I recently had a chance to sit down and have a one-on-one chat with Facebook CEO Mark Zuckerberg. There was lots to talk about, and he answered questions about, among other things, Facebook products, privacy issues, rumors about recent fundraising by the company, and competition with platform developers. Quotations below are based on my notes and roughly accurate.
Platform v. Applications
I asked Mark about the company’s policy on competition with application developers, an issue that has come up repeatedly over the last year.
Mark said that the company has no rule against competition with application devlopers. In general, though, he says it’s not good for Facebook to compete with third party applications that have been built on their platform.
There’s this big question about whether we’ll compete with applications. The approach that we take isn’t that there’s some rule that we won’t compete with applications, but we just think that in general it’s not good for us to.
Mark says there are two reasons that they don’t compete with developers lightly. The first is that the company is focused on its core competence – building the social channel (profile, friends, sharing of information and content) and allowing developers to plug into that via their API, platform and Facebook Connect. Facebook has a limited number of engineers, he says, and they need to stay focused on the core service.
The second reason, he says, is that it sets a bad precedent to compete with the best developers. “The other thing I’d say is that if there is a precedent where there are good applications and we just go and compete with them its generally not good for the ecosystem.”
I asked Mark if he thinks the lack of a hard rule that the company won’t compete with developers creates uncertainty. His response is that the company cares most about the ecosystem as a whole, and that while they are thoughtful about competing with application developers, they’ll do it if it is in the best interests of the ecosystem as a whole.
Mark specifically talked about two examples, Facebook Music (discussed below) and Facebook Marketplace, which is relaunching from an in-house application to be powered by Oodle.
Facebook Marketplace is an example, he says, where the company is actually removing an in-house application and replacing it with a developer application instead. I asked him if having an official partner for classified listings harmed the developers that have similar applications on Facebook. His response – there is still a competitive marketplace, and having Oodle as an official partner doesn’t “in any way disadvantage having a competitive marketplace.”
Facebook Music
I asked Mark about Facebook’s rumored efforts to launch a Facebook Music service in partnership with one or more applications developers.
Mark confirmed that Facebook was investigating the possibility of launching a music application.
To make a really good music application you have to have access to music. We felt that because we are operating at a much larger scale than any of the developers at this point, right now at least, we felt like we had a good chance of helping someone negotiate to get access to the music necessary to create a good music application. That is the theory as to why we were exploring this.
He added that he can’t say whether or not Facebook would get involved with a music application directly, or if they did decide to get involved how they would do it.
Music is such an important application, he says, that Facebook may have to get involved to lend the effort the scale needed to pull it off effectively with the labels and other rights holders.
Data and Privacy
I asked Mark why the company decided to give Microsoft access to Facebook user email addresses to promote MSN Messenger.
He says that the relationship was reciprocal and that Microsoft allowed Facebook users to import Hotmail contacts and invite them to Facebook. He also pointed out that it was a one time use and that Microsoft didn’t store the data after sending out the emails.
I asked him about Facebook’s policy towards giving out my personal information, such as my email address, based only on the permission of a Facebook friend (which is what is happening with MSN Messenger).
Mark says that it’s a complex issue, after noting that users have the ability in their privacy settings to restrict whether friends get access to your email address. Data privacy issues are seeking equilibrium in the community, he says. People are willing to share much more information than they were previously.
Facebook Valuation And Fundraising
We discussed Facebook fundraising issues and valuation. He said some of the speculation was true and some wasn’t. he confirmed that Facebook’s $15 billion valuation round was still open and that CFO Gideon Yu was open to new investors at that price. But he denied that Facebook was pitching for new money at a lower valuation. “We’re not actively going around trying to raise money from a lot of different people. It’s more just a follow on to that [previous round].”
Mark also said that the company isn’t overly concerned about capital, and that their current costs and revenue trajectory is on track.
Revenue
This was the one topic where Mark was not very forthcoming. He wouldn’t talk about specific revenues. But he did say that the company’s self service advertising product was doing very well, both in the U.S. as well as internationally. “It’s surprising how much money comes in internationally,” he said, and suggested noncommittally that Facebook’s self service ad revenues are higher than our recent estimates that MySpace is on a $50+ million run rate for their new self serve ad product.
