Is Your Face on Facebook? Facebook SWOT

Arpan Shah's Blog - 14 octobre 2007

If you're not on Facebook, chances are your children are; if you're not changing your status every few hours, then where have you been? Some call it the latest fad in social computing; some call it an alternate reality. Whatever you want to call it, Facebook is one of the hottest things happening right now. So what makes Facebook special from other social networking sites like Friendster, Orkut and MySpace? Here's my SWOT analysis on Facebook. Keep in mind this is my personal take on Facebook. While there are strong parallels with Facebook and SharePoint technology, I've resisted from commenting on those parallels in my analysis:

Strengths

• Community. Facebook has really focused on the notion of community vs. only the individual. They have really helped foster communities.. in fact,that's how they started! They started with schools and companies. Many other social sites are more individual focused.... though moving towards groups and community.
• Stickiness. How often do people come to Facebook? Answer: all the time! It's addictive… it's super addictive. Features like "status" and the tracker feed (or as I like to call it, the stalker feed), make it really sticky. People want to know what their friends are doing; people want their friends to know what they are doing. Facebook notifications (for eg. When someone writes you a wall message, adds you to Facebook) force you to logon to Facebook. It's almost an excuse for yourself to get onto Facebook… other applications that force you to logon are typically seen as annoying… Facebook – it's a welcome excuse to logon! Stickiness is also a result of all the rich features/apps and user interface making it very easy to use and explore different applications.
• Privacy. Unlike other social networking software, Facebook seems to have found that right balance of privacy. Users can choose what their personal privacy settings and at the same time their friends (and possible people in their Networks) know exactly what's going on. Friends know when something changes; friends know when other friends message each other; friends know when you've added pictures.
• Semi-synchronous messaging. Instant messaging/chat requires your full attention to maintain a meaningful conversation. Email was so yesterday. J Facebook offers wall messaging that allows you to send short messages quickly to different people. Depending on your privacy settings, other people can read them and are notified when you write a wall message to someone else! Other applications offer something similar, but Facebook provides a much easier way to get notified and get visibility into what others are doing.
• Canvas. Facebook is easy to use… with all the complexity that makes it attractive for power user personalities.
• Open Platform. Facebook allows people to expose their applications through Facebook and makes data available for other applications to use. This makes it stick for end users and makes it a super valuable platform and partner for other applications. This point, along with the next related point, is critical to the success of Facebook and really separate Facebook from the rest of the social computing pack!
• Partners and 3rd party applications. This follows right from the last point. There are companies that are betting their entire business on Facebook. Facebook provides them with a peer-to-peer network and provides them with a platform to launch their application. For revenue generating applications, rich user data and implicit targeting make it extremely powerful.
• Momentum. Facebook is one of the hottest things on the Internet and they know it. They give themselves an eleven figure valuation! With Microsoft, Google and other big hitters interested in getting a piece of the pie, they are getting a lot of attention. Most importantly, they have the attention of 10s of millions of users – these users aren't going anywhere any time soon.

Weaknesses

• Adding Applications. It's painful adding applications (finding the right application, for example) and sometimes when you add applications you inadvertently spam people; you don't realize it but you are inviting all your friends to use that application if you aren't careful.
• Application Availability, Consistency and Experience. Facebook allows different companies/individuals to build applications. They have a developer kit that's fairly straightforward. While this model has a number of benefits, one of the difficulties is managing consistency. Because these applications are developed by different companies, the experience is different. Also, because these applications are hosted elsewhere, it could experience downtime, et cetera. While Facebook does review some of these applications, there's no guarantee in a web 2.0 world! On the flip side, some individuals and companies have profited tremendously from this model and Facebook has increased its stickiness and relevancy.
• Navigation. Related to the point above, Facebook has become the portal for many applications and experiences. Sometimes you don't know how to go to that one app… how to configure it, change it and jump back to another application or profile. How do you find the right application or an application that's relevant to you when there are thousands of "useless" applications out there?
• Too many applications. When you become popular, you get a lot of "spam". Well, this doesn't just have to be e-mail spam; it can be application spam as well. Facebook needs a way for relevant applications to surface... maybe something like digg? Otherwise, users will have a sour taste in their mouth and consider Facebook "boring" or "irrelevant".
• Instant Messaging. While they have semi-synchronous messaging, they don't quite have instant messaging nailed. I know there's an application for instant messaging, but it's not that appealing and doesn't match up with other Instant Messaging applications in the market.
• Lack of profile compatibility. There are efforts going on to create a "profile" standard of sorts. Facebook really has the opportunity to provide some thought leadership here. Their feature of being able to import from address books is great; they should have a feature, drive a standard, that offers the linking of different profiles across social networking (or related) applications. Arguably this is a bad step b/c it could means more people signing up for other social networking sites, but this is inevitable and it's important for them to consider a leadership role here.

