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Zuckerberg Isn't About the Money

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Mark Zuckerberg isn’t focused on the company’s $15 billion valuation. He just “doesn’t think about it,” the Facebook CEO said in an interview with Sarah Lacy today at the South by Southwest Interactive Festival. Instead, he’s focused on building a platform on which people can communicate efficiently and maintain and develop connections. (Watch video)

Efficiency and connectedness were certainly the words of the hour from Zuckerberg. Maybe it was his audience of users and Facebook developers in the packed ballroom of the Austin Convention Center, but his message was tailored more to the Facebook vision rather than any substantive talk about where the platform may go next in terms of features and monetization.

It’s the kind of starry-eyed idealism that is either patently untrue or shows how much Zuckerberg still needs to learn about running a company. I’m all for staying focused on your business rather than chasing every dollar, but at the end of the day a company whose CEO is focused on communicating a message rather than figuring out how to turn a profit is delusional. Sure, sometimes the Field-of-Dreams approach works, but sometimes it just ends up like Kozmo or Webvan.

When it comes to monetization, some type of endorsement-style advertising is in the works, but Zuckerberg didn’t get into details about what it would look like. However, given the more granular privacy controls he’s promising, it’s hard to see how people won’t be able to opt out of obvious advertising. And while marketers might relish positive word-of-mouth advertising; if they’re paying for it they’re going to want to control it, making endorsements a hard sell.

On the financial side, Zuckerberg said, “We’re running the business around breakeven; we’re not throwing off a ton of money.” He also dodged questions about Microsoft being unhappy with the state of banner advertising on Facebook.

As for features, the crowd asked for a better messaging system that if implemented, will look a lot like e-mail. Zuckerberg agreed that a feature like that would be on the way. But when asked about plans for a Facebook music service, his answer was simply, “We have nothing to talk about right now.”

The interview changed none of my thoughts on Facebook or Zuckerberg, but I’m still willing to give the company the benefit of the doubt. As Zuckerberg points out, “Revenue and valuation of a company are a trailing indicators of the value you are building.”

But if no one will pay for it, then how valuable can the Facebook platform be? I think we’ve heard this tune before.

23 Responses to “Zuckerberg Isn't About the Money”

  1. Does anyone actually find his answer about his possible fortune in the slightest bit credible? Also, does anyone actually buy the line about Facebook running at “bascially breakeven”? My guess is they are going to lose a boatload of money this year after making money last year — which means they’re going backward.

  2. I tend to side with Alex on this one. Monetization is something that’s built on top of a solid user experience and a useful product that can build a following, not the other way around.

    And I don’t find it disturbing at all that Zuckerberg is more focused on vision than finances. He’s not trained in finances, and (correctly) leaves that segment of his business to the very capable people that he’s hired to look after it for him. Sometimes the mark of a good leader is the ability to hire people who are smarter than you, and leave them alone to do what they do well. Vision about a product is what put Zuckerberg where he is today, not any sort of deep financial understanding.

    My feeling is (again, with Alex) that he should continue to make sure the ship is sailing the right direction, and let a well-paid and well-trained crew worry about the economics of getting everybody fed.

  3. Prashant

    @stacey: I think Scrabulous was making more than 25K per month . two person startup . not in the top 10 application still 25K + is a decent number i guess.

    give him a Break guys ..the Chap is just 23 year old .

  4. Zuckerberg spun carefully constructed public relations messaging to just about every question throughout the course of this often repetitive interview. I walked in and out a few times, and the same message deck was in play. Still, most of the folks in the overflow room at SxsW were heavily engaged. Lets give him props for having managed to get FB where it is today.

  5. Stacey Higginbotham

    @Zac, yes the interview was fluffy. I didn’t go into the rancor the audience had for Lacy because that’s the story everyone else would have, and potentially the story that FB wanted people to see. I probably should have mentioned it, but I didn’t want to let the angst against Lacy distract people from realizing that Zuckerberg got up there and said very little.

    @Alex N., I’ll try not to take that as a flame, but I would like to hear from some of these apps developers who are making money in the millions. No one I’ve spoken with seems to be making much money from their applications through advertising so far, so perhaps these are people doing transactional fees? I would love to talk to them.

