Facebook CEO Mark Zuckerberg: We Burned Two Years Betting On Mobile Web Vs. Apps

English: Mark Zuckerberg, Founder & CEO of Fac...

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From my Forbes.com blog The New Persuaders:

Facebook CEO Mark Zuckerberg hasn’t said much, if anything, publicly since the No. 1 social network went public in May. But oh, how much has changed since that day. Not only did the IPO fall flat, but Facebook is now dogged by slower growth perhaps partly due to its late start on mobile advertising.

Today, Zuckerberg went public himself at the TechCrunch Disrupt conference in San Francisco. Clearly the big “get” for the conference, Zuckerberg was in his element at the conference, which is aimed at tech startups and the software developers creating them. In a wide-ranging and surprisingly revealing interview with TechCrunch founder Mike Arrington, who has since become a venture capitalist, Zuckerberg said Facebook lost two years betting on mobile Web technology instead of native iPhone apps but said he thinks mobile will be even bigger than the Web for Facebook in terms of advertising.

Investors liked what they heard. Facebook shares rose 3.6% in after-hours trading, breaking $20 a share, on top of a 3.3% rise on Tuesday before his talk.

Here’s the interview, edited slightly for clarity and my inability to catch every single word the fast-talking Zuckerberg utters:

Q: You went public on May 18 and the stock has lost roughly half its value.

A: Just get right into it!

Q: Would you have done anything differently on the IPO?

A: The performance of the stock has obviously been disappointing. But the commitment we made was to fulfill this mission to make the world more open and connected.

The key will be how we do with mobile. A lot of stuff has changed in six months since we’ve been in the quiet period.

Literally six months ago, we didn’t run a single ad on mobile. So people can underestimate how good mobile can be for us. It’s the main thing that’s fundamentally misunderstood. For one, there’s just more mobile users–5 billion people have cellphones in the world. Second, they’re spending more time on it. We’re already seeing people more likely to be daily active users on mobile. And those stats are before the new iOS app. And third, we can have better advertising on mobile, make more money.

Q: You make money to build great services rather than build services to make money. Do you really mean that?

A: We are a mission-driven company. In order to do this, we have to build a great team. And in order to do that, you need people to know they can make a bunch of money. So we need a business model to make a lot of money.

Building a mission and building a business go hand in hand. The primary thing that excites me is the mission. But we have always had a healthy understanding that we need to do both.

Q: What about the stock causing morale problems?

A: Well, it doesn’t help. But first, Facebook has not been an uncontroversial company in the past. So people are fairly used to the press saying good things about us and bad things about us.

What really motivates people at Facebook is building something that’s worthwhile, that they’re going to be proud to show to friends and family.

We also haven’t done much on equity to incentivize people. The way we do compensation is we translate the amount of compensation we give you into shares. [So employees get more shares if the stock price is down, thus similar compensation, thus the stock price doesn't mean as much as it might appear.]

Q: I’ve been rough on the company on mobile products.

A: We were very self-critical too.

Q: Is mobile a strength or weakness for Facebook?

A: There are more users, they spend more time on Facebook, and we’re going to make more money on mobile ads. There are huge things we can do to move the needle. Mobile is a lot closer to TV than [to] the desktop. We’ve had right-hand-column ads and it’s been great, a multi-billion-dollar business.

But on mobile, we can’t do that. It’s clearly going to have to be different. We’re seeing some great mobile ad products being developed. There’s a huge opportunity. The question is getting there.

Clearly we’ve had a bunch of missteps there. The biggest mistake we made as a company was betting too much on HTML5, because it’s just not there yet. We went for this approach, an internal framework called Faceweb. We just couldn’t translate it to mobile with the quality we wanted.

We had to start over and rewrite everything to be native. We burned two years. It may turn out it was one of the biggest if not the biggest strategic mistake we made.

Two years ago, we decided to bet completely on HTML5. We believed that because it used the same technology as the desktop, we thought it could improve. But it wasn’t good enough. We realized the only way we could get there was to go native.

Q: Did you realize the previous Facebook mobile app sucked?

A: Yeah, it was not where we wanted it to be. We just decided to ship the same features as before, but faster. But in parallel, other teams have been building new features. Over the coming weeks and months, we can expect to see a lot of the cool stuff. …

Read the complete post at The New Persuaders.

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Benchmark VC Matt Cohler: Mobile Ads Will Be Even Better Than Web Ads

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Image by Facebook via CrunchBase

From my Forbes.com blog The New Persuaders:

Despite rising doubts about whether mobile advertising will ever amount to much, Benchmark Capital partner Matt Cohler says he’s more jazzed than ever about the prospects.

