How to Create the Next Facebook: Seeing Your Startup Through, From Idea to IPO

by Tom Taulli

  Consider that when you go for venture funding, your potential investors will do due diligence on matters of ownership. If the ownership of your company’s intellectual property is not clear, you may not be able to get the funding you need.

  Let Facebook’s legal missteps and mistakes be a warning to you. The young startup was embroiled in lawsuit after lawsuit simply because Zuckerberg neglected to think about and guard proactively against potential legal claims that were ultimately brought against the company. Had Zuckerberg refrained from hiring a savvy attorney to mitigate his company’s legal problems, the Facebook we know and love today might not have ever gotten off the ground. So do yourself and your company a favor and seek the counsel of a qualified attorney early who understands the nuances of technology startups. When—not if, but when—a frustrated former employee or a competitor brings the first legal suit against you and your company, you’ll understand just how valuable this advice really is.

  The Product

  Some men see things as they are and say, “Why?” I dream of things that never were and say, “Why not?”

  —Robert Kennedy

  Mark Zuckerberg is a product genius. He has an innate ability to understand what type of product users will love. Critical to Zuckerberg’s success in product development has been his understanding that his product—Facebook—must be aligned with his company’s mission of openness and sharing. Zuckerberg describes his company’s approach to product development best when he says: ”We have found that products that are ‘social by design’ tend to be more engaging than their traditional counterparts, and we look forward to seeing more of the world’s products move in this direction.”1 However, Zuckerberg’s imperative to create a social product that promotes openness and sharing may not necessarily fit the mission and ideals of your company. So how do you create a product that squares with your company’s mission and yet resonates with your end users? In this chapter, we take a look at the many inputs you can rely on to help you do just that.

  Creativity

  No matter how hard you try, you can’t sit people down in a room and teach them how to be creative. Creativity is a skill that can’t be learned, despite the message that countless self-help books and creativity gurus try to sell you. It is similarly erroneous to think, just because you’re smart, that you can figure out how to be creative. Creativity has nothing to do with intelligence. In fact, some of the most creative people throughout history have had IQs in the normal range.

  __________

  1 Facebook IPO Prospectus, May 17, 2012, www.sec.gov/Archives/edgar/data/1326801/000119312512240111/d287954d424b4.htm.

  So, if creativity is not the result of learned knowledge or above-average intelligence, what is it that sets those who are gifted creatively apart from the rest of the pack? Creative people throughout history—like Einstein, Darwin, Mozart, Leonardo da Vinci, and Freud—have been able to bring a fresh perspective to the status quo. They have the innate ability to avoid getting stuck in old, normalized ways of thinking and can, instead, analyze a situation or problem in a new and, ultimately, valuable manner. And as a result of their creative approach to problem solving, they have arrived at some amazing discoveries, as we saw in Chapter 1, when we looked at Samuel Morse’s invention of the telegraph.

  Add Zuckerberg to the list of figures throughout history who have displayed incredible creative abilities. Part of the reason Zuckerberg has been able to forge creative breakthroughs is because he is a multidimensional person. When he was growing up, he didn’t just read programming books. He loved reading the classics, and one of his favorite works of all time is the Odyssey. In fact, he could read the classics in their original language—French, Hebrew, Latin, or even ancient Greek. Furthermore, when Zuckerberg went off to college, he didn’t just study computer science; he paired this more technical-minded major with another major in psychology.

  Yes, Zuckerberg is a fan of liberal arts, and his understanding of and proficiency in this subject matter has most certainly contributed to the creativity he displays when he develops products, solves problems, and runs his market-dominating company. The lesson here is: You never know where inspiration springs from. When Steve Jobs was in college, he took a class on calligraphy. Ever wonder why Apple products come equipped with such beautiful fonts? Now you know the source of the inspiration.

  Timing and Some Luck

  Let’s say that you’ve established that you are an innately creative person, and you have even been able to develop a creative idea. You’re set, right? Sadly, creativity alone may not be enough to ensure the success of your product or company. You also need to get the timing right. Keep in mind that sixdegrees.com had all the key features of a social network, but it launched back in 1997, at a time when the requisite technology to make full use of the site’s features was far too expensive for the average user. By the time Facebook launched in 2004, however, the situation had changed drastically. Facebook was poised for growth on its launch because of certain major megatrends, including the following:

  The growth in use and abundance of affordable digital cameras

  The ubiquity of broadband

  The average user’s increased comfort level with the Internet and growing willingness to disclose personal information on the Web

  The emergence of free open source software like MySQL and PHP, which made it possible for a student like Zuckerberg to create a world-class web site

  If Zuckerberg had been born 10 years earlier and attended Harvard during the mid 1990s, Facebook might not have ever been invented. Entrepreneurs need to have a good sense for where technology is moving, what users want, and a bit of luck, and then jump on the opportunities those two factors present to them.

