This guest post is written by David Sacks, the founder and CEO of new startup Geni. Previously, he was COO of PayPal. He also produced the movie “Thank You For Smoking.”
For the last several years, Yahoo, MSN and AOL have all suffered a declining share of pageviews, but that does not mean the portal is going out of style. Rather it has been redefined, first by Google, and now by Facebook in potentially even more profound ways.
The core question a portal needs to answer for a user is “How do I find the information I need?”
In the early days of the web, the answer was browsing, which made sense when there were a limited number of useful sites. (Remember when it was a big deal for Yahoo to put the “New!” or “Recommended” icon next to a website’s name in their directory?) But as the number of websites became infinite, search replaced browsing as the dominant paradigm for finding new sites, and Yahoo’s failure to keep up in this area allowed Google to take the lead.
Google has continued to leverage its lead in search to become a full-fledged portal. Once users have found what they are looking for, Google makes it easy, through their iGoogle product, to subscribe to that content through alerts, RSS feeds, or a huge selection of widgets, all of which are compacting more useful information onto fewer start pages than ever before. As a result, iGoogle has become Google’s fastest-growing product. But iGoogle has a serious limitation: it doesn’t involve sharing; each user has to make an individual investment in set-up and can’t benefit from the work of others. It’s not really a Web 2.0 product.
Facebook has a new answer to the portal question. The “social graph,” or your network of relationships, will push information to you. You’ll learn from your friends. Thanks to Facebook’s new developer platform, the types of information being disseminated now include not just news, photos, events, and groups but also music, videos, books, movies, causes, political campaigns — and the list is rapidly growing into almost every conceivable category.
The advantage of this approach is that it makes it relatively effortless for users to access a world of information that is both increasingly comprehensive and personal to them. Even if all this information were available through search (and it’s not), search actually requires work; the user must know what they’re looking for and type it in. Then they must parse the results to determine which are valuable, labor which is not shared and reused by others. By contrast, Facebook requires no work once your network is set up. Your friends push information to you that is likely to be useful, and if not you can tune your preferences until it is. Facebook promises a kind of Socratic knowledge: it tells users things they didn’t even think to ask.
While the process of structuring new kinds of information for the social graph to distribute is still sorting itself out, it is easy to object to the frivolity of information on Facebook. For example, Facebook is great at telling me what my friends just had for lunch, but how about hard news? Well, for starters, I’m waiting for the Digg application to not only display articles I’ve digged on my profile, but also to aggregate all the articles dugg by my friends. This could lead to the kind of social news site that MySpace promised but failed to deliver.
Not only Digg, but virtually all Web 2.0 applications which are based on the wisdom of crowds can be reconceived as Facebook apps based on the wisdom (or trust) of friends. To the extent that these services cater to publishers who seek a mass audience, such as YouTube or Flickr, the social graph will not threaten their business. But to the extent they publish content intended for friends, or if the value of their service increases with the participation of friends, these applications face only two choices: get each user to recreate his or her friendship network on their own site or migrate their service to the Facebook platform lest someone else does it first.
The potential for Facebook to layer on any feature whose value increases with the participation of friends is an incredibly broad canvas for a portal. Moreover, as each new application gains acceptance, it enriches the overall value of the network and makes it incrementally more likely that the next application will be tried. Much of what we know as “Web 2.0″ will eventually be rebuilt on top of Facebook.
To be clear, the social graph will not replace search, in the same way that search did not replace browsing. And search may still be more easily monetized than the social graph. Still, as a basis for a portal, neither Google nor Yahoo has anything nearly as cohesive holding its properties together. Google can layer on any feature where search is paramount, which is hugely valuable, but as it expands beyond this core competency, it becomes increasingly hard to press its advantages into new areas. Yahoo already seems to have reached the limits of its far-flung empire, eliminating redundant operations such as Yahoo Photos.
In my view this is a misdiagnosis of what ails Yahoo. The problem is not too much peanut butter (i.e. that it’s spread too thinly). The problem is the bread at the core. Browsing plus second-tier search is not sturdy enough to hold everything together. The new portals are defined by the quality of their bread, not their peanut butter.