In an interview with TechCrunch founder Mike Arrington at the TechCrunch Disrupt conference this morning in San Francisco, the former vice president of product management at Facebook said he has made zero investments this year, though he wasn’t entirely clear why except to say he made more than the usual number last year. But he said he’s looking actively for opportunities in “mobile marketplaces,” as well as products and services that use the smartphone as a “remote control for your life.” Here’s what else he had to say, in edited form:

Q: You haven’t made any investments lately. Why?

A: I haven’t made any investments this year. Last year I made more than a typical venture investor would.

It wasn’t a single specific decision. We’re at an interesting moment in time where aspects of various platforms are starting to shift. But I’ll do it if the time is right.

Q: Do you regret not making some investments?

A: I’m sure I passed on some things that will probably be successful.

Q: You criticized Groupon awhile ago when it was hot. That looks pretty smart two years later. But you have invested in a deals site in Brazil.

A: I think daily deals are a good idea. Any ad people view as content is a good ad, and that’s true for daily-deal ads too. But I’m not sure it’s smart to build a company around that one thing. Groupon has some interesting assets. The question is what can it do with them? …

Read the complete post at The New Persuaders.

No ‘Pinterest For Cats’: Google Ventures’ Kevin Rose Shoos Away Copycat Startups

Worlds Collide Onboard the S.S. Jeremiah O’Bri...

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From my Forbes.com blog The New Persuaders:

Few people have seen the ups and downs of startups more up close and personally than Kevin Rose, partner at Google Ventures and cofounder of Digg, the social news site that could have been Reddit but faded and is now trying for a comeback under new owner Betaworks. In an interview at the TechCrunch Disrupt conference this morning in San Francisco, Rose talked about his relatively new role as a venture capitalist.

Among the highlights: He said that he has helped speed up the way Google makes investments, that Google isn’t trying to lowball startups on valuations, and that he’s avoiding copycat startups (um, not to be too impolite, but like those dozens of companies in the conference’s demo hall?). Here’s what else he’s thinking about today, sometimes paraphrased:

Q: How has it been as a full-time venture capitalist?

A: I was doing angel investing for three or so years before joining Google Ventures. It was always a part-time thing, a casual investment every month or so. Now I’m seeing 10 or 15 companies a week. I always like seeing cool new ideas.

Q: Is it hard keeping them all straight?

A: Absolutely. I’m terrible at names.

Q: What’s up with the apparent drama between Y Combinator and Google Ventures, where the former accused the latter of lowballing startups on valuation?

A: We’re absolutely not going out there and trying to lowball companies. Some companies are worth $15 million and others are worth $6 million or $8 million. I’m closing three YC deals, all three we took the terms straight up. Another one, we just saw too much risk, so we didn’t do the deal.

Q: A couple of companies I talked to said the due-diligence process is longer with Google Ventures.

A: I don’t know that we’re more strict about that. I took $200,000 from GV for my last startup, Milk. The diligence process was a little longer. But I’ve been working personally on streamlining that. We do $5 million to $10 million that absolutely take good due diligence, when you’re investing that much. I think we’re in a great place now.

I have nothing bad to say about Y Combinator. I’m investing in several of their companies. Nobody’s mad at anyone.

Q: What YC companies have you invested in?

A: We just closed on BufferBox, kiosks for people to get packages at, like Wal-Mart stores.

Q: Are there certain kinds of companies you like?

A: I’d be lying if I said I have this grand vision. When I see a company that’s really doing something disruptive, that gets my interest. I don’t want to do a Pinterest for cats. I’m more of a surgical investor. The only way to do that is to pare down the total number of deals you do. I may do 10-12 deals a year, but they’re companies I really believe in. …

Read the complete post at The New Persuaders.

Uber-Entrepreneur Jack Dorsey To Startups: Don’t Just Disrupt, Start A Revolution

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Image via CrunchBase

From my Forbes.com blog The New Persuaders:

Jack Dorsey is a latter-day legend among entrepreneurs, and no wonder. Not only did he help found Twitter, where he serves as executive chairman and head of product development, but he’s also founder and CEO of Square, which is trying to foment a revolution in payments by allowing people to use their mobile devices as wallets.

Revolution, in fact, not simply disruption of the existing way of doing things, was Dorsey’s main message in a keynote talk this morning at TechCrunch Disrupt, a startup tech conference in San Francisco. “We need to change the name of this conference,” he told thousands of attendees hanging on his every word. Here’s a sampling of what he had to say, mostly aimed at dashing precious beliefs of entrepreneurs:

I never wanted to be an entrepreneur. I never woke up one morning and thought I need to get a ticket to San Francisco. I actually wanted to be Bruce Lee.