When I asked about how Facebook’s virtual gift product was doing, Mark kept quiet. “I don’t know off the top of my head but wouldn’t answer if I did.”
Update: Mark has left a comment below clarifying Facebook’s goals (we’re sure it’s him because he used Connect to link the comment to his Facebook profile – another benefit of using the new service). We’ve also swapped the outdated photo for a newer one:
Hey Mike — This is my first time leaving a comment on TechCrunch. Congrats on the great Connect implementation! It’s exciting to see how having people’s real identities changes the way people comment and interact. Now I can comment here and people can know it’s actually me.
Anyhow, thanks for taking the time to meet with me and a few other people at Facebook the other day. I think this is a good summary of our discussion. I’d like to clarify a few points though, especially around our platform philosophy.
Our goal with Connect and our platform is to build a strong ecosystem of apps that help people share information in new ways. Our strategy is to focus on building out the core platform and to not focus on developing many apps ourselves. The launch of Connect is an example this — it’s part of the core platform and it enables lots of developers to build new social apps and websites. Since we still have a small and tight engineering team, it’s important for us to stay focused on developing these core services.
As for some of the other comments, I agree that the picture of me is pretty bad :) Not sure when that was taken… Don’t we have a better one on our website that you can use?
Mark
I’m just glad Zuckerberg’s lawyers seem to have forgotten about the cease and desist letter they sent me re my FacebookEconomy.com domain name =)
Until you just reminded us, thanks! we will be in touch.
cant anyone put two things together and not be sued?
ConnectLocator.com
brilliant!
That is quite possibly one of the worst pictures ever. It doesn’t make him look like an executive let alone a CEO, it makes him look like a 12 year old getting his class picture taken. All that’s missing is the screen of the fake books behind him.
I guess Zuckerberg’s appearance is a strategy. An ordinary everyday guy doing extraordinary things. Can’t you see the sweat isn’t ironed. :-)
Do you all see the Facebook Connect button in the leave comment section? Because I don’t. Is it because I’m in Thailand?
It doesn’t matter what he looks like. The guy is worth…oh I don’t know 100 times what any of us is worth..so one would conclude his style works for him.
If that’s your value system.
It’s only worth on paper. You might as well buy boxes of Monopoly and you’ll be as rich as him.
Hey Gebadia,
I don’t mind comparing yourself with Zuckerberg and draw a conclusion but I don’t understand how you jump to judge other people’s worthiness that you don’t even know who these people are.
And I want to say this if you measure people’s worthiness on things that can easily accumulate or disappear such as money (as we are seeing billions of $$ disappearing these days in a blink of an eye) … that is not a real measurement.
You can be no one at some time but give birth to a baby that could become the greatest country President….oh!! Boy!! There is no limit for the list, so my point is if you underestimate your potential and down your self that doesn’t mean other people are like you.
better than this early shot Gates
http://images.b.../bill_gates.jpg
I’ll have to reevaluate my dress sense, try and get admission into Harvard for any course, attend for three days then ‘drop out’. it works!
Yeah, really. I was just thinking he looked really ridiculous in that picture.
It kinda reminds me of that picture of Steve Carell for “The 40 Year Old Virgin.”
lol, just because nearly every ceo wears a suit doesn’t mean you have to do that? There is this swedish ceo of a big glasses company that comes to work on his skateboard and wears baggy jeans and stuff. He is also a billionair that started his company from 0.
Mark is just a real down to earth kinda guy. (i guess)
How does it matter?? He is a friggin billionaire…so who cares he looks 5 or 25???
Jealousy will get you nowhere, he created FB, and is still the CEO. Credit to him.
Lets not confuse CEO with “CEO”; just having the title doesn’t mean you are actually providing any leadership. Mark Z to me is just a figurehead to get press (see above), after his novelty wears off and investors demand revenue I wouldn’t be surprised to see him step down and become Cheif Strategy Officer or some other muted title.
A bit sarcestic but could be very true.just like jerry yang created yahoo but stepped down by pressure of the sharholders. same thing could happen to Mark Z in the future. but for the meantime i wish him luck
Completely agree, having read half a dozen ‘interviews’ with him its clear he has nothing interesting to talk about, I mean come on the questions and answers are barely posted in this one.
