Silicon Valley Notepad: Lunch at Facebook -- and plans for domination
Filed under: Technology, Columns, Media
The first thing I noticed was the dearth of parking spaces at Facebook world headquarters in Palo Alto, California. I drove to the top lot. Full up. I drove down to the lower lots, where visitors are not really supposed to park. After losing out in stare-off battles with a few FB employees, I finally nailed a spot almost at the back of the lot. The last time I've seen a parking lot like this was . . . Google before the IPO.At the reception desk, I'm asked if I'm coming just for lunch or for a meeting. I reply "Both" and sneak a peppermint chocolate candy from the bowl sitting on the desk. Refrigerators with water and soft drinks stand in the lobby for visitors. Once I'm allowed through the door into the open area where hundreds of employees sit, I can't help but notice the significant number of 22- and 24-inch LCD monitors perched on desks. I learn that these desks do not even belong to engineers. So this is clearly not a company that is worried about spending money, by any conventional standard.
I meet Larry Yu. He runs the Facebook communications team on the business and finance side, which is where we first connected, after I wrote a story on why Facebook's IPO might not be as good as some pundits have opined. After that exchange, I invited myself down to talk to the FB crew in Palo Alto. Larry suggested lunch, and I was happy to partake.
We talked about surfing a bit. Larry surfs, and I, having just moved over from Hawaii, am getting tooled up for frigid NorCal wave riding. Then it was time to eat and discuss Facebook's plans for global domination. Which is verbatim what I asked Larry: "Tell me about your plans for global domination." He didn't miss a beat: "Where should I start?"
Eschewing the crowded cafetaria option (including sushi), we headed to the roof for the second Facebook dining facility: a sun-dappled BBQ spread with a splendid view of Silicon Valley. Selections included pulled pork, BBQ chicken, burgers, veggie burgers, and Cajun-rub red snapper. I snapped up the fish, piled on two chocolate-chip cookies, and sat down for my grilling. The FB team first grilled me on what was going on at AOL with our new content strategy. Fair enough -- the price of admission.
Then we got down to business. The basic takeaways were fairly interesting to me. First, Facebook has crossed a threshold somewhere in the past few months that has made it friendly enough to appeal more broadly to ad agencies and big brands. I'll write more about this in a subsequent post. But Yu said that a lot of this comes from simply figuring out what works in terms of advertisements, targeting, and understanding how to interact with Facebook users in an environment that's far more communal and not nearly as transactional as the general Internet or search engines.
Also of interest, Facebook is leveraging its own community to cut costs. User-generated content has allowed many sites to populate with material written by users. Facebook has taken this a step further by enlisting its own users to localize Facebook into more than 50 languages. This has probably saved the company several hundred million dollars in localization costs, and it's a template for how community-driven companies can tap their avid fans not only as an ad audience but also as a source of intellectual horsepower.
There are still many companies that specialize entirely in localizing Web content. And LinkedIn has largely failed to localize its content, which has meant that it hasn't had as broad a user-base expansion as Facebook. I was shocked to learn that 70 percent of Facebook users are outside the U.S. -- a very impressive number.
You have to ask Facebook some hard questions, and I did: Does Facebook plan to let users more freely export their data, friends, and photos to other social media applications? Yu and his team told me that plans were already underway, and that it would get easier for users to do these things. Lots of other people don't think so, though, and you can understand why Facebook might be reluctant to make it easier for people to leave.
Then again, Facebook may have passed a critical threshold thanks to its Facebook Connect service. As for myself, I find I'm using Connect more and more, to log into other companies' sites without hassling with passwords. Open ID is still making a run for that function, and the two may well coexist, but I definitely sense that Facebook is ahead. If Connect ends up dominating, then Facebook basically has sealed its position, and it can let users move their data anywhere, pretty much.
Facebook acknowledged that it's looking at ads far more in terms of engagement rather than merely in terms of impressions. This isn't exactly news that Facebook has started to launch ads that are more about driving demand for events, products, and the like than just foisting impressions. But this mantra has quickly been taking over the ad space. More and more product companies seek to define their campaigns not so much in impressions or clicks, both of which are hard to place a value on, as engagement.
One thing that did spook me a little bit was that the Facebook team seemed to feel that highly targeted ads were no big deal, not Big Brotheresque at all. This is something that has bothered me about Facebook, and using user data and pictures to seed ads has caused some concerns. It has also caused some interesting ad campaigns, such as this one where Sarah Palin critics targeted Palin's Facebook fans with a slam campaign. Facebook's team said that they do allow users to vote down ads they dislike, and that will give them a strong filter over what sorts of spots show up on pages they view.
