Monday, May 12, 2008

Facebook: The purge begins

Regular readers will remember that I recently warned Facebook kiddies to be very afraid because their new boss, ex-Google honcho Sheryl Sandberg, would soon begin thinning the ranks at Facebook: “Slowly, one by one, she will start picking you off. Like a predator in one of those sci-fi movies where people keep going missing.”

Sure enough, now comes word that the company’s CTO, a guy who has been pals with Mark Zuckerberg since high school, is leaving for no apparent reason. Official version is that Adam D’Angelo (photo) wants “to take some time off.” Now listen, friends. Kids in their early twenties do not take time off. Especially when they’re working for the hottest get-rich-quick startup in the Valley. These folks do not leave because they need a break and want some R&R. They leave because someone gave them money to go away so that someone can bring in one of her friends that she trusts more or believes is more capable.

Nevertheless the ever-clueless CNET describes the resignation this way: “It’s kind of like this: an indie rock band gets signed to a major label, and after a taste of the high life, the bassist jumps ship.”

Um, no. It’s like this: A garage band gets signed to a major label, and the label assigns a producer to their album, and the producer says the bass player’s gotta go. I mean, you’ve seen Wayne’s World 2, right? Or, for the older folks, does the name “Pete Best” ring any bells?

Perhaps you were wondering why ZuckerBorg has embarked on a one-month “Vision Quest” to India and other locales for “pleasure and contemplation”? Well now we know. The poor kid can’t bear to be around when his pals start getting SandBorged. What a sweetie.

FWIW, I was talking to the Beastmaster over the weekend and he says he’s heartened by the fact that Mr. Fleece-and-Flip-Flops can’t handle watching the carnage. He and Monkey Boy see this as a sign of weakness. And they’re right. The true killers (and I know because I’m one of them) don’t mind seeing our friends getting tossed under a bus — in fact, we get off on it. Larry, who’s the sickest of us all, actually videotapes his firings and then watches the tapes afterward, while being pleasured by interns.

But not little Zuckerberg. When put to the test, he blinked. Nice work, kid. You let the Valley VCs and private equity sharks into the pool, and now the sharks are eating your friends, and you’re off in India, hiding. What a mensch.

The question arises: Who’s next? Will Zuckerberg’s sister, Randi Jayne, maker of painfully bad songs and videos, gets booted from her sweetheart job in “marketing”? Doubtful. They’ll keep her around just so Mark can feel safe. Worth wondering, though, is what role Zuckerberg will return to when he completes his Vision Quest. Smart money says he gets pushed into some kind of “visionary” role so that the new team of Valley veterans, installed by Facebook’s investors, can finally complete their takeover of the company.

Wednesday, May 7, 2008

Facebook running out of gas?

Supposedly developers are losing interest in the platform. And guess what? Right on schedule, the big brains at Microsoft are looking to acquire the place.

Tuesday, April 15, 2008

Dear Facebook kiddies: Be very afraid

Sure, your new COO, Sheryl Sandberg, is the flavor of the month and is getting all sorts of great lovey-dovey press from Fortune and the Wall Street Journal. And right now you all just think it’s so cool to have this bona fide grownup taking over and many of you actually feel safer now that you have a mommy on board and you’re not depending on Zuckerberg who, let’s be frank, hasn’t always inspired confidence. Young friends, enjoy the honeymoon while it lasts. Keep zipping around the offices on your ripstik things and scrawling stupid graffiti on the walls and believing it when Sheryl gives you hugs and tells you you’re so cool. Because one day soon that shtick is all gonna be over, and mama is gonna bring the hammer down. Trust me, I’ve seen her in action. I’ve partied with this woman and I know what she’s like. For one thing, she’s way smarter than all of you little punks put together. And she will not be afraid to let you know it. For another thing, I once saw her bite a dude. He came up and put his hand on her shoulder at a party. She turned and sank her teeth into his hand, so hard she drew blood. Worse yet, I later found out that the dude was her husband. I’m not making this up.

Anyway, Facebook kiddies, enjoy your time while you can. Right now Sheryl Sandberg is studying you. She’s sifting data, combing your code, seeing what kind of car you drive and what hours you work. She’s watching you. She’s sizing you up. Slowly, one by one, she will start picking you off. Like a predator in one of those sci-fi movies where people keep going missing. Don’t believe me? I wouldn’t wander off down any hallways alone. And whatever you do, do not put your hand anywhere near her face. I’m serious.

Wednesday, March 5, 2008

Sandberg leaves for Facebook. Let’s all recite Eric Schmidt’s Serenity Prayer.