A few backs an interview in a UK newspaper was taken with him and his ‘handlers’ hovering in the background to help him answer questions.
Pathetic, why cant someone conduct a proper interview instead of these fawning shallow ones that dig into nothing.
Good interview.
Moral of the story — if you have something really good or profitable, try to patent it if you can. Otherwise, Facebook may copy it and crush you…so you may be better off developing it for MySpace instead.
MySpace seems much, much less concerned about the applications side, which in some instances, makes it a better place to deploy your app.
The other moral of Facebook’s lack of a non-compete with developers — be sure to make your app un-killable, or it may go the way of eBay trying to shut-off PayPal, or MySpace trying to shut off YouTube. History often repeats itself.
Has Facebook at leat committed to not banning apps as a competitive strategy? I’m not sure. If not, at least that would be a decent policy I think they could commit to.
Actually, I believe that I have the equivalent of Adwords (in terms of how it turned Google profitable) for Facebook. I am patenting it. Some I believe patentable, some is skills, some is just extreme work-ethic.
I am pitching Mark Zuckerberg on a performance-based acquisition / merger right now. I hope you will listen up Mark! I am dead serious that this is a good idea for you, and it is best for both of us in terms of speed and growth if we do this. It could go elsewhere, or even be independently developed though it would take longer to grow. Culturally, Mark and I are like clones moreso than any other potential acquirer, and his reputation is also very good, so I hope he will hear me out.
Ben Fremer
http://www.weba...icsolutions.com
Ben – I agree, but I wouldn’t mention patents on Techcrunch. TC and its followers are very anti-patent. Many here lump good patents and invalid patents together arguing patent protection does not promote innovation. Of course, this argument is a close cousin to the old argument that you don’t need to have an income or any asserts to qualify for a 120% mortgage with no money down.
Actually, I believe that I have the equivalent of Adwords (in terms of how it turned Google profitable) for Facebook. I am patenting it. Some I believe patentable, some is skills, some is just extreme work-ethic.
I am pitching Mark Zuckerberg on a merger right now. I hope you will listen up Mark! I am dead serious that this is a good idea for you, and it is best for both of us in terms of speed and growth if we merge.
http://www.weba...icsolutions.com
Patents are useless if you read the API TOS for both Social Network platforms.
Solid interview. I’d be interested to see who are the takers at a 15B dollar valuation. Maybe the Saudi’s until the price of oil dropped to $40
:-)
The price of gas in Washington, NC is $1.63 a gallon – gotta love it. If I remember correctly there was talk that they thought $75 was a fair price in the future though. My jumping for joy may be short lived.
“People are willing to share much more information than they were previously.”
What is the upper limit on this? Me thinks it is no privacy – anywhere. There will be backlash, but i think it’s inevitable.
I like Zackerberg’s strategy to stay focused on the core service.
1. Its rubbish that the official marketplace will have no competitive advantage over others marketplace apps. It’s going to wipe them out
2. $15B valuation round “still open”! He means $250M didn’t close it? What the size of the round $1B ? Not a straight reply.
wrt to the official marketplace: seriously, that’s like saying IE doesn’t have a competitive advantage because it’s the default browser in Windows.
i would have really liked to hear what he has to say about the thousands of apps whose traffic cratered once the redesign moved them off profile pages to the poorly labeled Boxes tab.
“he confirmed that Facebook’s $15 billion valuation round was still open and that CFO Gideon Yu was open to new investors at that price”
Zuckerberg sent the Orrick people after me with Australian security goons when I TESTED indexing profiles for a Wink/Spock like search engine that wasn’t even public.
This after he made his Harvard house stuff PUBLIC 3-4 years prior.
AFAIC Zuckerberg is a dipsh1t, and Facebook is not even worth 1/15th of that valuation and he knows it.
I like facebook but this guy is just not inspiring as to how his huge success will go fw. I’m putting my chips on google.
http://news.cne...9885788-36.html
Facebook already has 500 employees
bloggingstocks.com/2008/05/01/google-steps-up-hiring-in-2008-but-not-in-an-organized-way/
“In the first quarter of 2008, Google upped its head count from 16,805 to 19,156.”
