Yesterday at the Web 2.0 Summit, Founder’s Fund managing partner Sean Parker gave a provocative presentation entitled “The New Era Of The Network Service.” In it, he argues that so-called “network services” like Facebook (which he helped start) and Twitter will soon dominate the web, rather than “information services” like Google and Yahoo.
It’s a very interesting idea, to say the least, and obviously you’re interested in it, as about 200 of you commented on it yesterday. So we’ve obtained Parker’s full slide deck from his presentation. Find the full presentation embedded below, definitely worth the read.
great stuff.
This deck misses one slide: comparing Google’s revenue/profitability vs. “the networks”.
The fact that everybody has a mailbox doesn’t mean the you should invest in selling stamps.
Do you remember that after founding Google and being the best Search Engine, Google didn’t had any idea how to make money other than licencing their search to Yahoo & AOL, until they came with AdWords. Even with AdWords, they had to settle the patent suit with Yahoo (because, Overture had the patent for that).. Twitter is also doing the same thing right now, licencing it’s tweets to Google & Bing.
Is this slide deck from that Hobbit fellow? He’s still wrong. It’s all a fad. Google is a multibillion dollar company. Why is tech crunch posting hobbit news?
Ebay??? The Future of the Internet???
We are all screwed in thst case.
The difference is that people used Google in almost everything they did with the Internet and they still do because the search is so necessary. It became a must have product that was used in almost every aspect of one’s online life. If Twitter and Facebook have a similar role in one’s life, then people would be sorry for that person!
The social networks aren’t a must have product for most people and unlike search is not used for a large part of one’s life – work and pleasure. So the comparison in terms of usage is apples and orange. Facebook is just an evolution of AOL of the past and Twitter is another form of communication good for broadcasting unlike IM/e-mail.
To think that this would be the future of the online world is a bit silly. Google, Facebook, Twitter, Amazon, they are all part of what makes the Internet, none of them are it.
Network is the future??? who told him…. ???
This might me generating traffic but for how long…??? 2 may be 5 years. after that….???
Internet is evolving….the future is unpredictable…
Geoff Corgis – nice comment…:-)
i like how the moron lists “apple” along with facebook and ebay. Apple? where are they online, because i sure as fuck dont see them
besides using some buzz words – what exactly did his rambling mean – UTTER NONSENSE. you should better Micheal –
network effect – garbage in – garbage out – sean parker forgot that one basic premise.
nice thought, facebook still sucks balls though.
Yeah, there is that. Also: the kids fled.
Social networks are taking over! =)
Publishing that deck just increased Twitter & Facebook’s asking price by 10x.
This is utterly ridiculous. The idea that Facebook and Twitter are going to be the downfall of Google is absurd. This is mostly just one Parker’s delusions.
maybe “downfall” is strong. that’s my headline choice. but parker does suggest that social networks like facebook and twitter will provide the value to people in the future rather than the networks based around data like google.
It’s too bad Google doesn’t own anything with a really strong network effect, maybe something like Youtube perhaps? Nice how he completely left that out of the equation. Slight oversight.
That presentation was utterly unconvincing. Yes, in general, network effects are powerful. Can you automatically monetize them? No. If you could, Facebook would already be a dominant business, not just a dominant time-waster.
DUH Moment….YouTube I believe is the 2nd largest search??
“It’s too bad Google doesn’t own anything with a really strong network effect, maybe something like Youtube perhaps?”
Business needs “orders” which generate revenue which generate profits which send the stock price higher. A social network that doesn’t drive sales is worthless
Bonkers — (an accurate username)
I think we’re making the same point here, but you’re post is so awkward that I can’t really tell.
Well do a google search for
+bonkers +dreamlife.com
To see how f–k-d up I am.
The irony of this, and my post, if you can read between the lines, is YouTube.com doesn’t produce orders for Google/YouTube.com Google so far can’t monitize it for profit. Since advertising can’t make money posting ads on it.