By now you’ve heard that yet another top Google exec has left for greener pastures at Facebook. This time it’s Sheryl Sandberg, who was some kind of bigshot running the ad business at Google or something like that. Best story on this I think was in today’s Wall Street Journal (see here) because they managed to get hold of Roger McNamee, this private equity dude who owns part of Palm and has been poaching Apple engineers left and right and then just smirking when I haul him down to Cupertino and shout at him. Turns out Roger is also some kind of mentor to Zuckerborg and has been encouraging the Z-Boy to poach Googlers.

Anyway this is not good news for Squirrel Boy and he knows it. Like, when the Journal puts a story like this on its front page, right in the middle, you know you’re going to get calls from your board members. But how can Google hope to hang on to these folks? The stock is topped out. Growth is slowing. The Borg is circling — clumsily, but circling nonetheless. Plus Google execs are all in huge demand because these little startups figure the Google whiz-kids must have some special magical knowledge because look at how well Google did right?

Maybe it doesn’t occur to the startup kids that Google’s top execs don’t have any special genius, they are just lucky bastards who landed in the right place at the right time. Or maybe the kiddies do know that and they simply don’t care. I hate to suggest that someone like Mark Zuckerberg might be entirely craven and cynical because gosh he looks like such a sweet fifteen-year-old kid and everything I’ve read about him makes him seem so nice. But maybe Z-Boy realizes that he needs a few Googlers on staff because he can play that up as a vote of confidence (“See, we must be on to something huge, look at all these Google execs jumping on board”).

The fact is, though Sheryl Sandberg might have some great operational skills, the reality is she doesn’t even need to ever show up at Facebook and she’d still be worth her weight in gold to Zuckerberg.

Here’s why. People like Sandberg who have made huge amounts of money, like hundreds of millions of dollars, can go anywhere and do anything. They choose their next job based on where they think they can make the biggest score. Her joining Facebook tells the world that a savvy Google exec, who could go anywhere and do anything, looked around and decided that the Next Big Thing is Facebook.

In other words, Sandberg’s value to Facebook arises not from her job skills but from her reputation as an investor. Sure, she’s not investing money; she’s investing her time and her name. But she’s investing nonetheless. She’s betting that this thing is going to pay off in a big way. And she will draw other investors behind her. It’s like when Warren Buffett invests in something. Everyone else jumps in too because they figure the Sage of Omaha knows something they don’t.

You have to remember what Facebook’s core business is about. It’s not about helping people stay in touch with friends or express themselves. It’s not about changing the world or creating an ecosystem for small apps makers. It’s not even about selling ads. Facebook is a vehicle through which a bunch of investors in the Valley hope to turn a small pile of money into a much bigger pile of money by selling shares in the public markets. That is Facebook’s core business. That is its raison d’etre as they say in Latin. This is a company created by, for and about venture capitalists. It’s not a company so much as it’s a narrative. A fable. A fairy tale.

Zuckerberg himself is pretty much incidental to the whole thing except that it makes the story a little better to have a boyish little Harvard dropout (cough Gates cough) in flip-flops and fleece jacket up on stage. (Not as CEO, mind you, because he’ll soon be giving that title to Sheryl Sandberg. Z-Boy will become Chief Innovation Visionary or Chief Strategy Architect or some other meaningless title which in English will translate into “World’s Luckiest Little Bastard.”)

Worse yet, right now Facebook is a friggin Ponzi scheme, with Facebook’s venture-funded apps partners making money primarily by selling ads to, um, Facebook’s other venture-funded apps partners. And voila, like that, everyone’s making money! Can you say shell game? Moreover, Facebook itself is being propped up and kept alive by the Borg, simply so it can serve as a thorn in Google’s side. And frankly the Borg will be happy to keep this thing alive and to help Z-Boy and his backers make obscene billions as long as Facebook saps energy from Google and distracts them and draws away their talent. Z-Boy, clever fellow that he is, is happy to serve as the Borg’s proxy in its war against Google, so long as he’s richly compensated, which he will be. He spotted a war between giants and cleverly turned that to his own advantage. Well played, kid.

Bottom line on the Sandberg hire is that what Zuckerberg and his advisers realize full well is this: IPOs usually boil down to one sentence that investment bankers can use when they call their clients. The one sentence Facebook would really like to have is this: “It’s the next Google.”

This is why Zuckerberg hired Sandberg — because ultimately what he’s trying to do is impress the saps in the public markets to whom he’ll soon be trying to flog shares. Sandberg brings huge street cred in that regard.