Your money is safe Frank. When you get to that level it is the quantity and not the quality. They are all quality devs on that level.
No dev is going to willingly choose FB over Google as a place of employment.
That’s just patently false.
1) Smaller companies are often more fun to work for. The level of bureaucracy, culture, and demographics are very different. Likewise, Google is probably more family-friendly.
2) Your stock options may vary, and especially so depending on your personal belief in the $15B for Facebook.
3) There are still differences in the devs at either place, even if both are top-notch. Google hires a lot more engineers, and Facebook is the hot thing, so Facebook can afford to be more selective than Google. On the other hand, Google seems to be able to retain people like Mike Burrows, Craig Silverstein, and Jeff Dean for life — the people behind their most (public) game-changing technologies — while the people who seemed to have demonstrated that potential at Facebook seem to move on very quickly, whether to other companies or management roles.
There are of course millions of other factors, like location, skillset, personal connections, belief in the product, etc.
Several things we’ve always wanted to ask him in an interview:
What would he be doing now, had he not created Facebook?
Who’s idea was it to open up Facebook to developers – when and how did the idea first crystallize?
Besides Harvard, what other colleges did he initially apply to – and why did he ultimately chose Harvard?
I wish FB would have tweaked their product in a way that would give me an excude to meet friends of my friends. i’m a heavy user and it’s the single biggest problem i have with the product.
the promise is there, to greatly expand your circle of friends by tapping your existing friends. the functionality just isn’t there. it’s missing.
How could Facebook help people meet friends of friends? Any app or system that comes to mind seems a bit shady or creepy…
If you want to meet friends of friends, try putting the laptop down.
Another really good thing about this new Facebook Connect commenting system is that people like Mark Zuckerberg could comment on this very interview and Facebook would verify that it was genuinely him :) would be very awesome if he did leave a comment…
Mike interview after Facebook Connect launch, a smart combination, PR 2.0 action :)
..”he confirmed that Facebook’s $15 billion valuation round was still open and that CFO Gideon Yu was open to new investors at that price”
This is what happens when you lack rational computation of brain cells. Facebook is worth no more than $3B
There was a concerted effort about 2-3 years back where the top people at FB started strategically floating the 15B number around with the A-List bloggers including and not limited to Robert Scoble.
They had a strategy for making the valuation which they knew was exaggerated legitimate through the viral online press.
The coup de grace for this was the 250M Microsoft investment and the matching NYC hedge fund private investment.
As we all know you can sell 1 share of private stock for 10 Billion dollars legally because it’s not regulated by the SEC.
This was to set the foundation of the IPO later on where they were going to have a dutch auction similar to Google and have the investment bankers search Google and past history then have them hit the now 2-3 year old articles people like Scoble wrote speculating that the assets were worth 15B.
Of course then the economy hit rock bottom and their plan fell into the toilet. Go figure.
It wasn’t executed that well either. They made it obvious and it was transparent to intelligent people. The employee count didn’t match the number either.
Overall, the strategy can be listed as one of the Epic Fails of the internet.
I still don’t quite understand how Facebook can make money. I think they should at least have a msn search bar tab, even though msn search sucks in my opinion. Every time i use it i never get the result that i wanted or expected.
They are getting spooked by MySpace Music and are actively trying to be more like them.
Trying out Facebook Connect with this comment.
I currently do advertising through FB’s self serve system and usually get CPM rates anywhere from $.10 – $.40. How can you possibly build a sustainable advertising business model with advertising rates this low?
I agree, the picture definitely looks youthful. But, let’s consider the space. We now live in a world where this picture is the picture of intelligence and innovation. The genealogy of social media and related developments is founded here.
I agree
Nothing against Oodle. Handing over classifieds to a third party isn’t a great idea. The same technology as Walmart, super.
Classifieds are important and lucrative. Google, Craigslist and Ebay treat them like bread and butter and Facebok just outsources them? I don’t think I agree with that.
