How to win friends and influence people

A HUGE thumbs-up, Facebook’s “like” symbol, greets visitors at the entrance to the company’s headquarters in Menlo Park, in the heart of Silicon Valley. The imposing sign is crafted from that of a former occupant of the attractive corporate campus, Sun Microsystems, a once high-flying startup that crashed before Facebook moved there in 2011. When employees leave they can see Sun’s name and logo still inscribed on the back of the sign. This corporate memento serves as a reminder of how quickly fortunes can change if tech startups take success for granted.

Not long ago sceptics dismissed Facebook itself as a fad. Having watched its early rivals stumble, many doubted the longevity of another social network and underestimated the ingenuity of its 31-year-old boss, Mark Zuckerberg. An ill-managed initial public offering in 2012—the firm’s share price sank on the first day of trading—seemed to confirm those doubts. But those betting against Mr Zuckerberg were wrong.

Facebook is now the sixth-most-valuable public company in the world, with a market value of around $325 billion. Facebook claims nearly 1.6 billion monthly users for its social network (see chart 1). Around 1 billion people, nearly a third of all those on the planet with access to the internet, log on every day.

Facebook takes up 22% of the internet time Americans spend on mobile devices, compared with 11% on Google search and YouTube combined, according to Nielsen, a research firm. As a result it has more data about more users than almost any other company in history. It has used that advantage to become one of the most powerful forces in the advertising business. Its revenues have more than doubled in two years, to $18 billion in 2015.

The firm has maintained its dominance by becoming one of the tech industry’s most active acquirers, buying other services that might have lured users away. Since 2012 it has spent more than $25 billion on businesses including Instagram, a photo-sharing site, WhatsApp, a messaging service, and Oculus, a virtual-reality firm. Americans spend 30% of their mobile time with Facebook and other apps it owns (see chart 2).

Facebook has become more like a holding company for popular communications platforms than a social network. But even that description understates Mr Zuckerberg’s ambitions. He is making big bets on the future of communication, mainly messaging services, artificial intelligence and virtual reality. Speaking to The Economist Mr Zuckerberg says that he sees his company as “a mission-focused technology company”. That puts it in direct competition with other tech-industry titans, especially Google.

Faced with the challenge of how to grow when a huge share of the connected globe already uses his products, Mr Zuckerberg is determined to bring the internet, and so Facebook, to people who are not yet linked up. One scheme involves an unmanned solar-powered plane. Such plans are audacious, sometimes controversial and by no means guaranteed to be successful. But Mr Zuckerberg has a history of pushing beyond what most observers thought possible.

I’m liking it
Facebook has reached its position of influence and power by defying three maxims about the internet: that social networks have short lifespans, that it is impossible to make money from them and that mobile advertising is a grim business.

Facebook goes from strength to strength but only narrowly avoided the fate which befell rival services that seemed destined for dominance. Friendster and MySpace fizzled out. Frequent headlines about executive departures in its early days contributed to the suspicions that Mr Zuckerberg was leading his startup to a similar disaster. In 2006 he came close to selling Facebook to Yahoo for $1 billion, but pulled out when it tried to negotiate the price down. Other firms, including Viacom and Microsoft, have also been suitors.

Mr Zuckerberg, however, always had a long-term plan. He spoke about how the service could become a “utility” and talked about the next ten or even 20 years, causing mirth among industry veterans.

That meant ensuring that Facebook did not meet the same end as Friendster, where frequent outages and long page-load times caused users to abandon it. From the start Facebook invested heavily in technology so the site would not go down. It expanded gradually to universities beyond a select group, then high schools and the rest of the world, but only when it felt it had the server capacity to support new users. The firm’s technology infrastructure “is not visible, but that is probably what we have spent most of our time on,” says Mr Zuckerberg.


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