Why Facebook matters
It's not just for arranging dates. And it's not just another social network. Facebook offers sophisticated tools for maintaining social relationships.
NEW YORK (Fortune) -- When I tell Facebook CEO Mark Zuckerberg he seems like a natural CEO, he acts insulted. I guess at 22 it's just not the way he envisions himself. But Zuckerberg is a strategic thinker. Listening to him talk, it becomes apparent that the company he co-founded is a deeply considered enterprise. It's also more important than most observers realize. That's not just because it has already amassed almost 10 million members.
On the one hand Zuckerberg sounds a little like Craigslist founder Craig Newmark, whose company eschews most financial goals and focuses mostly on offering non-profit services. "I never wanted to run a company," Zuckerberg says. "A business is a good vehicle for getting stuff done." He is more concerned with a vision for changing the world. And he is deeply immersed in seeing it reified.
But my respect for this kid - so young-looking when I first join him at lunch that I'm actually shocked - deepens when he describes what he calls Facebook's "mission."
"A lot of companies get grouped as social networking," says Zuckerberg. "Lots are dating sites, or media sites or sites for community. But our mission is helping people understand the world around them."
"We're not trying to be a portal, or to maximize the time spent on our site," he goes on. Nevertheless, he also makes it clear that he is fully confident Facebook can be nicely profitable while doing so.
The story of the company's founding at Harvard just two-and-a-half years ago is so well known as to already be almost mythic. Originally just a service for Harvard students operated out of Zuckerberg's dorm room (shades of Michael Dell), it took off so fast that within a year or so it had spread to thousands of campuses. Now it's on almost every college campus in America.
Last year, Facebook added some high schools, and more recently workplaces. The members of each group are initially just connected to others at their school or place of work. You add others to your network as you see fit.
Then in September, Facebook announced it would create geographic groups, essentially enabling anyone to join a group based on where they live. The 10 million members today function in over 40,000 different groups. Zuckerberg himself, for instance, is in the Harvard group, the Facebook company group, and the San Francisco group.
What's so special about Facebook?
The typical user can see less than half a percent of Facebook's total user profiles, Zuckerberg says. That is in stark contrast to MySpace, where everybody can basically see everybody else if they know where to look.
Unlike most other social networks, Facebook has sophisticated privacy settings. You have a lot of control over who can see what information about you. So you can enable members of your school or work group to learn about you, but prevent anyone in a high school group from seeing anything, if you choose. You can also determine how information about you shows up in searches other members conduct on the site.
Photo albums are an important part of peoples' personal profiles, for instance, but the control Facebook offers is so "granular," to use Zuckerberg's term, that you can allow one album to be seen by your college mates, another only by work colleagues and bar your siblings from seeing any photos, if you choose. Users are so confident that their information is sequestered from intruders that more than a third post their cellphone numbers.
"This authenticated network structure is a significant difference from other sites," says Zuckerberg. It also significantly reduces the risk of the kinds of problems with sexual predators that MySpace has famously had.
Zuckerberg thinks of Facebook as what he calls a "utility." More than 60 percent of members return at least daily, to see what friends are doing, check messages, send messages to others or to amplify their own profiles. The formats for Facebook profiles are standardized, unlike the free-for-all on MySpace.
The recent hubbub when Facebook added what it calls "news feeds" to each user's home page has died down, and it doesn't seem to have perturbed Zuckerberg much, though he concedes the company launched the new features clumsily. The feeds are a way to automatically alert you when friends do new things. Members already had access to this information. Now they just get it more efficiently.
Where is Facebook headed?
Nonetheless, many thousands of members initially posted outraged diatribes and joined groups protesting the changes. Zuckerberg says Facebook's members have been complaining about expansion and changes ever since the site added Yale, Columbia and Stanford to the original Harvard-only site. Meanwhile the service has only grown.
Facebook also made news recently with a $200 million deal in which Microsoft (Charts) became the exclusive seller of banner ads and sponsored links. Zuckerberg says the deal frees Facebook to focus on what it considers the bigger opportunity - more original forms of Facebook-only advertising like sponsored groups. Apple (Charts), for instance, has its own group through which every week it gives away millions of free sample songs on its iTunes music service.
The ubiquitous social networking trend is not uniform. Facebook's unusually sophisticated features help explain why Yahoo! (Charts) has reportedly been negotiating to buy the service, though the reports say it balked at Facebook's billion-dollar asking price.
I don't know whether Facebook is worth that much. But no matter how old you are, you may end up finding it worth enough that you want to use it yourself.
Yahoo seen considering buyout of Facebook