Facebook Connect Rocks!!! I want it for my website…
typing with fb connect
not fb bro.
http://www.eskibirsaat.com
interview didnt really add anything new that wasnt known before. mark is still in fantasy land with 15 billion
Connect make some extra preferences in ning also.
http://www.iamlittle.net
Just finished a small self-serve ad campaign on FB. It was highly targeted and we used several different creatives. Bottom line: results stink. The avg. click through rate on our ads was .03%! At least our avg. CPM paid was just .19
This isn’t the first time we’ve used FB ads but will likely be the last. The response rate is not worth our time. I have no idea how FB could possibly be worth $5B let alone $15B with a revenue model that doesn’t work for its advertisers.
I tried the ad service to test the water how effective it is for my business. Never gotten anywhere. The people don’t even click, and if they did, none of it turn to sales. At least Google ad service is doing me a bit better. I still prefer the traditional mailing out pamphlets and cold call, these work better than Google and/or Facebook.
Not going to spend anymore of my money on Facebook. The ad service stinks and I advise businesses to not use it, you’ll lose money.
“pamphlets and cold call, these work better than Google”
Obviously you don’t know what you’re doing. Yeah, better stick with the cold calling.
this kid is an idiot if he thinks we buy this nonsense. there’s very little difference between “running around raising money” and “round is still open”. The fact that the round is still open lo these many months/years is odd in and of itself.
I just tried to login with Facebook connect – it said the service was down. Annoying!
Just wanted to say that Mark looks handsome in that picture.
I agree. Stop hatin’ on Zuck’s picture.
He looks like the dork he is.
Facebook is loosing momentum…
I, like many others I suspect, are simply ‘over’ Facebook and the endless articles about their platform/network/whatever. I still find it hard to see how they will ever justify the ridiculous valuations they get branded with let alone make the ‘business’ profitable.
Let’s see what they’re doing in 5, …no, 2 years from now!
Hey Mike — This is my first time leaving a comment on TechCrunch. Congrats on the great Connect implementation! It’s exciting to see how having people’s real identities changes the way people comment and interact. Now I can comment here and people can know it’s actually me.
Anyhow, thanks for taking the time to meet with me and a few other people at Facebook the other day. I think this is a good summary of our discussion. I’d like to clarify a few points though, especially around our platform philosophy.
Our goal with Connect and our platform is to build a strong ecosystem of apps that help people share information in new ways. Our strategy is to focus on building out the core platform and to not focus on developing many apps ourselves. The launch of Connect is an example this — it’s part of the core platform and it enables lots of developers to build new social apps and websites. Since we still have a small and tight engineering team, it’s important for us to stay focused on developing these core services.
As for some of the other comments, I agree that the picture of me is pretty bad :) Not sure when that was taken… Don’t we have a better one on our website that you can use?
Mark
This is my first time using Facebook Connect and it eases the process of stepping out from behind the shadows of an internet handle to post on a public webpage. While I am an early adopter of the internet — with ties back to dialing into my local BBS systems, it has always been my perogative to keep separate online and offline identites because the perception that internet communcation can create. For every forward thinking reader of TechCrunch that understands the benefits of online communication, there are a dozen that have a difficult time grasping the concept including friends, family members and colleagues. Facebook and its community built on real identities has improved the perception of online communication and I am excited to see how Facebook Connect continues to build on the momentum.
mark, as a facebook addict i’m jonesing for more. keep it coming.
to all the ridiculous fools commenting who enjoy nothing more than a pigpile: when was the last time you got 120 million people to do anything?
Facebook connect is awesome Mark – it seems to be the quickest way to wipe out the trolling that has plagued the internet ever since its creation.
One suggestion though – have a little thumbs up and down on comments and record these and display the overall up or down ’score’ on their comments. Little things like that help readers identify good/bad comments, encourage people to not troll, and also encourages more comments. Plus integrates them further into their facebook identity.
Awesome integration so far though, can’t wait to only have one login for the whole internet.
wow. i thought that was a faker at first, but that looks like the real Zuck leaving that comment above… pretty cool.
good summary of topics, altho i’d like to have heard any feedback on why they haven’t launched Payments yet. seems odd they wouldn’t have partnered with either PayPal or Amazon if their own internal solution was running late. Payments would certainly make Connect even more compelling (& monetizable).
for some speculation on the virtual gifts revenue, see earlier analysis by Jeremy Liew & Justin Smith:
http://lsvp.wor...a-35m-run-rate/
http://www.insi...gifts-revenues/
Hey Mark,
I hope you got my Facebook message. If not, please see above and your Facebook inbox. I’d very much like to chat even for a bit. I am dead serious about what I’m saying. If you’re too busy to chat until it is patented away (probably within about 2-4 weeks), that’s fine with me, though a message to that extent would be appreciated. I really think this could be the key to unlock tens of billions in annual revenue from Facebook.
