BUSINESS BLOGS
BUSINESS BLOGS
category: business
01 Dec 2007

I probably need to dust off my microeconomics books to better understand the nuance between edgeconomy and massconomy (I guess those are seats between First Class and Economy?), but interesting nonetheless:

The point is: in the edgeconomy, business models happen. The days of business model fascism are over.

Business models can no longer be planned in an ivory-tower boardrooms, announced by grand decree, pushed through the value chain by inert market power, shoved down helpless, hapless consumers’ throats, and left inert for the next century.

That approach to commerce is as obsolete as a mainframe or a Model T Ford. And the venture guys, CEOs, etc who don’t get it are great at killing their companies dead.

That’s why I keep making the fundamental point - Facebook’s DNA was built for the massconomy. Unfortunately, Facebook is at the forefront of the edgeconomy. This fundamental strategic mismatch is why Facebook’s problems are growing - and will continue to accelerate.

I agree with the boldfaced part… I’m not sure I’d give Facebook and its backers that much credit re: their gameplan for advertising. The fact is Mark Zuckerberg is a programmer who borrowed his main idea from many before him and a wide array of factors including luck, simplicity and timing propelled him and Facebook under the limelight…

Mind you, beyond those factors, comes Zuckerberg’s ambition and drive, according to a controversial article in a Harvard magazine:

What can [explain Facebook’s success], in large part, is Zuckerberg. Tales of Zuckerberg forgoing food to program through the night are near legendary. He coded facemash in a two-day, half-drunk frenzy, according to his online journal. “I haven’t really eaten all day,” he wrote. “My diet and sleeping patterns really go to shit when I have a coding project … or when I don’t.”

But, with ambition and drive, sometimes comes hubris, too.

This is probably the fourth big mistake - or mishandling of an opportunity - he’s made in the past 12 months alone.

Mistake #1 was the way the news feeds was announced. Yes, today it is a great add-on but it had to be scaled back and modified after users cried foul.

Mistake #2 was the FB apps and FB fund. Yes, the concept of a platform is great, but devoid of utility (ironically) the apps are largely useless and only create noise. It’s why I spend far less time on Facebook than I did a few months ago (and I was never a heavy user). The point is: it killed my user experience. That was the FB apps, the FB fund was a f-up from the get-go. It showed a lack of experience and common sense.

Mistake #3 was Beacon, from beginning to end. This isn’t the end, because Coke balking at the program is really just the beginning of the bad news from mainstreet, and Madison Avenue.

Mistake #4 was the MSFT investment: $240M for a 1.6% stake is great, but at a paper value of $15B, Facebook is going to have a hard time yielding an actual exit. An IPO is impossible at given revenue, profit levels and lack of business plan; and M&A is off the table too as MSFT will you-know-what block any deal by Google, Yahoo!, News Corp. etc. and not have any reason to pull the trigger itself…

The backdrop of all of this, is that (at least when VCs Accel, Meritech and Greylock came on board), Mark Zuckerberg put in a clause that the board could not replace Mark Zuckerberg as CEO. Problem is, even Yahoo! made room for Tim Koogle and Google made room for Eric Schmidt. I’m not sure who really gets the credit for YHOO and GOOG’s success, but at present rate, unless Zuckerberg gets an injection of humility and common sense, I know who will be blamed for Facebook’s Friendsterization.