Chapter 9: The Social Networks
On top of everything else, the team at MySpace should be particularly concerned about Facebook, the (relatively) new kid on the block. In fact, I suspect that by the time this book is published, Facebook will be the largest social network on the Internet, surpassing MySpace in users and page views.
Like Microsoft, Facebook was started by a Harvard dropout. Founder Mark Zuckerberg wanted to connect with all of his Harvard classmates, and so he launched Facebook in February 2004. It was a hybrid of Classmates.com and MySpace, except that Facebook was only for Harvard students. That very limitation made it a huge success: while MySpace was growing out of control, Facebook gave its Harvard users the control and community rarely seen in the larger social networks. Before the end of its first day, Facebook had registered twelve hundred Harvard students. By the end of its first month, more than half of Harvard’s student body was online.
That’s when Zuckerberg took a risk. He quit Harvard, moved to Silicon Valley, and raised venture capital from Founder’s Fund, the same group that started eBay’s PayPal and Napster. Starting with Harvard, Facebook methodically enlarged its network to additional Ivy League schools, then to all colleges and universities, and then to all schools. Finally, Facebook opened to the world in September 2006.
By then, Yahoo reportedly had offered the twenty-two-yearold Zuckerberg nearly $1 billion for the company. Most people thought Zuckerberg was nuts, but he turned Yahoo! down. Then Microsoft stepped up just as Facebook reached 30 million users and attained a growth rate that eclipsed every site on the Web except MySpace. Microsoft bought less than 2 percent of the two year-old company in 2007 for a reported $240 million (and for anyone having trouble with the math, that would value Facebook at roughly $15 billion). Zuckerberg was not nuts (Microsoft, I am less sure of).
What I find interesting about Facebook is its resemblance to Jim Anderson’s network of networks. Zuckerberg, like most entrepreneurs, stumbled on a model of the mind through trial and error instead of understanding the brain. Recall that Anderson realized that the brain is not as homogenous as researchers had once thought. On top of that, the number of neural connections is not very great. The average neuron has roughly 10,000 connections to other neurons in the brain. But the total potential connections is about 1010 (100,000,000,000). In other words, actual connectivity is only about 0.0001 percent of what it could be.