Also, Hi again Dave! front-row-Ben from Startonomics here…which was definitely awesome beyond belief for anyone interested. Anyways, can you tell Mark I’m an obsessive technophile entrepreneur that might be worth listening too?
Yeah — that portable, real-Id factor is definitely pretty cool and will enable a new wave a future technologies IMO.
Thanks,
Ben
Looks like Mark isn’t the only delusional person around.
Better to at least have something you believe in than nothing at all or something you really think is terrible. :)
I’m ok to just continue growing my own companies steadily instead and the concept is independently viable. Ah well. Yahoo declined to buy Google on the cheap and Terry Semel thought they were nuts. The rest is history.
http://googlesy...le-in-2001.html
http://googlesy...-and-yahoo.html
No response of even curiosity at all from Mark for me. Back to work and life and growth as usual for now I guess :)
Perhaps a lack of concern for profit-focus is why they apparently can’t attract more investors currently at higher valuations. There’s a good chance I’m wrong about what I have, but I also think there’s a decent chance I’m right. Perhaps only time will tell. I sure will remember today if I’m right, though. :)
well I really like facebook but their lack of support for standards such as the ability to login via OpenID I dont really understand… I realise that they might think that they can auth all this friend information but really i have the contact list etc the reason I go to facebook is that my friends are there using it
supporting OpenID and OAuth would mean I can login to facebook using a secure ID and it stored my information and interactions in facebook my ID provider would know where my facebook profile was ! there is NO WAY I am going to put some stuff there but I will trust it to Visa/Mastercard…
so please dont think of this as a opportunity to add a way to just login and not a threat…
it’s a opportunity !
regards
John Jones
http://www.johnjones.me.uk
Mark,
You need PHONE customer service for your ad service. E-mail assistance is providing your customers with the pony express instead of… well, instead of phone. I’d rather have shitty outsourced customer service than get stuck in an endless e-mail loop with a dittohead not interested in actually helping to service the customer.
Alex
Same answers different day. The beauty of TC is listening to start-ups tell their story as you can feel the excitement and passion. This guy acts like he’s Steve Jobs. FB is a great product and folks are leaving MySpace for FB at an incredible rate. From an investment point of view, he could raise cash but he’s got to get over the valuation.
testing facebook connect!
“Quotations below are based on my notes and roughly accurate.”
dictaphone run out of juice?
How “roughly accurate” was the response Mark “suggested noncommittally”?
I just know I am about to read a really great article when it states this “below are based on my notes and roughly accurate”
Great job Mike, would want you to work to hard and give an accurate report.
Facebook is what it is today because of Mark. He has single-handedly gotten the company to where it is today. (Runs it like a dictator and anybody who stands up strong is gone. Not for the weak hearted) Granted it is over his head at this point and he is too arrogant to get help from anybody but something tells me that he will make it through. Not $15B but I am sure he can keep he company valued at a few billion. His biggest focus should be increasing revenue which everybody in the industry is expecting him to do. I agree that music is a huge part of his next effort. MySpace music is definitely something that Mark needs an answer to.
A nomadic observer
SG
Just trying out facebook connect :P
Using Facebook Connect!!
I think part of the fun of the Internet is the anonymity involved. I mean for some things like Facebook, bringing your true identity online has it’s place, but I surely do not want to use my true identity for many other things. That’s just poopy.
This is definitely interesting … I’ll be curious to see what happens with Facebook music
I’m very interested to see how Facebook evolves and which other sites integrate with it.
Good interview. I find myself using facebook more and more all the time.
I clicked Connect and nothing happened after it.
Testing FB Connect. Cool….
Awesome integration of Facebook connect :)
Way to go TechCrunch!
testing out facebook connect integration..
Facebook integration with Windows Live services through facebook Connect is just what I have been waiting for.
Mark Zuckerberg seems to have done a great job promoting Facebook Connect. Even I tried… And it’s actually nice!