For Facebook, More Users Are More Problems
At the moment when most social networks flatline, Facebook is taking off. But for Mark Zuckerberg, 175 million users are just the beginning of his headaches. Money, spam, and crime are spoiling his online utopia.
The first and most pressing reality: Money.
It is impressive that Facebook soared from 150 million users to 175 million in just five weeks. But until Facebook can show it knows how to make money off those users, the newcomers are a burden, not a blessing.
A rule of thumb Valley insiders use is that adding a million users to a site like Facebook requires $1 million in capital. That means Facebook should be spending roughly $5 million a week on servers and other computing infrastructure. From what's understood about its finances, Facebook is not covering the cost of its operations, let alone generating enough profit to pay for capital investments. The $360 million it raised from Microsoft and Hong Kong telecom mogul Li Ka-Shing in 2007 and 2008 will not last forever, especially at this pace.
And now is a terrible time to try and raise money. The social-networking investment bubble has decidedly popped. Friends Reunited, a social network purchased by British TV network ITV in 2005 for $250 million, is now worth as little as $30 million, analysts estimate. Facebook, likewise, is today worth a fraction of the $15 billion value at which it last raised money. It could well find new backers, but they will drive a harder bargain than Microsoft CEO Steve Ballmer.
The second reality: Spam.
Because of its privacy controls, clever algorithms, and draconian customer service, Facebook has proven relatively resistant to the kind of fake-hot-girl spam that ruined Friendster and MySpace. And when Facebook apps started getting spammy — zombies and pirates, anyone? —- Zuckerberg's social-network cops cracked down on those, too.
But hucksterism seem to be part of human nature. To the extent that Facebook seeks to reflect the real world, it's going to get filled up by people with something to sell. That these are actual people just makes it worse.
Take the aptly named Howard Bragman, a typically self-aggrandizing flack who specializes in helping gay athletes come out of the closet. He complains in the Daily Beast that Facebook banned him for adding friends too quickly.
His motive for being so sociable? Why, he has a book out. We all have "friends" like that. And now they're all on Facebook.
The third reality: Crime.
Facebook is open to anyone with an email address. And anyone can sign up for a free email account these days. Once signed up, it only takes a cell phone to access the site.
So people are posting from everywhere, including inside prison. Ashley Graham, a convicted murderer serving time in a U.K. prison after stabbing a man through the heart, updated his friends with this status report:
HMP Holiday's a place where men can come for a nice relaxin break from their moanin women and crying kids. No stress just rest.
Perhaps he can make friends with Leon Craig Ramsden, the man who reportedly posted on Facebook that he felt like "killin some1" before going to a bar and doing exactly that. If Facebook really aims to connect everyone in the world, it's going to get the Grahams and Ramsdens, too. How will parents feel about Facebook when their kids start getting friend requests from prison?
None of these obstacles are insurmountable. But they serve as a useful reminder: As Facebook grows up, things are just going to get less and less pleasant. Facebook began in the collegiate dreamland of Harvard, where the world's most entitled people gather to have their feelings of self-importance validated. After you leave campus, you enter the real world. Welcome, Facebook. Need a friend?