Umair Haque / Bubblegeneration
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Thursday, November 08, 2007

Research Note: Evil is in the DNA, Special Facebook Edition


"..."There are these small bands of people who are trying to take over the world," Yu said. "This is so much more fun than working at a hedge fund or an investment bank."

ie, Gideon Yu, Facebook's CFO.

That's a really (really) important quote.

What makes revolutionaries - well, revolutionary - is the desire to change the world. For the better.

Almost all of today's new market leaders, interestingly, share this trait: it is a deep genetic difference that underpins advantage. The deeply felt desire to change the world for the better is ultimately how radical innovators are able to explode value propositions, redesign value chains, etc.

But that's not what Facebook wants to do. Facebook wants to take over the world.

See the difference?

One is about improving things radically, about innovation: the other is about capturing rents, about scarcity and control.

We can put this a bit more formally. Facebook wants to play games of coercion and domination: I threaten, you obey. This is really what F8/SocialAds/ etc are.

Today's real radical innovators know that games of coercion and domination really don't work very well in the edgeconomy - because you can't coerce all of the people all of the time.

They are pioneering very different kinds of games: games focused on making things radically better for everyone - on exploding the boundaries of value creation. This is Google, Wikipedia, Myspace, Craigslist, even, increasingly, players like IBM and P&G.

Now, this might seem minor to you. But advantage is in the DNA. In terms of strategy and outcomes - it's perhaps one of the biggest components of what firms are, and so it's one of the biggest determinants of what they'll do, and how they'll perform.

So it's not surprising that on the same day, Mark Z said:

"...If those interests include not seeing advertising, that is too bad. "There is no opting out of advertising,"

Like I said: evil is deeply embedded in Facebook's corporate DNA.

NB - This post doesn't mean firms get evil as they grow up, evil means you need better PR/spin/etc, or that I have a moral objection to evil.

Let me try and clarify as simply as possible: it's about strategy.

BGSL studies radical innovators. One of the traits that turns nobodies into radical innovators is a deeply felt desire to change the world for the better. A startling number of today's most successful businesses (not just 2.0) share this trait.

Why? Doing good/making things better deeply dominates the new economics of business. The longer version is better left to another time.

That's the point: from a strategic pov, good beats evil - unfortunately for Facebook.

-- umair // 11:07 AM // 11 comments


Comments:

That's a really important set of quotes; thanks for bringing them to our attention. Can we think of any other companies who are up to similar kinds of evil?
// Blogger Ben Werdmuller // 2:29 PM
 

This works well with Dave Winer's quote: "Advertising will get more and more targeted until it disappears, because perfectly targeted advertising is just information."
// Anonymous Anonymous // 5:31 PM
 

uh? you have no "moral objection to evil" ?

but, yeah, going to have to give it to you on Facebook's increasing evilness.
// Blogger phil jones // 5:48 PM
 

There are so many ways to make money with $240m to play with.

That cash should be invested right away into businesses which create solid dependable revenue streams and leverage the excellent Facebook brand experience. This would reduce their sigma considerably and show the market that they are intent on justifying their valuation.

Instead it sounds like their business thinking has ended with "let's sell ads", potentially alienating their users and leaving a lot of lunch on the table for other players and future entrants.

Perhaps the box outside of which Facebook should think is the computer screen itself.

-s
// Blogger srini // 8:26 PM
 

dude,

you've really got your hate on for facebook. 15 bill is obviously ridiculous but you should at least join it so you can get these wonderful "what you been up to all this time" emails from people you haven't seen in 20 yrs. the add ons are extremely annoying.

can't remember my login details and too lazy to look them up...dhd
// Anonymous Anonymous // 8:56 PM
 

Hopefully Facebook/Myspace etc is just training - getting us ready and the market mature enough for something big and really revolutionary! If not, then there will have been a great loss.
// Anonymous Anonymous // 9:27 PM
 

Good for you for exposing the generals at Facebook as the bullies they really are.
// Anonymous Anonymous // 7:55 PM
 

Umair,

I would just like to say that different people have different interpretations to the quotes by Gideon Yu and Mark Z.

Personally, I disagree with ur notion of 'Evil' as you described Facebook and I feel strong biasness from you when it comes to criticizing Facebook.

As a user of both Facebook and Myspace service, I find the experience to be incomparable. To me Facebook has truly change the way I communicate with my peers, not to mention all the additional value and knowledge I have gained from networking on the system rather than Myspace profiles (with all the junks apps) that take forever to load.

In terms of advertising, in today's capitalism society, what's worth doing is worth doing for money, it is also an important source of operational income for website company.

As for 'selling out' to the marketers, I believe one of the 'world-changing' company you've mentioned - MySpace has sold out a long time ago with annoying trashy ads bugging the users all over the screen. Honestly, I rather be bugged by 'Dell laptop' ads which is specifically targeted at me and potentially will match my needs on Facebook rather than the useless 'Shoot Paris Hilton to win a FREE ringtone' ads on MySpace.

Peace.
// Anonymous nikko // 11:26 AM
 

Dear Umair Haque, I was deeply amazed at your name-dropping of the 'value firms' that focuses on making things radically better for everyone included Myspace!!!! IS THIS A JOKE?? Especially given the amount of effort you put into dissing facebook in your blog was based on TWO AMBIGUOUS comments??? I personally don't think it would be possible for facebook ads to end up as bad as Myspace.

Practically every page you are on involves some form of adverts on myspace for irrelevant products (ie ads encouraging me to vote for my fave big brother housemate to "win a free laptop" continue to appear), whilst the few ads that do appear on facebook are more targeted and more relevant to what I'd be interested in (ie - vodafone plan information).

This type of advertising, as well, requires the user to pretty much "request" the adverts to appear on their facebook site. Whilst I think the younger demographic (in particular that uses myspace / bebo) might actually interact with the ad profiles, I think the number of people who actually want to put adverts on their own site would be quite limited.

Marketing's changed. The local butcher has plasma screens with it's prices and ads instead of a chalk board, supermarkets in the UK have their own "tv stations"... it's just the changing way of advertising I guess. Makes the advertising in Minority report seem achievable though.

Maybe it's time for you to think...
// Anonymous sugardaddy // 11:49 AM
 

you know what - the last two comments look a *lot* like facebook astroturf to me.

those comments weren't ambiguous in the least - if anything, they were crystal clear.

that said, brand profiles aren't the issue.

they're a great idea. so good, in fact, that myspace did them years ago :)

it's beacon that's a massive step in the wrong direction - the idea is great, but the way it's been put together is all wrong.

look. i'm not arguing that facebook is useless. windows isn't useless; microsoft's still evil. i'm arguing that facebook is trying to coerce it's users - and that's evil.

you can argue against this all you want - but there's lots of evidence to support it. not just beacon, but numerous facebook privacy problems, the deal with microsoft, etc.

thx for the comments (if they were real ones).
// Blogger umair // 5:00 PM
 

umair,

of course they were real comments.

I, as a 'real' facebook user (search 'Rob Record') and myspace user ( www.myspace.com/robrecord ) can vouch for the opinion that Facebook is vastly superior to Myspace in many ways, including the advertising (even though I hate advertising, it's much less intrustive).

I would love to know more about the reasons behind your opinions of Facebook so I'll read more of your blog entries.

I just want to tell you that from my perspective, and most of my friends, Facebook has been the most useful social app yet. I am sad to hear that it's rotten at it's core.
// Blogger robotix // 6:48 PM
 
 

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