And of course, I had to ask if they planned to take on PayPal. Nope: That's a whole different kettle of fish. Antifraud systems alone are a bear of a business to be in, and PayPal has plenty of other issues that it needs to solve. For now, that is, Facebook plans on keeping its transactional side confined to internal uses.
Is the company cashflow-positive yet? Yu wouldn't answer, nor would he disclose revenues, but from the body language it seemed clear that they felt pretty comfortable with that question. I'd say the company is solidly in the black at this point.
As I walked out, I realized that I did forget to ask about Facebook's ongoing quiet struggle with Twitter for the real-time space. The recent purchase of FriendFeed made its intentions pretty apparent. But I'm pretty much real-timed-out, and I figure that everyone will be able to search all the streams at some point. A good question for my next lunch.
I left Facebook HQ with a full belly, a pocketful of expensive organic fruits lifted on my way out (at Yu's invitation) as we passed the cafeteria, and a few things to think about. I am still not sure their IPO will meet earlier expectations, but now I have a much better idea of what to look for as I consider Facebook's business going forward. And next time I'll bring my wife for lunch, too.
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Reader Comments (Page 1 of 1)
9-15-2009 @ 6:25AM
MO said...
As a Facebook enthusiast ,I would like to say that one of the reasons the company is dong so well is its responsiveness to its customers concerns.When I first joined a year and a half ago the targeting for ads was much worse and and us users complained to the company and they scaled back considerably.Other tactics that offended people I have seen changed also.Now I am not saying they are a perfect company but I am actually glad to hear they are doing good since I would hate to see my favorite way of keeping in touch with my family and friends ruined by the company going out of business!!
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9-15-2009 @ 6:39AM
Josh said...
Yes, Facebook is trying to take over the world. They have Pinky and the Brain working for them.
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9-20-2009 @ 11:49PM
yar2009 said...
No way to filter the spam?
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9-15-2009 @ 7:24AM
Allyn said...
I find facebook uninteresting and useless mostly. If somone want to say something to me I would rather they tell me in an email not post it for all to see. I rarely open my page. But then again I have a life.
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9-15-2009 @ 8:14AM
SunnyD said...
Allyn, I guess if you don't have a lot of friends and family scattered around the world, you don't need a way to keep in close touch or share photos etc. But unlike some others, some of us "HAVE A LIFE" which includes loved ones near and far.
9-15-2009 @ 7:39AM
Sally G said...
Allyn,
I agree that I prefer to e-mail directly and that Facebook's privacy/copyright issues have kept me away. (The "I have a life" comment was probably unnecessary, IMHO.)
I certainly don't need another site with lots of ads. The commercialization of the Internet since the mid- to late 1990s, when I first joined AOL, has troubled me: Google is one of the biggest offenders, IMHO. I can't even sign onto YouTube as I used to do before Google took over without a Google account, which I refuse to get as Google's information-gathering makes me uncomfortable. Luckily, I can still watch videos.
Were I a Facebook user, I would be worried about an IPO affecting the quality of the service and the intrusiveness of advertising as shareholder profits become the overarching goal. I'm not sure that responding to users' wishes will still be as important. (Full disclosure: I have a great tendency toward pessimism/cynicism, but too often proved right to change my ways.)
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9-15-2009 @ 7:41AM
Rock Fossil said...
Facebook needs a slap in the facebook!!!
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9-15-2009 @ 7:42AM
Phil in Illinois said...
FaceBook: I've decided to write about FaceBook since that's what this forum is REALLY about. It is a good way to communciate with your friends en masse. But, and I want to urge this...it DOES have a way to exchange email on a one-on-one basis, too. So, in effect, not ALL you enter goes to ALL friends. It can be an exchange between you and another, just like an average email account. Personally, I like it except for some of the silly games embedded
into it. I can see where they might help pass time for some and yet, be mentally challenging for others. They aren't all bad. I also Twitter and follow several organizations there, as well. FaceBook will continue for now to be a part of my life as a I travel acrossthe country.
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9-15-2009 @ 7:46AM
michael said...
Justlike twitter, facebook myspace and anyone of them try to do good at first, but give it time and you will see that most of these will be taken over by companies such as google and microsoft which happen to be much domaniering these days in keeping up with technology.
Overall you will want to be a company that can offer more two other companies in what you can offer such as enhancement . Keeping up with technology is a fast paced business what can you offer me in making my company better and more efficient that i dont already have.
What makes you think i can use you to target more people. facebook, twitter and myspace do attracted the younger crowd more so with myspace but can you do the same and lets see how. Here is a point with all the employees that you do have how hard is it to get a job there as i hear most of the time pretty hard in some cases .