What major advertisers wants to put their ad on a video of a one Kid hitting another Kid in the balls? That gets viewed 1 million times, how about you? at $10 a view? or $1 a view.
Brought to you by Toyota, corporate sponsor for Boy whacking another Boys balls.
Or the Jump Rope videos, Skateboard vidoes, 100,000 different versions of “Smart Girl Like Me” vidoes? (or what ever song rewrite you want to pick)
yeah but not all the videos on youtube are of disgusting or childess things, evenif it is the majority. i’ve been seeing more ads on youtbe than i ever have and i think it’s just going to have a larger presence on that platform as time passes because they can do that. it’s just a lot more work. i would reather google doesn’t just let random companies post their random ads over videos that have nothing to do with them, but even companies are getting smart. i mean they are taking youtube video’s or concepts and fleshing them out and making actual commercials on youtube or eslewhere with these original youtube videos/ideas.
They are just trying to hype their investment. I would.
Especially interesting when considered alongside theories such as ‘the new physics of society’:
http://redmonk....network-pablum/
Could be possible…
I mean look at this… Google seems to think more people are interested in Facebook than Google…
http://www.goog...ebook%2C+google
Google might die an elitists death… jmo… Google is just boring…
Sorry… not boring… just utilitarian… not much “to it” although many others of course would say otherwise… but they are small group of people rather than the whole who are in it for fun…
For personal connections I go to Facebook. For information I go to Google. For shopping I go to Amazon. Each provide a different types of service. They can all co-exist and win. One need not destroy the other.
+1
+ 2
why are you so logical. i left fb a long time ago but i completely see why it’s necessary for some people. i don’t understand why he thinks that google doesn’t have a network or doesn’t network. what is to stop google from being better than fb or being the new fb or whatever. google can do anything it wants because they have identified their prime service and it’s integral to everything they do/spin off…where as i don’t think fb can go the google route and still make everything work.
I don’t think he has a Twitter…
Thanks for posting this. Keep up the good work, MG.
There is definitely something in what Parker is saying, however the so called ‘Rise of Facebook’ will require moves that leverage and build upon the value of their network. Facebook hasn’t shown that level of competency or business savvy in recent years. Twitter seems to have more buzz than actual value for users.
The challenge for both Facebook and Twitter will be to create value that brings users back. Staying in touch with your buddies from high school is great if that actually means something to you. However if this were a business model that Google were interested in, they would have their own network to use and would arguably be providing more value (integration with Google Docs, Gmail, Froogle, Wave, etc).
I don’t buy the argument that Google – a company with a market cap of 175B and 22B in cash – will become irrelevant over night. Remember, Google has the capacity to innovate and release new products as well (even if they are ‘beta’ 5 years after release) AND easy access to monetizing solutions.
He doesn’t characterize value of “information services” very well. The core value isn’t the collection and processing of information–that is relatively easy. The core value is making available the right information when/where needed to make the right decision, etc. It’s not a total sum game where one must defeat the other; they can be complementary and exist in parallel. Both can continue to grow in value. There’s still a lot of growth to information services and it will transform over time. To ignore it would be short-sighted.
Also, once your network gets big, I bet it is “information services” that help you find the right relationship. The network is nothing without a way to navigate it.
sold. changing my name to NetworkLocator tomorrow.
weak
Those graphs showing Facebook blue dominating are impressive.
That said, after review of the deck, I’m guessing you had to be there. I trust there was a -great- deal of embellishment to back up assertions. Also, extrapolation on prior trending is as loaded as the non-Facebook blue graphs — and conveniently glosses past stratification in the data sets outside of purely raw numbers.
One need only revisit what those massive counts of any service trend towards in true value — as the network switch costs have already been seen whenever -any- node/user/subscriber is no longer using the service (i.e. the fallacy of free) that is value set based on assumed use patterns and the inertia of quorum for social sets.