Well it’s great news for Facebook and bad news for Google. Everyone out here has seen this coming for months. Which is why last November we crafted Eric Schmidt’s Serenity Prayer. Makes good reading today in light of the Sandberg defection.

Thursday, February 21, 2008

That giant popping sound …

It ain’t champagne being opened. Sorry. Facebook user numbers in the UK went down last month. Probably no big deal. Neither is the fact that their chief revenue officer just quit, “amid scrutiny of Facebook’s $15 billion valuation, which many analysts say isn’t justified by the company’s revenue of about $150 million last year,” as the Wall Street Journal puts it. Scrutiny? Of valuations? Here? In the Valley? What the hell is the world coming to?

Tuesday, February 12, 2008

Facebook: You can never leave

So says the New York Times which runs a nice article explaining how Facebook keeps you from deleting your account. Money quote: “Some users have discovered that it is nearly impossible to remove themselves entirely from Facebook, setting off a fresh round of concern over the popular social network’s use of personal data.” Neither can you move your contacts to a different social networking site, as Scoble pointed out recently.

So here’s the racket. All these Web 2.0 guys built their businesses on open-source software like the LAMP stack and all went around raving about the wonders of open source and how great it is that there’s no vendor lock-in — and then they set about locking their own users in. Sure, it’s not the kind of hooks that old-school gangstas like IBM and EMC used to use. It’s less overt and more subtle. At Google they call this the “Velcro business model,” meaning you can, in theory, get yourself unstuck, but it takes some effort. Squirrel Boy loves to talk about it and he says that all you have to do is spout some pious bullshit about empowering users and putting their needs first and then you can get away with anything you want.

Saturday, February 2, 2008

El Reg: Facebook is over

Look, I hate The Reg as much as everyone else but they’ve nailed the Facebook situation here. Numbers don’t lie and the numbers show interest waning in these time-suck Web sites. Much love and namaste to Ted at Uncov who figured out that the only way to make money on Facebook is to sell ads to other Facebook application developers, and what this amounts to is a repeat of the late-90s bubble:

Ted Dziuba of the recently-departed, much-missed blog Uncov put it best: “Fuck, this is a pyramid scheme. There is no money input into this system except venture capital. I remember a time, long long ago, when tech companies spent their own venture capital on each other, so revenues were all booked from the same small pool of money. Yeah, as I recall, it didn’t end well.”

The Reg is also correct in predicting that very very soon we’ll have the usual cast of Web 2.0 cheerleaders claiming that Facebook is still a huge transformative game-changing media giant and the world has changed and those who disagree just don’t get it:

This time around, expect spinners to work on massaging the comScore figures, and happy-clappy bloggers to leap to social networking’s defence by claiming the falls are sign of the market maturing, and of fierce competition. They could be right, but it still means that the individual business are not the goldmine their greedy backers slavered over.

Scoble? Owen? Start typing.

Tuesday, December 18, 2007

Filthy hacks, I’m warning you: Lay off Zuckerberg

See this is what happens. They build you up, then they tear you down. Now ABC News is taking a cheap shot at Facebook’s Mark Zuckerberg (see here) because he sued a magazine claiming they invaded his privacy by publishing some embarrassing documents related to a lawsuit. Gist of the story is that who is he to be suing people over his privacy when he runs a company whose business model involves sharing people’s private information, geddit? Like, aren’t these young kids today supposed to be totally transparent? As ABC puts it: “Having private information spread on the Internet, it seems, is no more fun for the creator of the leading social network site than it is for ordinary people who have found that their sensitive photos or documents have spun out of their control.”

O Zuckerberg, you harvester of souls, I feel for you. Almost. At the same time, in honor of the fact that Facebook has done a deal with Microsoft and begun the process of being assimilated, we’ve decided to create a new nickname for Mark — instead of Faceberg, he’ll be ZuckerBorg. And we’ve created a new image of him to go with the name. Nice, right?

Thursday, December 6, 2007

Opt out? Hell yes I want to opt out!

Man this Facebook Beacon situation is getting ugly out here in Palo Alto. An angry mob of people (photo) has formed outside the Facebook headquarters, and they’re not going away. It’s like a hostage type situation. The Facebook kiddies are inside, afraid to come out. They’ve been trying to send out for pizza but the police won’t let the delivery guys through. Turns out the cops are pissed too, because one of them bought some jewelry for his girlfriend and his wife got notified on her news feed. I’m telling you, man, do not mess with the boys from the Palo Alto SWAT. They will fuck you up.