If these companies are hard to get a job with then can you offer me experience that will enhance my company knowing that I have experienced help on the other end?
According to this person interviewing says facebook seems to running in the black he says, that does not sound good to me as black means there dead almost or about to be phased out.
Offering good food seems to keep employees but quality work from inexperienced staff looks like there at facebook only because they have good food.
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9-15-2009 @ 8:02AM
Lauren said...
"In the black" refers to a positive income. "In the red" means that there is less money coming in than going out. So in this case, "in the black" is a positive thing.
I recently went to a reunion and was amused to overhear many comments "I heard about it on facebook." Our group, in fact, had regained touch through facebook.
And to the person who said "I have a life" I find that amusing. One can have a life and still interact via facebook and other social networks. If used well, it can actually enhance a rather well lived life.
9-15-2009 @ 7:49AM
Kitten said...
when I finished high school 24 yrs ago and married (NOT someone I went to school with) I lost touch with almost everyone from school and over a couple of years I lost touch with everyone. Basically I fell off the map as I've been told. I finally gave in to some family members who kept asking me to join facebook and I am sooo glad I did. I've only been on it for 2 wks and I have had over 50 people I went to school with get in touch with me. This weekend there is even a big party for anyone who went to the school, as long as they are over 21, to get together. All classes. I can't wait to go. Its like a whole other life has reopened with the same ol' people who are all grown up now. I think this is a great thing.
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9-15-2009 @ 8:04AM
Jessica said...
I can see where you are coming from Sally and Allyn... but to those of us who use Facebook... it is an awesome tool for reconnecting.
I know churches that use it to plan meetings, authors who use it to plan book signings, and then the regular people like me who use it to keep up with the friends we have had over the years.
In my honest opion (IMHO) I am happy that face book is around... it is way more centered around its users than twitter (since I am not an internet stalker and don't need to know every move you make)... and more adult then myspace.
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9-15-2009 @ 8:04AM
Mimi said...
Face Book HQs sounds just like America Online (AOL) did back in its "hay day". AOL was a damn good place to work. It was exciting, fun and financially rewarding and did I mention the perks?!?!? With all of the stock options and splits, I am financially secure today...all because of AOL!
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9-15-2009 @ 12:58PM
Tina said...
Facebook was great a few years ago and then the middle aged people all jumped on facebook and started trying to rack up as many "friends" as they could! It's a joke now!
A few years before that it was Myspace and now it's Twitter. The old people always butt in and ruin everything!
There's nothing more pathetic than a 50 something year old on facebook with 200 "friends"...
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9-15-2009 @ 8:35AM
Barbara said...
Be very careful. Facebook security needs some serious work done. I have had my Facebook account been hack'd into, and they have tried to contact my friends to send money to the hackers overseas! Be very cautious!!!!
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9-15-2009 @ 9:26AM
Carlos said...
Yes, I too often base company profitability on body language. You should teach those sill stock people to just read body language so they would know for sure or not, if a company was in the black. What a silly statement.
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9-15-2009 @ 9:33AM
birgit nauert said...
great info on your side please advise how you can start
to set up your company service
Reply
9-15-2009 @ 9:33AM
Charleen said...
Meetings, sushi, rooftop scenic views, surfing( in the ocean) not even on the web. ok thats all dandy info. Not a word on what they plan to do as far as the virus problem in this Facebook world. I got a viscious virus and was told from one of the numerous applications, all allowed to be "made" by users. They make them and attach a virus or two to make your computer useless.I have to now pay over $300 to get my computer back to where it was before I jumped on the Facebook wagon.What exactly are their plans as far as more safety is concerned? Adds are nice and pay THEIR bills, but who pays for this virus I got from THEIR webite? I do.
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9-22-2009 @ 11:51PM
laura said...
I've thumbed down a Facebook ad probably half a dozen times, encouraging single mothers to go back to school, because I am neither a single mother nor interested in online classes.
I wonder when the strong system will actually start working.
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9-15-2009 @ 7:39PM
faith said...
Tina --
So you think social networking and the internet are mutually exclusive to the 20 and 30-somethings? What age group do you think was largely responsible for any of this to even exist today?
We may be "middle-aged," but we're not dead! When did young people start putting "hits" out on the "middle-aged?" I have been running across this mentality from young people alot lately, and I don't understand what the problem is. We all have to communicate; we all have to work; we all love our family and friends; and we all like to have fun. Why can't we all just get along???
When you say hurtful things like that, think about the loved ones in your family who are middle-aged. Would you treat them that way? If you would, then you've got serious issues!
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