In short — don’t count chickens that you’ve already eaten.
Or, that flew the coop yet still show up on the tally.
Or, that are that are part of the thousands that sign up everyday as part of a larger click-fraud scheme. Facebook/Twitter don’t seem to be too aggressive in trying to curb bogus sign-ups… hmmm… wonder why?
A fake account is still an account in the raw number tally.
Interesting at the outset and in principle, but in usage patterns, I think not just here, but across the web and across applications, we overestimate the diffusion of this network phenomenon.
The passive audience derives great value from following/choosing/listening to various people who effectively become one-way broadcasters. And they may never really want to be your friend, retweet what you say, or leave a comment or any sort of trace. That is zero network value. 100% data collection value.
The point: Twitter, for example, in this context is as much an information collector as it is a network generator. What differentiates these info pools is quality and freshness of data. A smart reporter upon getting a whiff of news may first go to twitter, then wikipedia (which often beats all sources), and then to google. THAT would be a reason to relegate google to some other ( I wouldn’t say lesser) position.
Many folks are content to listen to the less annoying broadcasters in twitter, as evidenced by the median tweet volume of one per lifetime per user, according the the Institute for Quantitative Social Science.
How about, for the most stark example – the match dating site, overtly a ‘network’ generator albeit on a one-to-one basis, but seen also as a major collector of data in searchable form, not just on people but on brands, trends, etc. match is a better google for marketers.
bottom line: I’m not sure, then, that we can separate collecting data so neatly vs. simply defining new partitions in types and sources of data collection. A whole bunch of folks are cool NOT being friends and just taking in the web. Despite the more esoteric “search” engines I mention (match?) I think google or a googlish service will be the commodity leader vs. disappear to background noise.
If I could short every VC’s bet, I would be very, very well off.
The future is uncertain, and undoubtedly will take a sudden “left turn” when people least expect it.
Doubling down on Twitter being important in the long run is a tired trend. Stop pretending like Twitter and Facebook are anything alike.
This presentation is so 1999.
In the short history of Google there was actually one real moment in which it’s future dominance was threatened.
Google was not only successful in diffusing the threat, but also in obscuring how real it was.
Three years later and people still don’t get what Google’s Achilles heel is.
YouTube
Every new dynamic that changes the status quo is a threat to an established player. The trick is weather the incumbent recognizes it, and can respond. Those are two huge assumptions. Don’t pretend that Google is immune. The baddest Goliath’s are probably the most at risk as they bask in their own greatness.
can you please tell us?
Its great. all about connectivity.
The power of networking. at the end, Networking not about who you knows, but who knows you.
Interesting slides. I wonder what Google’s counter to this would be? It would be interesting to get them to comment
“Collecting data is less valuable than connecting people.” I heard the collector has $22B in cash and the connector has slightly less.
Also, slide 4 is not a direct quote. Slide 28 is funny – “Over the next decade”. It took 2 years for Facebook to become a fad, in 2 more another will replace it.
Technically FB does not own a network, they own a web site. The people are the network. People do not subscribe to the law of networks!
This is not great stuff.
exactly. aang needs to read yours and ericjhendreson’s comments. fb and twitter are facilitators just as much as google, yahoo, amazon is. to say that google doesn’t network or network as much as fb is disingenuous because we are all data to all those companies. the data is just used and faciliated differently. i don’t see twitter as fb just like i don’t see google as fb. i think all these companies have various purposes with maybe google doing the better and more extensive job of furthering connectivity platforms whereas fb and twitter are more valubale for personal connections. i get personal connections on google all the time through email, and some of their other services. i think this presentation is full of filler and doesn’t ask critical questions that will allow for him to make those overly generic statments he made about the future. if you bet futures then don’t bet on sean parkers comments. social networks have always existed in various forms. it’s just that they are now dominating the the stream but i personally think that information will always trump connectivity. people connect on google, through google, with google…what makes him think a company like fb is going to surpass google. in what future is he looking? and why doesn’t he help us all by defining what he thinks is what so we have a clear perspective of where he’s coming from instead of us having to make comments (like the last sean parker post) about how this is valley talk or how he owns so much fb stock.
