Facebook’s Continuing Makeover
Facebook, the Internet phenomenon created by 23- year-old college dropout Mark Zuckerberg, may not be earning very much money right now. But it is a business, and a highly valuable one: Microsoft recently bought a 1.6 percent share in the company for $240 million, and rumors that Facebook might offer its stock to the public surface regularly. Zuckerberg claims he isn’t yet ready to sell stock in his creation, but he does plan to keep reinventing it with new features for its exploding roster of users.
The site was originally built to connect students at Harvard, where Zuckerberg was a student. Then he and two classmates expanded it to include 40 other campuses. Soon they included all U.S. colleges, then high schools. Now anyone can sign up. Facebook’s growth has been so rapid that any statistics cited are soon dated. Current projections put Facebook users at 200 million. A Spanish-language version of the site also opened for the nearly 3 million Spanish- speaking users, and sites in German, French, and other languages are opening soon.
Zuckerberg may be a young entrepreneur, but he has already made decisions few managers twice his age would relish. He has built an ever- expanding organization of 400 people and faced a pending lawsuit by former classmates who claim he stole their idea. He has chosen to keep the company private and turned down an offer from Yahoo! to buy Facebook for $1 billion in cash. He has gone from college student to celebrity in California’s high-tech Silicon Valley. His every move is watched by the technology industry, competitors, Wall Street, and the press. With all that attention and pressure, however, he says he lives in a one-bedroom apartment with a mattress on the floor.
Facebook has weathered several storms. Al though its turndown of Yahoo’s offer was controversial, perhaps even more challenging to Zuckerberg was the crisis over Beacon, an information- tracking feature Facebook introduced. The application automatically notified users’ friends of all purchases they made at over 40 Web sites. That feature created a firestorm of protest over privacy issues, along with unflattering press coverage.
Zuckerberg may have reacted too slowly to users’ concerns, although he did revise the program and now allows users to opt out of it. In the end, Facebook recovered quickly. The site’s latest innovation allows any user to create new software applications, charge users for them, and keep the proceeds. The response has been highly positive so far. One application Zuckerberg likes himself is Facebook Scrabble.
But the site needs a way to actually earn money. Zuckerberg is experimenting with advertising applications. As the Beacon crisis showed, however, he will need to consider users’ desires and allow them to avoid features they don’t like. Users at social- networking sites have different wants and needs from those accessing commercial or news sites. In the latest twist, some users discovered, for instance, that they can’t entirely delete their pages if they want to leave the site. Through it all, Zuckerberg remains committed to producing a positive experience. “I’m here to build something for the long term,” he says. “Anything else is just a distraction.
1. How does Mark Zuckerberg typify an entrepreneur? In what ways do you think his experience or background as an entrepreneur is unusual?
2. How well do you think Facebook manages its relationships with its users? If it needs to start showing a profit, how do you think this may change that relationship?
