The business lessons being learned around Facebook on a regular basis are fascinating. The company has achieved once in a generation, or longer, user scale. We have never seen a company with the reach Facebook has, and we may never see it again. I know never say never, but the possibility we never see this scale again is worth pointing out.
When it comes to Portal and Libra, which to me, represent the broader struggles Facebook has had launching new products, there are a number of interesting observations to be made. But the big picture to see with Facebook is the position they now find themselves in will make launching new products or services extremely difficult even if they are well positioned on paper, and well-intentioned.
I’ve said this from the start, Portal is a really great product and had Google, Amazon, Apple, Microsoft, etc., launched this hardware it would have done much better. Portal, despite narratives from FB executives, is not selling well, really at all. I know this for a variety of reasons, but the main one is coming from component providers I know who make components in Portal. Volumes are low.
But what strikes me as the most interesting part of this story is how on paper Facebook seems exceptionally well-positioned to deliver Portal, and the solution lines up almost perfectly with the job to be done (the reason people use the product or service) of Facebook. In fact, if you were inside Facebook and did a job to be done analysis of the service and used that analysis as a basis to create the next product launch, you would almost certainly arrive at a product like Portal. Yet, no one seems to want it.
Factors for its failure to sell can include many things. For example, humans are still not comfortable with cameras in their homes yet. However, that seems to be slowly changing. Most people video conference on their PCs, tablets, or smartphones and may not see the need for dedicated video conferencing hardware. Or it could just be people don’t want such a product from Facebook.
While many points can be made about other factors, other than it’s from Facebook and user trust is an issue, I do think the heart of the matter is that Facebook has lost people’s trust to the point that Facebook may never evolve beyond what it is as an online place people see stuff from their friends. Basically, a social wall.
Again, this is fascinating on many levels about business, product, customer behavior, and more. Facebook should, on paper, be successful with a number of products they have tried or will try, but the reality is that ship has sailed, and this gets very tricky for Facebook going forward.
Libra, like Portal, looks great on paper. It makes absolute sense in the context of Facebook’s scale, yet it may very well fail. I’m sure by now you have seen the reports that founding members of Libra are leaving the consortium. Despite the exodus, Facebook remains committed, as I would have expected, but the fate of Libra is still up in the air.
This is again an example of something that, on paper, Facebook is exceptionally well-positioned to deliver. Here, by direct nature of their user scale, touching ~2 billion people on a monthly basis and well over a billion people on a daily basis. You would think a company with that user scale has an opportunity to disrupt banking.
If you have followed the narrative, and executive commentary on Libra, moving to bank into the 21st century and helping to bring the unbanked into financial inclusion are the main goals. Facebook’s entire position was no other solution that could satisfy Facebook’s scale needs, so they felt they needed to get involved.
I thought this note from investor Fred Wilson on Libra was telling.
It is fashionable to be negative about the Libra project right now. And it is equally fashionable to call it “Facebook’s crypto-currency project.” Both are understandable under the circumstances.
But yesterday was the beginning of an independent effort, one that Facebook does not control, one where Facebook is one founding member among many, and one where Facebook has one board seat out of five.
But even more important is Libra’s mission to create a stable cryptocurrency that can operate at sufficient scale such that Facebook and others can use it as a means of exchange/payment system in their applications.
No one will disagree with the promise of Libra. Yes, banking needs to change and potentially be disrupted. Yes, we want to bring the unbanked into the conversation and strive for financial inclusion. But, whether Facebook controls it or not, their platform will play a critical role in delivering the solution, and that is where I think the solution breaks down.
There are so many economic theories out there, and only if governments get involved would something like this move forward. But, to the point of the Bitcoin proponents, controlling currency is something governments want, and it is not in their best interests to adopt a neutral global standard.
Facebook has reached such a scale that they are perhaps more powerful than they realize. That scale, power, and influence, has created a significant state of skepticism among not just businesses, governments, but also their users.
I don’t expect Facebook to give up, but what concerns me more at the moment is Facebook’s management’s inability to see these patterns playing out. I’m not sure they genuinely understand the underlying systemic problem that stands as a thousand-foot wall impacting their ability to move beyond anything but a social feed for people to peruse when they are bored.
It is within this vein that I’ve named these efforts well-intentioned failures. I believe Facebook has well-meaning intentions behind these products, but there is a bigger reality facing them that makes these well-intentioned new products a struggle from the start. Digging into the systemic issues facing Facebook and the corner, they have been stuck into seems to me to be the most worthwhile effort at the moment. Because if they don’t the underlying issues, I’m not sure how they move forward.