Facebook provides a bubblespace of your “friends”. Like AOL.
Google gets you outside the bubblespace.
Just like Fupa (and many, many others have said), walled gardens always wither and die. Like AOL before it, FB will wither (though it will linger for years before finally succumbing.)
As for Twitter, it too has no outsized capacity to dominate the internet. It’s AIM, in another guise.
So you compare AOL (back then, a paid service to access the internet) to Facebook (free service to connect with friends and family). Not sure that is a relevant comparison.
I would venture a guess that you and most everyone you know use fb on a regular basis. Would you mind elaborating on the “wither” that is ahead?
But perhaps Google Wave will be the technology that helps Google re-invent itself as the next generation Twitter/Facebook, thereby doing to Facebook what Facebook did to MySpace!
Yes, Google is an information services company from a consumer perspective but it makes all of it’s money from it’s networked services: Adsense and Adwords.
Very interesting idealism…
Facebook is a great network service. I use it, I like it. With that out of the way, lets note a few things:
1) What does “dominate” the internet mean? Dominate hours spent by users, page views, revenue generated, technological evolution???
2) This presentation is self-serving and wholly biased. I believe it serves to inflate the values of the companies Sean Parker has invested in. Nothing wrong with that. But it is what it is.
3) I question the high value being placed on the network interaction. I believe that extracting value from this is not as easy as Mr Parker would make it seem. It won’t come from ads, but more likely from services that can be integrated into the platform that leverage the number of hours spent on FB and the data being uploaded to FB (i.e., pictures, videos, etc.)
4) My ability to consume my friend’s status updates is far less important than my ability to find and consume information efficiently. The latter has significant, proven monetizing ability.
To summarize, connecting people with the right information at the right time is significantly more valuable than connecting people to people. And when I say more valuable, I’m talking about profit generation, because at the end of the day, that’s what matters to Sean Parker. I don’t question his motives, I simply challenge his premise.
i bet your presentation would have been better than what i just saw. i can pay someone in 5th grade to make a better presentation and maybe come up with better substantial points. give me a break. the dude has jumped the shark, or something because this is too egotastic to be informative. if i wanted people to people connection or people to crap connection i would be on fb or twitter. i search all the time.
In 2005 & 2006 it was MySpace which was going to be THE SITE of the future. The it was Facebook for 2007 & 2008 which had the limelight. For 2009 (and majority of 2008) Twitter got into the limelight. I am definitely surely some one else will take the limelight next year and the future. Nothing is constant.. That’s my firm belief.
Spot on – the very nature of people and that of the network (web) dictates that nothing will remain dominant online for very long.
Speculating on this subject to the degree to which Parker is seems a bit like playing the stock market or betting on a horse …. who knows what is going to happen – or if anything major at all will happen.
When I need to find something online I use a search engine – when I need to waste time online I ‘might’ hang out at facebook (unlikely).
For me, the future of the web looks a little different to Sean Parkers.
Amen… and the 70’s saw a huge run on CB radios and pet rocks. Anyone still communicate with a CB radio?
That’s the difference between a fad and a technology… in comparison the telephone has survived, adapted, and moved with society. CB radios, not so much.
Does anyone really believe our future will be communicated 140 characters at a time?
no and that’s why we’re all thinking that there’s something wrong with people jumping on the social networks will rule the world train. i mean when i saw it on cnn i wanted to destory my tv. social networks is killing what used to be news. information exists outside of networking bubbles. information exists in the ether. would i rather go on google or amazon to search for something or go on fb or twitter to search for something? really.