Yahoo was right to focus on an acquisition of Facebook but not for the reason it thinks. In its view of the world, Facebook is just another media property, a particularly fast-growing and sticky one to be sure, but ultimately just more peanut butter. In reality, Facebook’s social graph could have provided the bread to connect Yahoo’s far-flung empire.
But what would be in such a deal for Facebook? They will have their own empire soon enough.
Find out more about Geni at the Techcrunch Database.
Michael Camilleri: I do not doubt that features which enable you to “tune” on a more granular level can be created and will be released, but the question becomes one of convenience and ease. Is the average user going to go through all the trouble to configure all of the groups that are possible just to filter information which may or not be useful in the first place? Does this really solve any problems or does it just create new ones? Do average users want to receive a steady stream of information about what their friends are reading, listening to, buying, etc. or is the true power of word-of-mouth derived from the fact that it takes a conscious effort on the part of an individual to go out of his or her way to make a recommendation to a friend in a sincere, deliberate manner?
It seems to me that a lot of people are getting excited about reinventing the wheel. I already get recommendations from my friends when they think they have something worth recommending, and I have no problem asking a specific friend for his or her thoughts when I want it. Again, the pushing of information on a constant basis seems to create more problems than it solves, regardless of how granular a level of control is provided.
A few thoughts:
1. A lot of this debate boils down to how people are really leveraging social networks. It seems to me that the average users are making use of the most basic functionality while the technologists, startups and venture capitalists are hot on functionality whose value and appeal to average end users is currently questionable.
2. Jonathan Mendez may have pointed out the largest flaw in David Sacks’ argument. David’s entire “theory” is predicated on the notion that search is ineffective when all of the data that is available seems to indicate that it’s never been easier and more efficient to find desired information, no matter how specialized or obscure. David is arguing that social networks like Facebook (where people post drunken photos from frat parties, leave unimportant messages on their friends’ “walls” and “poke” each other) are more likey to generate relevant information than a search engine like Google. While I don’t doubt that useful information can be derived from social networks, in an “information overload” society where we are overwhelmed with data and have limited time, I think search engines like Google will remain the primary vehicles by which people will locate specific important information at the exact moment it’s needed, and these services solve the biggest pain for individuals. The addition of “community” influence to the organization and retrieval of information is probably viable, however limiting a “community” to your friends as contemplated here will not be very effective and will probably limit the utility of certain types of crucial information that people often need.
3. When we talk about “social” networking, I think it’s worth considering the cultural and sociological implications of the functionality that so many people believe will bring us together and help us interact. If I have a friend who is into independent films, for instance, I get more enjoyment out of giving him a call or sending him an email and asking if there are any movies that he thinks I should see than I will out of logging into my Facebook account and being able to see a computer-generated list of every movie he’s bought recently. What’s “social” about that? A 2006 National Science Foundation study found that Americans are more socially isolated than ever. In fact, a Duke sociologist who participated in the study said “We’re not saying people are completely isolated. They may have 600 friends on Facebook.com and e-mail 25 people a day, but they are not discussing matters that are personally important.” People like David Sacks have a vision that Facebook and its F8 platform are going to add great value to our daily lives through these “social graphs,” but I think there’s enough evidence that social networking really isn’t increasing the frequency or value of our social interactions on a meaningful level.
Personally, I believe that most of the social networking functionality, and the F8 concept, will add additional noise to the information we are exposed to. I also believe society risks a considerable amount when a) interactions with our “friends” are marginalized to streams of data generated by an application and b) we come to neglect the information provided by people outside of our “network.” How many problems in the world today are caused by the inability to consider the thoughts, opinions and information provided by people who are different than ourselves? How much progress is impeded when we shut ourselves out of the possibilites and opportunities that most often come from interacting with strangers?
