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Facebook Could Still Pull A Great Result Out Of This Mess May 26, 2010

Posted by Bernard Lunn in Uncategorized.

The commentary that Facebook is in a deep mess gets increasingly intense. Harvard Business Review knows a thing or two about business strategy. Whether or not you agree with Bruce Nussbaum’s opinion, you can be sure that it is influential. We also see somebody like Stowe Boyd, a social media pioneer and hitherto Facebook fan agreeing with Nussbaum. His line:

“strip-mining user’s social relationships will not work. Users will reject this as an affront.”

I am sure that Zuckerberg and team have a ton of unsolicited advice. Here is mine to add to the pile. Hopefully this is more than “you messed up!” I am offering a way out of the mess.

3 basic steps:

1. Understand the strategic error that got you into this mess. Stop looking for minor, incremental fixes. Or, as the old saying goes, “when you are in a hole, stop digging”.

2. Come up with a new strategy that aligns with user needs and a big untapped revenue opportunity.

3. Execute on the new strategy

The strategic error? It is an old one. Copying a competitor is usually a bad move. Twitter envy got Facebook into this mess. Facebook had a huge asset – the trust of millions. They blew that trust to chase a pipedream from a competitor that was a tiny fraction of their size and that is not even making money!

Facebook should have stuck with privacy. This is not complicated. Facebook is a new form of communication. It adds to existing forms such as ‘phone, email and texting. Those are all private by default (let’s leave hackers and snoopers out of this for now). By default, people expect communication to be private. When they want to go public they go to media. Blogging and tweeting make us all into micro-media-moguls. But that is media and that is different.

Why did Facebook dump privacy? Because they could not see how to monetize it. You cannot sell ads to people on a private phone call or when they are on email (sure Google does this in Gmail, but it is not effective). The only way to do it is by “strip-mining user’s social relationships” and that gets backlash.

But that is DRIVING WITH YOUR EYE IN THE REAR VIEW MIRROR. Pushing stuff to consumers is the old Madison Avenue game. Sophisticated push marketing is still push marketing. The Internet is moving us to to a pull model.


They have 500 million people who trust them. Err, strikethrough. They HAD 500 million people who trusted them. But they can get that trust back if they make three statements:

1. Sorry. No, really sorry. No clever PR fluff. Really, really sorry. Any crisis manager knows it has to be sincere and simple.

2. We are now 100% private by default. Anything you want to make public you OPT IN to do that. How hard is that?

3. Here is how you get to benefit by making some stuff public. This is where it gets interesting. Facebook has been saying “live in public, because that is what makes us social, blah, blah and oh by the way that will make me insanely rich, thanks suckers”. Now they say “here is our public option. Use it to become rich and famous. Use it to save money”.


As an intermediary you have to represent one side or the other. And a media firm is an intermediary. Traditionally, media firms have represented the seller – that is called advertising.

Why have they not represented the buyer? Because sellers were concentrated and buyers were dispersed. You could not get the buyers together to take an action. But the Internet changed that. In fact Facebook did more than any other firm to change that.

Sounds radical? Maybe. But ask this simple question. If you could represent 500 million people or 5,000 vendors, which would you do? The 500 million have way more clout.

Nor is this an academic exercise. Just ask the ecommerce firms that are raking it in by aggregating consumers for flash sales or coupons.

But it is not just about group buying. Almost all those 500 million also want to get rich and famous. Particularly when they leave college with huge debts. Give them a way to sell music or code or designs or jewelry or expertise or resumes or whatever. Yep, do some good for the world and economic justice at the same time. Zuckerberg could be not just insanely rich but also revered/respected by millions of people that have made money through Facebook.



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