Meanwhile the PR squad at Facebook is in major damage control mode. Katie says this is just about the worst PR team she’s ever seen. Luckily they’re being bailed out by friendly hacks who are providing ground cover with articles like this one where Fortune’s eternal optimist David Kirkpatrick (the guy who once famously defended Ebay’s ridiculous $4 billion purchase of Skype) now straps on his rose-tinted glasses again and explains why the whole Beacon fiasco is overblown, and how there’s nothing to worry about, and Facebook is the greatest company ever created in the history of the world, and the whole Beacon “scandal” is a tempest in a teapot which “may say more about the press – and today’s blog-led penchant for sensationalism – than it does about Facebook.”

Um, right. Of course. It’s not Facebook’s fault. It’s those bloggers. And — gasp — the sensationalist media. Including, apparently, Kirkpatrick’s own colleague, Josh Quittner, who penned this piece criticizing Facebook a couple days ago. Yeah, Kirkpatrick makes sure he cuts Quittner a new one in his article.

So what’s the big deal? Sure, it’s nice to see filthy hacks having a lively debate, and different people have different opinions, even when they work for the same magazine. In this case, however, my spider sense is tingling. Katie’s is too. Her take is that Quittner’s piece rattled some cages out here — it was picked up and linked to pretty widely — and so someone in Facebook PR or someone at the Borg or someone among Facebook’s investors reached out to Kirkpatrick and reminded him that you can’t go around pissing on people’s shoes if you want to keep getting interviews for your big slurpy cover stories about the Valley. It’s kind of like the Sopranos. It’s about respect. It’s about making things right. You know? (And yes, this is kind of what Katie told Kirkpatrick recently when one of his other colleagues at Fortune was trying to do a hatchet job on me.)

Real lesson from all this? Facebook may be just a startup, but they have a lot of powerful friends out here. Zuckerberg has been clever enough to spread around little pieces of his company to a lot of important people — sort of the Valley equivalent of the “walking around money” that Democrats like to sprinkle around to preachers and other “influencers” at election time, to help get the vote out.

Those folks with a stake in Facebook are all counting on that big pot of gold at the end of the IPO rainbow. Guess who their favorite reporter in the whole wide world happens to be? Guess which magazine is always happy to oblige when you need a nice splashy cover saying how smart and brilliant and creative and wonderful and special you are? Yeah. It’s like dat, y’all.

Kirkpatrick’s piece is like a shot fired across the bow of every filthy hack in the Valley. Message is this: Don’t mess with Zuckerberg. He’s a made man.

Wednesday, December 5, 2007

Faceberg: We’re sorry. Really. Okay, not really.

See here. Faceberg has posted an apology on the company blog for the Beacon fiasco. Money quote: “I’m not proud of the way we’ve handled this situation and I know we can do better.”

Thing is, nobody ever doubted that Facebook can do better. What’s scary is the fact that they won’t do better until people start to scream at them. It’s the fact that it doesn’t really seem to be in their nature to do the right thing. Their instinct, in fact, seems to be to do the wrong thing, and to keep doing it until they get caught. Even after they get caught, their instinct is to spin and fudge and brazen it out. No wonder the Borg has partnered with them. It’s a match made in heaven. These guys are like Google, only their slogan isn’t “Don’t be evil” — it’s “Don’t get caught.”

Either that or they truly are a bunch of spoiled and scarily fucking clueless kids who honestly have no idea why people are upset about this, because they truly have no moral compass and they view this whole thing as just another pain in the ass hurdle to get over on the way to becoming rich. In which case, yeah, I’m, like, rilly rilly super glad that they’re, like, gathering information on me?

The smarmy fake apology is not at all reassuring and seems to have been written by PR people who were trying to imitate a 23-year-old kid who’s speaking from the heart and trying to sound all sheepish and aw-shucks — except the flacks can’t do it because they’re as insincere and stage-managed as as the Facebook guys. Plus, let’s face it, the flacks are getting paid in Facebook equity, right?

For what it’s worth, compare Facebook’s lame fake apology to the much more convincing fake apology that Katie wrote for me after the iPhone price cut fiasco. That, my friends, is how you do it. Then again, Katie is the best in the biz. Of course we also have another advantage, which is that our business model aligns our interests with the interests of our customers. The happier they are, the more money we make.

Facebook’s business model is the opposite. It pits Facebook against its customers. The amount of money that Facebook can make is defined (and constrained) by the degree to which its users will allow themselves to be exploited.

Bottom line? This punk scares me. And I miss the days when the Valley was about making chips and routers and computers, not sending people zombie bites and tracking their online purchases. I miss the days when we were the good guys. I really do. Honestly.