Tuesday, December 02, 2008

Facebook: Looking Forward

Hotmail... Remember that ? Wow. 400 million active users down to obscurity. How is that achieved ? Hotmail then, was far bigger than Facebook is now. You travel outside the 3 coasts of New York, LA and Chicago and Facebook is not the "go to" that Hotmail was. I guess it just proves that because you are catching on like wild fire and growing huge numbers, does not necessarily guarantee you will be around forever. As they say, whatever is "cool" now is the butt of everyone's jokes in years to come.

The problem that companies like Facebook face in the future is that the low barrier to entry they enjoy now - the web, easy sign up etc - becomes the threat a competitor poses in the future. So, the strategy is that once someone is "in", you do everything you can to increase the reasons for them not to "go".

Facebook are doing this in two ways:

- Increasing social ties
The thinking is that the more social ties you have - friends - the more Facebook will become as critical as your cell phone for staying in contact with people.

- Increasing share of your "digital life"
The idea is that the more "content" you have hosted on Facebook, the more reason you have to stay with them because the effort of uploading it all elsewhere becomes too big. So, they become your digital scrapbook of memories that you start becoming attached to and protective of.

In the past, we have shown ourselves to be a fickle lot. We have all been guilty of abandoning virtual homes before and we will all do it again. If Facebook is betting on social ties and the hosting of content as being the reason we will stay forever, I would be holding off putting any of your 401k there when they IPO.

I think, however, the future of Facebook could be a much more uncool, unsexy route. They have built an incredible application platform that makes it easy for users to connect to various sources of information and services. If Facebook could see where people spend a lot of their money - ie wireless bills, cable, energy etc - and become the easier way to pay, add and manage those bills, Facebook could finally become something they would like to be which is...

Something we need, not just something we want.

A great clear morning in New York by the way. Love this city. Goal of the day is to drink more water.



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