The Facebook Effect: The Inside Story of the Company That Is Connecting the World – A Guest Review by Rory Cellan-Jones
At a high-powered meeting of wealthy figures from the technology industry recently, someone whispered in my ear about the youngest billionaire to have emerged on the scene in the last decade: “He needs adult supervision,” they told me.”He just isn't convincing as a CEO, he needs someone to hold his hand.” Having come across Mark Zuckerberg a couple of times and found him rather a low voltage presence, I felt some sympathy with that view. A shortish 26 year old, always dressed in jeans and sneakers, and apparently happiest talking to fellow geeks, he seemed uneasy in the role of tech tycoon.
Then I read The Facebook Effect, David Kirkpatrick's masterful account of the short history of the social network founded at Harvard just six years ago by Mr Zuckerberg, and my view was changed radically. Why? Because as the story of Facebook's extraordinary rise from a bedroom start-up to a global web superpower unfolds, the sheer cussed cleverness of its founder becomes ever more evident.
The author, a journalist from Fortune magazine, has had unprecedented access to Facebook, and in particular to Mark Zuckerberg, so it is perhaps not surprising that a positive picture has emerged. It is a breathtaking ride, as thefacebook.com, one of many website ideas tried out by Zuckerberg as a computer science student at Harvard, takes off so rapidly that within months he has moved to California, set up in business and thrown in his studies.
A simple idea – take the paper “face books” which introduce American students to each other and put them online – proved immensely potent, spreading from Harvard to other Ivy League universities and then to every campus in the United States. By late 2004, just ten months after it was founded, Thefacebook had its millionth user. The following year it moved beyond campuses into high schools, then into the workplace, and rapidly out into the wider world – and became simply Facebook.
With more than 500 million people around the world now using the social network to share intimate details of their lives, to engage in political campaigns, to trade news stories and jokes, the force of the original idea has been proven. But what is still not entirely clear is whether it adds up to business that can make sustainable and growing profits.
From early on, the smart venture capital money was stalking Zuckerberg, seeking a stake in a fast growing company, despite the absence of any revenues to speak of. In most such cases, any cash will only be handed over in return for two things – a sizeable share of the equity, and tight control over the leadership and direction of the business.
But somehow Mark Zuckerberg has managed to avoid that. Throughout Facebook's short history he has been adamant that growth, and improving the customer experience, are far more important than revenue. It sounds like the recipe for a dot com disaster of the kind we saw a decade ago, when businesses which obsessed about “eyeballs” rather than the bottom line, grew like topsy, then blew up just as fast.
At just about every stage of the journey, doubters have warned Zuckerberg that he is trying to move too quickly – whether it's in moving from the campus into the workplace, or introducing innovations such as photo uploads or the newsfeed, or the opening up of the Facebook platform to outside developers. On many occasions the users themselves have bawled and protested about changes to their beloved site – usually by setting up Facebook groups – proving that there is nothing as conservative as an early adopter.
Throughout, the young CEO has ploughed on regardless, convinced that he is on the right path, and that his vision of a world where everyone uses Facebook to share more and more of their lives, is becoming a reality.
David Kirkpatrick has unearthed details of Zuckerberg's negotiations with Google and Microsoft, in which he is seen skilfully playing one giant off against another, and then winning substantial investment funds without ceding much in the way of equity or control. We see him encountering the elder statesmen of the media and technology worlds, from Bill Gates to Rupert Murdoch to the Washington Post's Don Graham, without appearing cowed by their age and experience.
His success – so far at least – is something of an antidote to the conventional wisdom that young companies need a CEO with grey hair to shepherd them out of adolescence. The classic example is Google, where the founders Larry Page and Sergey Brin recruited Eric Schmidt as a chief executive, with the trio functioning as a very successful team. But Zuckerberg, while he has recruited plenty of older managers, is still in charge, apparently retaining the confidence of his investors and his team.
With all of this success, of course, comes a vast amount of self-belief, indeed arrogance, about the way the company conducts itself. And here is Facebook's least attractive side, its belief that it is just a vehicle driven by its users, and has no real responsibility when some of them get hurt. While it has undoubtedly brought a rich new means of communication to many, there are victims of this success. The children who feel pressured to join the network, pretending to be above the minimum age – and then become prey for stalkers who are themselves lying about their age. The students who post embarrassing pictures of themselves online – then find that potential employers are combing the site. The unwary who reveal too many personal details, then fall victim to the scammers, fraudsters and identity thieves.
Kirkpatrick does not skirt over the various crises the company has endured, the most notable being the outrage over an update of privacy settings which seemed designed to encourage users to be less careful about sharing their data with the world. But as the book ends he says Zuckerberg “has a conviction about the importance of helping people protect their most sensitive personal data,” a conclusion somewhat at odds with the evidence that Facebook's founder really wants us all to chill out a bit more about sharing our lives with the world. As a student, Zuckerberg joked about the “dumb f*@ks” who handed over their private data to him – how much has he changed?
Within the next twelve months the creator of this extraordinary phenomenon is likely to face the ultimate test for any entrepreneur, the stock market debut of his company. If it works out Mark Zuckerberg really will be worth billions. There is still a mountain to climb however, and a chance that Facebook could stumble, wrong-footed by another crisis over privacy or the challenge from rival networks like Twitter or FourSquare. But after reading David Kirkpatrick's book, I'm betting that Mark Zuckerberg will make it to the summit.
