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This post is extremely misinformed. The reason both Facebook and Twitter decided to go with ads instead of selling access to the platform is that they ran the n

by diego 14y ago

This post is extremely misinformed. The reason both Facebook and Twitter decided to go with ads instead of selling access to the platform is that they ran the numbers. By the time they picked their business models they had already taken in hundreds of millions in funding. The dollar size of the developer market is tiny compared to the ad market, so they could never justify their valuations by selling to developers. The middle ground the author proposes just doesn't make any sense. app.net has only taken $5M in funding, so if they manage to make a couple of million a year that could be considered a success. Can Facebook or Twitter make hundreds of millions of dollars a year by selling access to the API? Even if they did, could they do it without competing with their customers? Very doubtful.

padobson 14y ago
You make a good point. There's a lot of things that are unanswerable about what-ifs in the early days of Facebook. The biggest what-if I'm wondering about is this: what if Facebook focused on becoming the first large social media company to offer its API as its core money-maker? Zynga, presently, is worth ~2.5B. How many Zynga-like companies would there be if Facebook was focused on creating the best possible experience for their developers? The moving-target, locked-down API they peddle instead is a poor alternative motivated entirely by their focus on the advertising business model. It's a big what-if, and the premise of my article is really that they should have found out before they settled on advertising. It was a mistake to hire Sandberg when they did, because once they made her the COO the company had no other monetization options then advertising.
- tptacek 14y ago
  Imagine if Google found someone more creative to figure out their business model, which is also advertising. Think of what could have been! Maybe they could have focused on developers. Then, they'd definitely have better APIs; maybe developers could easily build products that leveraged Google's search index! Great APIs, and also tens of billions fewer dollars.
  - padobson 14y ago
    Google could absolutely use more creativity in their executives. The graveyard of failed Google products is vast, and its only because they indeed did choose the best business model in advertising for their search service that they have been able to survive and thrive through so many failures. And giving credit were credit is definitely due, Sheryl Sandberg played an extremely important role in making that business what it is today. Her mistake, and Facebook's mistake, was thinking that it could be repeated - that somehow the data that Facebook was leveraging was as valuable to advertisers and as unobtrusive to users as the data that Google was leveraging. This is not going to turn out to be the case - you will simply never see Facebook doing $30B per year in advertising revenue like Google does. Their traffic numbers are already similar, there is no reason to believe Facebook will be able to 10x their revenue when their traffic is already peaking.

by diego 14y ago

padobson 14y ago

You make a good point. There's a lot of things that are unanswerable about what-ifs in the early days of Facebook. The biggest what-if I'm wondering about is this: what if Facebook focused on becoming the first large social media company to offer its API as its core money-maker? Zynga, presently, is worth ~2.5B. How many Zynga-like companies would there be if Facebook was focused on creating the best possible experience for their developers? The moving-target, locked-down API they peddle instead is a poor alternative motivated entirely by their focus on the advertising business model. It's a big what-if, and the premise of my article is really that they should have found out before they settled on advertising. It was a mistake to hire Sandberg when they did, because once they made her the COO the company had no other monetization options then advertising.

tptacek 14y ago
Imagine if Google found someone more creative to figure out their business model, which is also advertising. Think of what could have been! Maybe they could have focused on developers. Then, they'd definitely have better APIs; maybe developers could easily build products that leveraged Google's search index! Great APIs, and also tens of billions fewer dollars.
- padobson 14y ago
  Google could absolutely use more creativity in their executives. The graveyard of failed Google products is vast, and its only because they indeed did choose the best business model in advertising for their search service that they have been able to survive and thrive through so many failures. And giving credit were credit is definitely due, Sheryl Sandberg played an extremely important role in making that business what it is today. Her mistake, and Facebook's mistake, was thinking that it could be repeated - that somehow the data that Facebook was leveraging was as valuable to advertisers and as unobtrusive to users as the data that Google was leveraging. This is not going to turn out to be the case - you will simply never see Facebook doing $30B per year in advertising revenue like Google does. Their traffic numbers are already similar, there is no reason to believe Facebook will be able to 10x their revenue when their traffic is already peaking.