This is based on the assumption that network, and information service innovations have reach it’s limit with facebook, twitter and google. Years ago we have yahoo search, msn search, myspace, hi5 etc. Today we google, facebook, twitter. Maybe the next great network service is on a 16year old desktop somewhere in Massachusetts.
sorry, but i love how he quotes hal varian, chief economist at google, about the value of network effects.
oh, the quote is in slide 4.
two total different things, I disagree with this article and agree to this comment “For personal connections I go to Facebook. For information I go to Google. For shopping I go to Amazon. ”
that’s the way its going to be at least for the next 5 years, until somebody comes up with the next revolutionary tool, but lets leave it the way it is by now….
What if another College Network comes out and replaces Facebook?
Right now facebook on top. Facebook will also face downfall after 10 years.
Collecting people is more valuable than collecting data, connecting people or connecting data.
lol. how are people not data?
Facebook and Twitter don’t collect people, they collect data about people so you can view them, a subset of what Google does via search and then allows you to stay connected to them like an RSS feed to that data. That is all it is.
yeah, cool. but i remember reading about “network effects” in … what was it called? “the industry standard” in 1999.
Great presentation. It’s very interesting to see the value he places on the network itself, rather than on the information. At the end, there won’t be a “winner” and some of these social networking sites will have to find a way to generate profit.
really mauricio…a great presentation? is it because of the ideas or points he presented or the actual slides themselves cause i thought that was completely garbage. seriosuly. i mean no offense sean parker cause you are smarter and more affluent than i am and you have cahones that i don’t but i could out present you in my sleep. i mean presenting something like this to a teacher would be an automatic fail or a pass for getting the work done. nothing interesting in what he’s saying because it’s the same thing we’ve been hearing. social network is the web. the only thing that was interesting here is mentioning apple and then saying that fb/twatter will be more dominant.
Unfortunately (or fortunately
) Google has way greater capacity to innovate and the history / track record of innovation. Yes, on Facebook users innovate quite a bit, but it’s micro-innovation. No capital intense, transformation innovative projects usually come from Facebook apps. It might change with time thou, but for that Facebook needs to improve their distribution algorithm that is weaker and weaker when competition between apps grows. It has potentials, but doesn’t have the ultimate solution yet to even dream overshadowing Google. (copy of my vb feedback)
Most presentations and graphs I see related to Facebook all show this big recent spike in membership. But I’m interested in avg. user time spent on Facebook. Personally I don’t use it near as much as I used to; I’ve discovered most of my old friends that had gone missing. And I notice many former heavy users have also gone from 4-5 status updates a day to 1-2 a week. It seems that as one gets older and more used to Facebook, then it ceases to be “exploratory” and just “functional”. Of course this is all just anecdotal but certainly we will use Facebook differently in the future than we do today. And how will that effect its revenue?
I think what Sean might be missing here is that Google is by definition leveraging a network effect. If you think of Google as a market maker between those searching for goods and services (not always to buy something of course) and those offering goods and services, its the largest marketplace in the world. Google facilitates buyers and sellers in the vastly longer tail than Amazon or eBay ever have or will. While it doesn’t take a % of the sale, it takes a transaction cost (AdWords) for making the market. As long as more people join the net, and look for more products which are offered by more merchants, they absolutely get a network effect. Each new web site offering something i might want to buy is a new node i can connect to through Google. Consider what sales revenue Google facilitates through its services in aggregate?
Sean also forgets that personal value in a network is only n^2 your connections, not n^2 all possible connections. Google on the other hand offers me searchable connectivity to all end points of the whole network. At some point in time i simply run out of valuable connections to add on FB. FB itself of course garners the collective value of all subnetworks so they will have a massive business. No doubt there. The irony will be that they will monetize it by merchants looking to target relevant sub networks for advertising. So its all sort of the same thing in the end. Everyone wins. Rainbows all around!
+1
i would desfinately watch your presentation ;P
+100
this presentation is just talk about what’s NEXT, without offering any support from the NOW.