One of the things that has always excited me about the Internet, and services like message boards, chat rooms and now social networks, is that they allow people all over the world, from various backgrounds and walks of life, to connect and share a wide range of information on important topics from various perspectives. Thus far, I’ve been a bit disappointed in the social networking found on services like MySpace and Facebook, because for all the talk about how beneficial they are, I think the ultimate potential from a cultural standpoint has not been realized, even if the startups and financiers are trying to sell us on how it has. Instead, the belief that information coming from your “network” is superior and more relevant than information obtained elsewhere is being promoted even though it seems to defeat the true utility of the Internet. This thinking only reinforces conformity and groupthink through informational cascade. I’m not naive or unrealistic, and don’t expect that the Internet is a panacea for all the world’s ills, but I find it somewhat amusing that so many of the people who are drinking this Web 2.0 kool aid and talking about all the benefits it’s providing by bringing us together are missing the fact that it’s actually doing just the opposite in many cases.
Doug: Even services like Wikipedia and Digg have found themselves victims of mob mentality, virtual “special interest groups” and censorship. That’s not saying that there’s no value being provided, but I think it’s fair to argue that most of these Web 2.0 services are just as vulnerable to manipulation as traditional media. It simply comes down to your preference of who you prefer being manipulated by. Thinking that you avoid manipulation and hidden agendas simply because your information is being provided by a “community” is not sensible.
Social media and traditional media are both equally useless if individuals are unable to exercise crticial thinking and common sense. If I trust something implicitly because a thousand Diggers said it, is it really any better than trusting something implicity because two professional (paid) journalists said it?
Drama 2.0: I think that David talks about future, something which will happen in two or three years. And you talk about current state of social networks. IMHO you both have right.
What David predicts, isn’t that hard to do. For example in my social network I already implemented different types of links to people. You can link someone as “good friend” and as “acquaintance”. Of course this determines someone’s influence of your ranking of news, etc. I was also thinking about tagging the connection. If your friend has different taste of music then your, you should be able to tag the link to this friend with “-music”
People who you don’t know also have influence on your ranking, but your “good friend” vote is worth 50 times more than a vote from unknown person.
I would argue about why your friend’s recommendation is so effective. Your friend was thinking what you can like, I agree. But more important is that you simply TRUST him, he is your friend for some reason. The form of talking over the phone is also more vivid than reading something in newspaper or portal.
People are quite busy nowadays. No one will call and interrupt you at work just to say that some article or a book is worth reading. But if you would have three hours to talk to your friend I am almost sure that he would mention something about that article or a book. And here social networks came with help if you don’t have time for long talks with all your friends.
Think about what Google did with links between web pages. Many VCs didn’t saw any potential there. In my opinion we are just starting discovering how social networks can be used.
Digg already tells you what your friends are digging. You just need to know where to look for this. Try again.
Well put, Drama.
excellent article…but “The social graph will not replace search” - ???? these are the same thing already…the underlying sna principles that make all of google’s search algorithm possible are the very same ones touted by facebook as the ‘new new thing’ when in fact they date back to before ww1 when sociologists were building these sociograms on paper! has anybody bothered to look at sna for these topics? check out insna.org for more if you want an academic spin….
Yeah Drama, it’s nice to see you posting.
> In reality, Facebook’s social graph could have provided the bread to connect Yahoo’s far-flung empire.
Yahoo’s already got Yahoo Messenger, which means it already knows which users are friends and which ones aren’t. One would imagine it’d be trivial for them to put together a “social networking” page that shows what those friends are doing across all Yahoo’s properties.
Quoted: I’m waiting for the Digg application to not only display articles I’ve digged on my profile, but also to aggregate all the articles dugg by my friends.
Have you tried BlueDot.us for this (http://bluedot.us)?
I attended the f8 launch event and am still blown away by the opportunity Facebook is sharing with application developers (yes, and marketers) to reach into their network and insert an ideavirus that can spread, like ilike’s music app, to 1 million users in just one week.
I blogged about the implications of Facebook platform just hours after the launch, at http://www.paulallen.net, and days before it became evident that some Facebook apps will get millions of users very quickly.
I’d link to the Facebook Alexa chart, but I’m posting from a blackberry in the Philadelphia airport. But I predict Facebook, by opening up its platform, will jump quickly from 100,000 new users per day to double or triple that. It already seems to have had a very nice spike.
