Tuesday, March 11, 2008

SxSW Keynote: Mark Zuckerberg, Facebook Founder and CEO

Mark Zuckerberg and Sarah Lacey Interview
Photo Source: Wired Blog

Referred to by some industry analysts as a train wreck interview, there is no shortage of opinions debating the merits of Sarah Lacey's keynote interview with Mark Zuckerberg, Founder and CEO of Facebook. I will leave it up to the blogosphere, twitter, Cnet and Wired to explain what happened and instead focus on some of the high points. During the interview, Zuckerberg gave several concrete examples about how Facebook was being utilized to bring about positive social change. On numerous occasions he spoke about their goals, concepts and mission and it became clear to me that one of the main reasons for their phenomenal success was the fact that they have tapped into fundamental human needs and have built tools around them. Facebook's core goals of facilitating communication, generating empathy and fostering connections between people is inline with behaviors people are already engaged in.

The new trends arising in the digital market place such as social shopping (where an individual's purchasing decisions are influenced by their social network) is something Facebook pre-empted with their Beacon initiative. A new form of advertising and marketing is entering the arena and is being ushered in through the social networking medium. If we look at human behavior, the concept of social shopping makes a lot of sense. In the real world we are heavily influenced by what our friends and peers say before making a purchase. Shiv Singh in his "Going Social Now" panel spoke about how the real-world experience of buying a couch is a very social one which very few online retailers are currently tapping into this. Having friends, social networks and other people endorse products and offer opinions is probably one of the most powerful marketing tool and is something that social networks such as Facebook are pioneering.

Other notable points were the fact that Facebook is engineering a highly responsive and adaptable ecosystem which operates on the basic premise that people are fundamentally good, but if individual users or applications become "too spammy" (as Zuckerberg puts it) their voices will be dumbed down and not allowed as many opportunities to reach their fellow social networkers. It's an interesting deterrent for reducing bad social networking behaviors.

Zuckerberg went on to openly admit that Facebook made mistakes with the Beacon initiative and demonstrated how they are working hard to address privacy concerns by affording users with increasingly granular permissions and levels of control over who they share what sorts of data with. Adopting such an approach is going to be key for all social networking sites and keepers/sharers of data moving forward and again is an example of how the digital world is a mirror of the real world in that we choose carefully who we share information with. People will be willing to share information more freely on the web if they can control who they share it with.

Below are my abridged Q&A notes from the interview (heckles deleted).

Z: Facebook's mission is to help people connect and communicate more effectively. Facebook recently lauched in Spanish and
it became very popular in Columbia where the first thing people started doing with Facebook was to organize, communicate and revolt against guerilla armies.

L: Did you ever think this would happen?

Z: Well. No. It's very hard to predict these things. It helps on a microlevel for people to communicate with people around them and generate empathy. When you add up all these connections something quite profound happens.

L: Why do we need Facebook to do this?

Z: A lot of people are doing this but people need other tools to communicate efficiently with people around them. There are different ways people can do this. FB helps people communicate with people the way they would already do but more effectively.

L: The other day you spoke about Facebook and terrorism.
Z: FB has a large user population in Lebanon.Young people growing up are trying to figure out what they are going to be when they grow up . Am I going to be a terrorist or do other things? With no other options it's easy to drift into religous extremism. Facebook had a positive impact in such societies amongst young people who were able to broaden their horizons and outlook connecting with others from different backgrounds and generate more empathy between them. In turn this makes them less likely to become religious extremists. We're not the only ones doing this. it's very profound if you can enable these sorts of connections.

L: Are these things you're doing proactively?

Z: We're helping people communicate more efficiently and make connections. We're trying to build an infrastructure on which to build these things. We were involved with the 'One' Foundation who want to build an organization to have enough political clout to change things.. their goal was to build an organization that powerful that sought to end poverty. Why does there need to be a big organization to channel these voices? The internet is big enough that these voices can be heard and big enough without having a huge organisation with millions of dollars to fight these causes. For things like this to work.. there needs to be a solid base not build top down but bottom up. This is an important trend in the world.. We're building an infrastructure where people can communicate on these things

L:I hear you guys are launching France tonight

Z: Yes, we're launching in French....

L: A lot of web companies have hard time scaling internationally - what's the secret to this?

Z: I think the need we are tapping into is a fundamental need. A lot of people thought it was just a college thing but by helping people communicate effectively we are tapping into a fundamental human need.

L: Let's talk about ad stuff. Google and Microsoft buying up stuff. Sites like Facebook and Digg are not really monetizable - are MS getting their money's worth?

Z: A lot of people have focussed on valuation. At Facebook we are building a product which helps people communicate and connect. Everything we do is through this framework. In terms of Microsoft relationship.. the way we think about serving our users and the way we want way we make money is in line with the way people share information, people share movies, things they're into.. people expressing their identities.. monetization is in line with what people are already doing.

If we give users enough opportunities for control...... (heckle)

L: Yes you have this immediate revenue from Microsoft but will there be pressure to crack this before money run outs?