NOW people are connecting regardless of websites. People are leaving myspace for facebook. They don’t care about a network rules. Network sites have a long way to go before they subscribe to people’s real needs.
paypal on the other hand is great because it offers a service people actually need in a very easy form to accept. Enhancing people is slightly different from networking.
This presentation is meant to attract funding, it’s not based on the REAL WORLD, but on what thsese people envision the world to be.
Mmm… Trying to hype FB and overstate its potential before an IPO perhaps?
Err, Google DOES connect people and does it well. People have used Google to find my products that I sell for example. It also helps me find people who sell stuff I want, for example. It connects people all the time. So for forums, blogs, IM, ICQ, newsgroups (since 1981), whatever.
What a bunch of hyperbole. I look forward to the next 5 years to see Twitter fall on it’s arse in terms of making money. People don’t want “tweets” mixed in their Google / Bing search, and people will tell Google and Bing this because they won’t use these search services that include tweets. Therefore, NO, Twitter will not make money from the search engines. I don’t even see advertising working in twitter.com because it’s not a commercial marketplace, it’s a “downtime” place where people can write youtube-style comments to their heart’s content.
i wouldn’t mind if google made it so you could open up another tab on their page and search these social networking sites, or added another button like their get lucky button…but i wouldn’t mind if they hadn’t made this deal with twitter. i don’t want twitter tweets to be on page 1 of my search results…unless i’m specificially searching for tweets. the day i start going to twitter for information is the day wikipedia or anything wiki or anything google dies.
nobody goes to facebook anymore…it’s too crowded.
i just peed a little when i read that.
Do not feed troll.
what a poser; selective disclosure of facts
I like most of what was presented. The idea of looking at Facebook and Google as two separate entities that do different things is particularly interesting. The idea of assigning Google to the pile that signals “collection of data” is great. Similarly seeing Twitter outlined as a network facilitator was particularly insightful. The definitions were right down to the point and very differentiated from the other tech blogs. Please keep up the good work and continue to inform us about these interesting gotchas in the industry. I can only hope that some of the more skilled writers of TC get together and collaborate on other interesting topics such as cloud computing and mobile. And remember, Twitter started it all!
I have this essentially same presentation produced by Scott Cook (Intuit founder) in 1999. Networks, and network effects (which Sean does NOT adequately describe) are very powerful and worth betting on… but don’t replace information functions.
Also, eBay is NOT a network, but it exhibits network EFFECTS – The relationship between buyers and sellers is transient and not permanent – but the network effect describes the inherent value of the LOCATION for matching the parties. In the same way, Dolby achieved a network effect with it’s technology, but it was not a NETWORK of nodes.
Networks != Network Effects – they only share a word
i think someone already pointed something like this out. lol. network effects so 1999.
I just can’t stand Twitter. I love Facebook. Period.
The first half of the presentation was basically copied-and-pasted from Wikipedia’s page on the Network Effect and the second half, in total, says “Facebook is popular.” Thanks for the analysis, Dr. Genius. I want those 29 slides of my life back.
hahahaa me too man. i saw it and i was like shit i should have listened to my instincts and stopped at pg 6. what a pos presentation.
The fall of Google will be Pay-Per-Click.
not just google though. everything really. monetize the web although the web belongs to us all right?
Twitter, I can’t see it being more than a fad. Its basically 1970s email archive in a web service with some security features. They are for distribution of information and only really benefit publishers. That is why you see news anchors and bloggers in love with it. For the average person, its doomed to be geocities.
Google creates value from information other people create. If you are a walled garden like facebook, you depend on your users to keep using the service. If you open yourself up you let google thrive and open yourself up to competitors.
All you need is three pieces of information to uniquely identify someone. For example: sex, birthday and zip code. Google could, if they wanted, use all the information they collect to build social networks automatically. Also, it isn’t much of a stretch for them to do this if you’ve seen gtalk automatically populate people you normally talk to on voice/gmail. Even the suggest feature in reader.