But I don’t see the social graph, however much I applaud it, becoming more important than search–ever. It will become a primary layer of the web experience, but not the biggest moneymaker. And potentially if users feel exploited enough because these are their relationships after all, an open source social network will emerge, which, like Wikipedia, will become a public good that all can benefit from without fear of someone else profiting. Om Malik has discussed the potential for feeling exploited.
Google exploits all the anchor text from all the links created by all the webmasters, but it doesn’t feel like exploitation because it’s all aggregated and not personal.
While Google will pass Microsoft in market cap in the next 2-3 years ($300 billion plus), Facebook will likely IPO and be worth tens of billions–an order of magnitude less than search which is far more monetizeable, but still an amazing accomplishment for a very young company with a very young CEO.
I agree with earlier comments that there will be a long tail of social networks emerging. I use Facebook everyday, and more and more often. But I use LinkedIn 2-3 times per week, and get far more professional value from it than I do from Facebook.
There is a list of social networking sites on Wikipedia (again sorry I can’t link to it right now, you’ll just have to SEARCH for it) that shows about 60-80 social networks, and you’ll be amazed to see how many already have a million or more users.
I started MyFamily.com in 1998. We raised tens of millions in capital for this idea. Had MyFamily.com remained free (it went to a paid subscription service in August 2002, if you can believe it, when it had at one time been growing by 20-30,000 users per day) it would likely have 50 million users today.
But the “wisdom of the crowd” post bubble would no longer support a free site feeding members to a paid service (Ancestry.com) and so MyFamily.com nearly died.
So there is proven opportunity in the space that Geni, FamilyLink.com and other family social networking sites are playing in, even if there is more opportunity in the non-family social networks.
By the way, I really disliked the book Wisdom of Crowds. I don’t agree with the theory, even if you have a smart diverse group of people guessing how many gumballs there are in the jar. Sometimes ggregate guesses are lucky, but most often they are wrong.
I would ten times rather have a single expert with the right tool, that a crowd guessing anything, a Warren Buffett with a model and a formula, that a million day traders wildly affecting swings in stock prices as their wisdom changes.
For example, I read about a hedge fund that had exclusive access to audience measurement data a few years back (was it Comscore, or something else?) that could use the tool to accurately predict growth rates of web sites and whether publicly traded companies were going to hit their revenue forecasts (based on traffic and conversions that are measured in real time)–give me an expert analyst with that data over all the guesses of the crowd, any day.
PA - thanks for posting on MyFamily background - I know lots of ex-MF people too and am always amazed by its path (knowing of course that it’s easier to see / say anything in hindsight). And I’m impressed you typed that long, long post on a blackberry at 5:35am…
This is an amazing enlightening string of posts. Thanks TechCunch.
Oh yeah, and are you THE Paul Allen?
So Google, with about $3.5 billion in net income over the last 12 months and a single dominant revenue stream, will surpass Microsoft, with nearly $14 billion in net income over the past 12 months and a diverse revenue stream, in market cap in the next 2-3 years? And Facebook, with $100-$150 million in projected annual revenues (and unknown profits) in a highly-competitive space, will have a market cap in the tens of billions. I would certainly love to hear Paul Allen’s expert analysis from which these bold predictions have been made. Anything is possible, but I always question anybody who makes big claims like this. In three years if social networking is still a hot topic, we’re in trouble, and people like Paul Allen should remember that the public markets are normally a bit more rational than the Silicon Valley fanboys, even if they do suffer from bubbles too.
@Joe, he’s Paul Allen (the lesser) - his words, not mine.
One of the most thought-provoking articles I’ve read thanks David.
Thanks for the post, David. Very good insight. I agree with Adrian about how thought-provoking it is.
I agree that Facebook is doing a great thing with it’s API. I have my FB friends notes as an RSS feed. I love the simplicity (white background/AJAX) yet complexity of the interface (even I get confused as to where I am and where I am going and my day job is building UIs in Flash!). MySpace never did it for me, because it lacked the maturity of the News Feed of Facebook (I didn’t want to check everyone’s page for new information) and lack of consistency (people would add awful background images and move their interface around.
I agree that there will always be a need for expert information from one’s subculture, but that will not be the majority of people–who the marketers want. Marketers want formula and Facebook can provide hubs of similar people.
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