Z: I'm pretty sure they're happy with that. I can tell you it's going really well for both of us.

L: The world of advertising is changing.

Z: There are new trends with people basically endorsing things. People endorse things the way they would do things naturally and normally. We want to help people share information.

L: Do you see this as a decade project.. building out the social graph?

Z: Interesting to watch this unfold

L: Let's talk about beacon and what your vision was.

Z: Beacon is a part of the platform team not the ad team.. we think there is a trend from these companies going towards a collection of social services ... profiles inbox, feeds.. We've tried to build a platform to enable people to build their own services and having access to other people's information as they want to share and push information back to their friends. With beacon we were trying to develop this system. It also ties into our ad system.. they can be used as endorsements ... people are coming to the site to learn about what their friends are doing.

The first iteration of Beacon was trying to get at this. We made some mistakes .. some interface things.. not doing things... we're learning as we go along.

L: Contrast with what happened with news feed and concerns people about privacy..

Z: We need to give people complete control over who they share information with.. 20% of people are now sharing their phone no. on Facebook. By giving users granular control over who they share information with the more they are willing to share and the more we will be able to give controls.

L: The thing that changed Facbook was when you opened up the platform. What tweaks are you making?

Z: Big changes are under away. At FB we believe people are fundamentally good. We allow users to do everything up to a point. If you're too spammy you get censored. We allow people to do this without going over the line.. What we are moving towards is to make it so that if you send requests to people.. the more people accept requests, the more people click on your feeds, the more things you can publish.. The applications that can publish the most things will be trust based, reacting to what users want....

L: Is FB setting more rules

Z: We're letting FB users decide .. more laissez faire... FB setting less rules now..

L: Itunes killer? Becoming a music mogul?

Z: As soon as we opened up platform, other developers filled this void with applications like iLike.. who knows how we will work together in the future....

L:Is this something that appeals to you?

Z:We are just trying to build this base, a developer platform that allows people to build on top of it.

L: According to Forbes ..you're the youngest billionaire on the list

Z: Not focussed on that..

L: Do you think the company is worth $15 billion

Z: Not focussed on this... way to be effective is to build a business/ecosystem..

L: Is having a valuation like that a negative? By having to live up to such a high mark?

Z: We're helping people map out who their friends are, communicate a story.. Having such a focus on money and business can self select for people who care too much about that. We are not planning on going public any time soon. Revenue and value for company is a trailing indicator of value we're building..

L: Is there an imminent Facebook IPO?

Z: We're not making decisions based on that.. For an IPO it's not we don't want to do it. we're just not focussed on it. It's not what we're trying to go for.. We had a similar thing when Yahoo was trying to buy the company for a billion dollars. The primary analysis was.. is this the correct ROI thing to do..

We have a chance here to build a platform that fundamentally changes the way people relate..so we decided to go for this.

L: Some people think you're a "know-it-all" kid.. if you don't like the way they do things they don't tend to stick around

Z: A lot of it is about expectations and what people are trying to get out it. If people joined...(missed this) For people focussed on building this platform.. the amount of change we have isn't that extreme.

L: I think it's good you fire people when they don't match.. I think it's a strength.

Z: Ok.

L: Let's talk about Cheryl..How will Cheryl cope in a male dominated world
Z: She has a great track record.. I don't think it will be an issue.

We're building a product management organization now. We just need to build out different teams now. We're trying to scale the company in an effective way. We have over 200,000 developers .. we are trying to bring a big platform to faciliate scaling..

L: So many people hate the job of CEO from a technical background. DO you do it because you want control
Z: I think what a CEO does is set the tone of the organization.. being in this role it helps us stay focus on that.. how we evolve privacy policy, advertiser systems, scale operations.. as the orgainzation grows.. I help people keep eye on that goal.. as CEO this is what people are doing.

L: Everyone wants to write about web 2.0 and use Facebook as their model.. you consdier yourelf a tech. company not a media company.

Z: Technology is important for company.. having a technical backgrounds allows us to have empathy for developers.... for us to help other people build companies being technical is a very fundamental part of our company.

L: One thing a lot of people don't talk about are the bound books you produce showing your.. ideas and the evolution of ideas..

Z: Yeah sure.

L: That wasn't a strong response.

Z: You have to ask questions.. (audience laughs and claps)

People chalk things up to original idea.. but most of work done by people, engineers.. working on it for months.. I wouldn't want to down play fact that other people are doing and building.

Audience questions..

There is no real way of holding on to information.. I can't search for messages.. hold onto content..

Z: We don't have a lot of this stuff yet.. giving people default settings and control... If we don't succeed at this privacy and trust key pillars which enables people to succeed.

We're working on it....

When asked about privacy:

The ideal format is that users only use apps. they want to and not be bugged by others. We want to remove friction in platform.. if you click on something.. that takes you to install page.. we don't think this is a great experience.

Q: What's the single biggest obstacle FB faces in the future?

Z: A lot of it is around giving people control of information in the future...

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