Actually I wanted to be a sailor, to explore the world. I wanted to be a tailor, to build things myself that I could share with other. I wanted to be an artist, specificallly a surrealist.

Along the way, I realized life really happens at intersections. Literally for me. I was fascinated by cities.

I thought about founders–in particular the Founding Fathers of the United States. They realized they wouldn’t get everything right at the start. There would not be one founding moment but many. A lot of the ideas they had at the time were wrong (slavery, for example, or women’s suffrage).

So there’s a massive amount of energy spent on the founding moment. At Twitter, not so. Companies have multiple founding moments. I consider CEO Dick Costolo a founder. He’s really reconsidered everything and made the company better. Same at Square with its COO. Same at Starbucks with Howard Schultz, who was not a founder. Marissa Mayer, not a founder of Google or Yahoo, but with the drive and smarts to create another founding moment at Yahoo.

So a founder is not a job, it’s a role. An idea that can change the course of the company can come from anywhere.

Science fiction writer William Gibson said the future has already arrived, it’s just not evenly distributed yet. Our job is to distribute the future that is already here. We need to make sure it spreads all over the world, as quickly as possible, and with the right values.

We have the change the name of this conference. What we really want is not disruption, but revolution. It pushes people to do the right thing. It doesn’t always have to be loud or violent. It’s just as powerful in its stillness.

So the key is how we recognize disruption. We want to distribute the future more quickly. We don’t want to just disrupt things and move them around. We want purpose. …

Read the complete post at The New Persuaders.

Google’s Marissa Mayer Live at TechCrunch Disrupt

Marissa Mayer, Google’s vice-president of search products & user experience, is holding a fireside chat at the TechCrunch Disrupt conference this afternoon. One of the best-known faces of the search giant, she often provides clues to where the look and feel of Google’s signature service is heading. She’s talking with TechCrunch editor and newly minted millionaire Mike Arrington.

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Google’s Eric Schmidt Live at TechCrunch Disrupt: What’s Coming Next

Google CEO Eric Schmidt is a surprise visitor to TechCrunch Disrupt, promising to talk about “what’s coming next.” Here’s what he has to say:

What we’re really doing is building an augmented version of reality. It’s really about making people happier. That to me is the opportunity that is really before us.

Three trends are accelerating (though to be honest I’m not sure I divined precisely which three trends he’s highlighting):

* Mobile, meaning smartphones. Your strategy should be mobile first. Mobile Web adoption is occuring eight times faster than the Web on the PC. We have pervasive connectivity. It’s no longer the case that your music player can be disconnected from a WiFi network. LTE (Long Term Evolution), which will bring 8-10 MB of bandwidth, is coming to many cities soon.

* Cloud computing. Example: We can now demonstrate and are about to ship products that allow you to speak in English in your phone and have it come out in another language at the other end. This is the stuff of science fiction. The fact that this can be done in a half-second to a quarter-second, which we think is too slow, is amazing. Cloud computing will be fundamentally expressed in these new services that will make your life just work.

This concept of making humans better is not a new concept–Bill Gates 15-20 years ago. Had to do all the infrastructure and AI work to make it happen.

Essential goal: We want to give you your time back.  This explosion of information is so much larger than we ever anticipated that we need help with. We do more than 2 billion searches a day.

The mobile opportunity is so large it’s breathtaking. The search traffic from Android phones more than tripled in the first half of 2010.

* Openness. He touts Android etc. vs. others’ closed platforms, unnamed of course.

We (Internet companies) fundamentally are giving people an enormous amount of power, which disrupts the power of governments and other institutions.

Imagine a future involving all of us that looks roughly like this: It’s a future where you don’t forget anything. In this future, you never get lost. It used to be fun to get lost. With technology, we will know your location down to an inch. Computers will drive our cars. It’s a bug that cars came before computers.

You can really have all the world’s information at your fingertips. And we can do it dynamically and in real time. You also can know what to pay attention to right now. You’re never lonely because your friends are always online. If you’re awake, you’re probably online, and your children definitely are. Instead of wasting time watching television, now you can waste time watching the Internet.

You’re never out of ideas–where to go, what to eat. This is a future for the average person, not the elites. Because of technology and information access, this is a future for a billion people now, 2 billion people next year, etc.

This is a future committed to doing good, to giving people more of what they want to do.

And now to questions and, one would hope, more specifics and less utopian talk:

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