June 23rd, 2012
Live Platforms / Dead Platforms
In the aftermath of the Facebook initial public offering, there were numerous postmortems about what went wrong. The one that interested me the most was by Bill Hambrecht (full disclosure, I used to work for Bill). Hambrecht advocates the use of a modified Dutch auction to find the right price and allocation for a new equity offering. His version of the auction process is called OpenIPO; Google used a version of it in their public offering. But it was his assessment of Facebook as a business that I found most interesting. He called it a “co-op,” and this is because without the participation of the users, Facebook has no value. Facebook is a co-op in the sense that the users voluntarily cooperate within its platform, although the distribution of benefits is heavily skewed toward the platform’s owners.
Out of this idea comes an interesting way of comparing Google and Facebook. Facebook is alive, it’s made of living things. Without those lives within the digital communications platform, there is no Facebook. On the other hand, Google is dead. Google operates on the traces left by living things, but not on the entities themselves. It’s the footprints in the sand that Google uses to predict the next set of footprints in the sand.
The health of the Google system depends on having access to both the sand and the footprints. If the footprints and the sand move into a restricted access sandbox, like Facebook for instance, Google’s output (SERPs) starts to lose resolution. Facebook’s system is a gesture farm, and with the extension of the “like” button to the Web, it has no boundaries. For the farm workers, there is no “outside of Facebook.” The health of the Facebook system depends on the voluntary cooperation of the farm workers; they need to believe they’re getting sufficient benefit for what they’re giving up. But as a biological system, Facebook is also subject to disease and viruses. If the users decide they don’t want to work on Maggie’s Farm no more, Facebook is drained of its health and its life.
Google, observing the growth of these gesture farms, rightly recognizes that the Web is no longer enough. The Google+ project attempts to graft a living Network entity on to the footprint analyzing machine they already have in place. But does this move Google from the land of the dead to the land of the living? If Google is mostly dead, does it operate more like a zombie? Is it subject to disease and viruses? And if it’s not, is it really alive? After so many years of being dead, could Google really cope with being alive?