on SalesForce, but they seem to be the leading player for hosted business platforms.  I'll refrain from much analysis since i don't follow them closely.  Yahoo continues to choke on both feet planted firmly next to its own tonsils, but they still do some great work on platforms & developer communities.  If only they can show a little business leadership & stability, they'll be around.  YouTube is a surprise here, and i list them separate from Google because they really are such a separately dominant player in video.  And like Facebook, the DNA of YouTube is all about developers.  They haven't really needed to do much since they are so far ahead of everyone else (in video), but i'm bullish they will figure out the monetization and as they do make it available to all of their developer community.  Mozilla has platform potential, if only due to an amazing ability to grab browser market share from MSFT.  LinkedIn has been a relatively plodding platform, but due to their audience specialization & demographics, they will be highly attractive to developers if they ever decide to open up more significantly (& revenue potential there is off the charts).  Of all the blogging platforms, Wordpress / Automattic is the most exciting & interesting... more to be revealed there, particularly if they continue on their recent micro-acquisition strategy.  Twitter is rocking these days, and i expect Ev & Biz & team to roll out some cool platforms stuff in 2009.  FriendFeed has so much potential it's not even funny, but i'd be surprised if they don't get swallowed back up by the GOOG before long.  Several other social networks have also embraced platform strategies, and may have modest success within selected geographies & demographics.

my apologies for any significant oversights or inaccuracies on the above.  and the "odds-on" stuff is really more for entertainment than serious discussion -- most all of these companies will be successful to some extent, tho they have widely-varying attention to platform issues. i'll try to make a few updates to this piece as my more-informed readers upbraid & correct me in the comments.

for more discussion of Platform dynamics, see Max Levchin's excellent masterpiece here (max: if you're reading this, please write more often!) : Developer Incentives in Social Networking Platforms

Andrew Chen also has many terrific articles on platform dynamics too numerous too count... i simply recommend you read as many articles on his blog as you can: http://andrewchenblog.com 

for praise / criticism of Facebook platform, and a few others on business models for social networks, integrating email & e-commerce platforms with social networking, etc see my previous posts here:

• Facebook's Problem isn't Privacy, It's Monetization
• Web 3.0 isn't the Semantic Web, it's Hailstorm 2.0
• Business Models for Social Networks: Monetizing Social Capital & the Long Tail of Cool
• Memo to GOOG, MSFT, YHOO, AOL: How to Turn 500M email logins into Facebook Platform (& a crapload of revenue)

Facebook Inbox 666: Number of The Zuck

Facebook Inbox 666: Number of The Zuck
Originally uploaded by davemc500hats

uh-oh... either Damien or Mark Zuckerberg has Possessed my Inbox.

pretty sure Merlin Mann has something to say about this.

Facebook Big Pimpin': Using Social Networks & Platforms to Drive Content & App Distribution

This is an initial brainstorm presentation i put together on Facebook fundamentals (social network, social platform, FB Connect, FB Payments), for a discussion with some folks in entertainment media about social networks & platforms.  Much of it is high-level & speculative, however it might be useful for other folks to think about.

Facebook Big Pimping: Using Social Networks & Platforms to Drive Content & App Distribution

view presentation (tags: social network platform distribution facebook)

(Note: any guesstimates i make about Facebook Connect and/or Facebook Payments are highly subjective, and likely to be very, very wrong... so please don't assume i know what the hell i'm talking about here.  Caveat Emptor.)