  6. Ok, let me start by saying that what I am about to write is not a flame. But, at the same time, after reading this post, I have to say I find it somewhat ridiculous. Have you spoken to any kind of well informed spectrum of facebook application developers? Perhaps you should. Some of them will tell you that they’ve left very cushy jobs to work on their apps. Apps in the top 100 are easily paying the developers’ former salaries and more [if they “monetize” correctly]. So, if applications running on Facebook platform can command profitability in the 150k+/year range (with the top 10 apps having profitability in the millions), what do you suppose facebook’s figures look like? If you think and extrapolate logically, facebook’s page views per user are something to the effect of 50 per visit. Applications amassing the aforementioned returns don’t even top 25. Now, please extrapolate the numbers. Add value of a vastly growing and expanding user base. Add engagement. Extrapolate some more. Then, rethink your statements about Zuck having to think about “monetization” — read paragraph 2 of page 4 of the article by a certain Mr. Anderson [of Wired, not TED]:

    Instead, Zuck is doing for Facebook what every other startup should do – focus on value for the user, and give the users what they want first. “Monetization” will resolve itself. Besides, in the world of free, who wants to listen to blabbing about “But if no one will pay for it, then how valuable can the Facebook platform be?” You are using his interview at SXSW as a source? As a member of the “press”, please don’t forget what a mess interviews can be, and stop being such a hypocrite. Also, remember, that if Zuck were to run out of money, I assure you, he won’t have trouble finding more. Facebook isn’t leaving the party, and Zuck probably won’t be asking you for a dance any time soon :p.

    Again, this comment wasn’t meant to be a flame. But, the more I thought about the context of what I was saying, the more upset I felt about ridiculous comments thrown at Zuck’s inability to “monetize” – and that’s just pure b.s. – pardon my bluntness, but if I want “ragù alla bolognese”, I’ll go to an Italian restaurant.

  7. Does anyone actually find his answer about his possible fortune in the slightest bit credible? Also, does anyone actually buy the line about Facebook running at “bascially breakeven”? My guess is they are going to lose a boatload of money this year after making money last year — which means they’re going backward.

  8. If Mr. Zuckerberg really possessed “starry-eyed idealism” he would take one look at the allegedly $15 billion dollar foundation he stands on and do something idealistic, or even starry-eyed, such as standing up for his users; in particular Fouad Mourtada, who got sentenced to 3 years in a Moroccan jail for faking a Facebook profile of that country’s crown prince. The sentence was censorious and wildly disproportionate to the “crime.”

    Mr. Zuckerberg could be the first leader of an American Internet communications company in history to stand up and say: Enough is enough – we’ve got plenty of cash & we’re going to take this moment to stand for something. No, sorry. He’s got about as much “starry-eyed idealism” as Bill Gates, Larry Ellison and Sergei Brin.

  9. @Om

    From all of the coverage I have seen the interview was a huge PR event with Zuckerberg as the talking head. Just like his 60 minutes interview nothing in it seemed to be legit.

    Therefore, everything in the interview is not Zuckerberg’s feelings, but his PR departments. The interview was done by the person who is writing a book on Zuckerberg and is clearly in the palm of Facebook.

    Normally I applaud anyone who stays away from the valleywag style of journalism. This time around I think that it is at least worth mentioning that the interview was biased and therefore anything in it is quite tainted.

  10. At least Mark Zuckerberg had upgraded from his usual brown gap hoodie sweat shirt to a new zip neck North Face black fleece.

    Words like painful came to mind in the first 10 minutes of the interview, although Sara Lacy did manage to plug her own upcoming book an numerous occasions. She should have left the hard hitting questions that Mark was not going to answer to Leslie Stahl, and focused on leading him into a conversation that would have appealed to the audience.

    The interview did get better as it went on, as Zuckerberg was more comfortable talking about things that Facebook is doing that are publically known. He was not comfortable talking about money or their other plans.

    The audience seemed to want to storm the Bastille toward the end and get something worthwhile.

  11. @ Zac

    There are of course countless other places where you can get (as you have already gotten) the kind of information you are talking about. In fact, that many of the reports seem to have glossed over what was said etc, so we decided to focus on the facts (or what Zuckerberg thinks are facts.)