Opportunities

Social Platform:

• Strategy, Marketing and Execution. Facebook needs to think big. They need to differentiate themselves and create a new category altogether. They need to build and position themselves as a real platform vs. an application. It looks to me that they've done a decent job thinking through the technology and marketing elements thus far. The Facebook architecture and open APIs lend themselves to be pluggable and scalable. By thinking like a platform and positioning themselves to be the "Social (Peer-to-Peer) Platform" or "Web 2.0 platform" or better yet a new category altogether, they have the opportunity to separate themselves from the other "Web 2.0" social computing apps. They will have essentially created a next generation web platform that businesses and technologies rely on, ultimately leading to one universal experience for social interactions. To be successful, it's important for them to continue investing in the technology as well as the marketing and evangelism.
• Technology. If you're really looking to be a platform, you have to architect and design like one. How do you scale? Interoperate? How secure are you? How do people build on your platform? As part of this platform drive, it's important for the Facebook team to invest in the plumbing to make all this possible for a partner/individual developer – the portal/navigation framework, the profile framework, targeting framework, the financial framework (something like PayPal or simply partner with them), et cetera. Strong, reliable plumbing to make a solid platform is key; applications will come. The parallel here b/w Facebook and SharePoint technology is very clear. :-)
• Marketing and Evangelism. Facebook needs to create a new category: social (application) platform. Facebook needs to think about participating in developer conferences; Facebook marketing needs to think about how to align their message with SAS, SOA, interop standards, with hosting providers, how to take their application and platform to market. They need to think much bigger than an application; they need to think platform and really drive thought leadership here. Whatever the category, whatever the positioning, they need to make it clear that they are beyond just an application. This makes them a real competitor and partner for big software companies. This drives more and more partners to make them relevant.

Revenue:

• Advertising. This is the most straightforward way to make money. They have a lot of users and user profile information. This rich set of data and relationships make it an excellent forum for super targeted ads at the individual and group level. Microsoft and Facebook have a deal right now in this space.
• Macro-Micro-Economics. Facebook (or a partner) has the ability to drive, what I call, "macro micro Economics". This is essentially enabling individuals to charge small amounts of money (a penny, a dollar for example) to their peers (or beyond) for a certain service, right or content. There is a lot of plumbing that needs to go here – seamless payment model (think pay-pal), digital signatures, et cetera. Essentially, you have millions and millions of people connecting with hundreds of people. There's a tremendous potential for individuals and Facebook to make money.
• Peer-to-peer business models. This follows from the previous point. A lot of little social networks making up a much larger web. Facebook, for example, could give eBay a run for their money. People can start selling their "stuff" on Facebook. Be it physical goods or digital media. Facebook provides a platform for easier access and is centered around people. So even if you weren't interested in a Beattles Album, since your friend Mike is selling one and all your friends think the album rocks, you might just buy one!
• Partnerships. Facebook has a real opportunity to partner with companies like eBay, Amazon and Apple to drive peer-to-peer, community-to-community services. Facebook can either create their own, or take a piece of the pie from them. Facebook can become the new way content, applications and experiences are delivered. If you do some simple, back of the envelope math and add up some fraction of the market caps of the three companies I mentioned, a multi-billion dollar market cap valuation is definitely imaginable.

Enterprise play:

• Facebook is cool – but Enterprises will feel more comfortable being able to host and own that data and application within their firewall. The question is whether Enterprises will think of this as a productivity accelerator or a productivity killer. In either case, there's definitely a business place here. SharePoint technology with My Sites at the center is a good example of how a corporation can launch something like Facebook in the enterprise. Will Facebook join forces with Microsoft, IBM or someone else… if nothing else, for the brand.

A new way to surf:

• People at the center. At the end of the day, we're a social animal. We want to connect with different people, learn from different people. With the critical mass Facebook has (and still growing) and the number of partners building on Facebook, Facebook can become where you go, where you surf and where you connect with other people.
• Mobile. The iPhone interface, from what I've seen from a friend, is really cool! The Facebook team needs to make the information even more accessible via all different types of mobile devices. One idea, for example, is to sync SMS with Facebook messages/your wall… and use it as a pull and push mechanism.

Threats

• New Competitors. Yesterday's news. There are a number of social computing sites out there today: Friendster, Orkut, LinkedIn, MySpace. And I am certain more *will* pop up. Loyalty will be with Facebook as long as they innovate and provide a great experience. Along with focusing on the platform angle, they need to make sure they don't suffer from some of the side-effects of becoming popular... examples include the focus on preventing spam (MySpace suffers from spam), not over advertizing (Friendster is all about advertizing), et cetera. So as much as it is about continuing to innovate, they have to learn from other failures and not lose the confidence of their customers.
• Too many applications & UX scale. Already mentioned in the weaknesses section, if there is too much, what I call, "app spam", it could leave a sour taste in a user's mouth. Relevant applications must surface, bad applications must not surface... and real work needs to be done to navigate, find and rate applications. As part of the platform, the "framework" needs to be worked on... and as Facebook becomes a popular framework, Facebook must figure out how to make the UX "scale" so it continues to be a clean and fun place... vs. over-crowded, frustrating and "argh". :-)
• Keeping up with the latest trends. Digital media is a trend – what will Facebook do to promote this? Will it partner? Will it create its own applications? They have to handle all of this very carefully. J Partnerships are key and continuing to attract the 16-24 age group is important. That's a good indicator of whether they are up to the latest trends… their CEO is young and understands that age group. In 10 years, will they continue to keep up?
• Managing growth and becoming the social computing platform on the Internet. Can Facebook attract smart and passionate developers? Can they continue attracting small and large business to build on them? Can they grow into a big business and continue innovating? Can they market effectively? Facebook really needs to drive the platform idea as I mentioned earlier. To succeed long term, they must position themselves as the social (p2p) platform of the Internet. J The more applications they get on board, the more relevant and important they become (see "Web Platform" bullet under the "Opportunities" section). They need to be in a position such that any partner or individual who wants to benefit from peer-to-peer business models or networks, needs to build on Facebook.