  Simplicity and Focus

  Make things as simple as possible, but not simpler.

  —Albert Einstein

  This quote appears on Zuckerberg’s Facebook profile; it is the key to his product development philosophy. However, simplicity is not something that comes naturally to smart engineers. The temptation is to create products that boast loads of features—and not because engineers necessarily want to help end users—but just for the fun of creating interesting, new technologies.

  Similarly, when a founder is building a new company, it is fairly common for her to flit from one idea to the next, trying to implement not just one but all of the latest, coolest, and most up-to-the-minute technologies. One day she might focus on mobile. The next day she wants to add a social networking component to her company. Then, after that, she’s all abuzz about gamification. To a certain degree, this type of behavior makes sense, because it is a conditioned response to all the noise that is constantly floating around in the tech space. After all, if there are any constants when it comes to technology, it is that there will always be a new buzzword. Always. But take a minute to think about the one characteristic that each of today’s top companies in tech, including LinkedIn, Zynga, and Pandora, have in common with one another. Give up? Their founders have all built billion-dollar enterprises by maintaining a laser focus on one product category.

  For a young startup, straying from your focus is a terrible impulse that needs to be restrained. If you find that your venture has a tendency to veer off course when it comes to your product development efforts, a great way to regain the focus of your company, your cofounders, and your employees is to get in the habit of saying no to requests to add a little more of this and a little more of that. If you can’t retain focus, your product will most likely wind up being too complex and messy to be helpful or of use to your end users. There’s a phrase for the unfortunate habit of layering product feature upon product feature upon product feature: feature creep. Avoid it!

  Idealistically, your product’s purpose should be instantly clear to your end users; they should be able to identify immediately which of their key problems your product can solve. How was this the case with Facebook? Zuckerberg got the motivation to create the site from his frustration with the fact that th
e printed version of Harvard’s facebook was always out of date. (Zuckerberg did not come up with the name Facebook on his own; it was first used by the university as the name for its directory of new students.) In Zuckerberg’s eyes, it was a no-brainer to give Harvard’s directory of students an online home on the Internet. However, Zuckerberg realized that his site should not just replicate Harvard’s facebook on the Web. He knew that a superior approach to the site was to make it about sharing.

  The first version of Facebook was actually fairly simple. It only took a couple weeks for Zuckerberg to bang out the code. The resulting welcome page was fairly bare bones in nature. In a sense, Zuckerberg was really one of the earliest practitioners of an approach called the lean startup, which is championed in Eric Ries’s book The Lean Startup (Crown Business, 2011). Ries believes that success is about building a minimum viable product and then launching it to the world to obtain valuable feedback on it from users. After user feedback has been gathered, Ries asserts, it is then easier to evolve the product and gain traction in the appropriate market more quickly.

  On their very first Facebook profile page, users could add the following information:

  E-mail address, name, gender, AOL Instant Messenger handle

  Relationship status

  Courses

  One photo

  Major and year enrolled

  Interests, including movies and books, and one quote

  The earliest version of Facebook also let you leave public notes for your friends on their Facebook wall, but the concept was fairly basic and downright minimal compared with the Timeline that each Facebook user has access to today. You could also contact your friends using private messages. That was it—the whole functionality of the site. Not much, huh? But that was the point. Zuckerberg was focused on one thing and one thing alone: Solving a problem for students, which, in the case of Facebook, was helping students share information and connect with one another, perhaps for a study group or a date.

  Let’s face it; college is a big-time social experience that is predicated on building and exhibiting your social status. What better way of showing how popular you are than by displaying publicly how many friends you have? As a result, Facebook began to spread like wildfire. After a few months, students at other universities and colleges across the country were begging Zuckerberg to give their campus access to his social networking site.

  When you look at Facebook’s very first interface, you can see that it is clean and clearly understandable. Although the company periodically redesigned the web site, it did do so not to make Facebook cooler, but rather to make it even cleaner. Simplicity was a constant focus and, as it turned out, it was a major selling point. At the time Facebook launched, its only real social networking competitor was MySpace, whose design principles were the polar opposite of those at Facebook. Although Facebook used a one-size-fits-all approach to its overall site design and user profiles, MySpace was unwieldy, allowing users to customize their profile easily and, in doing so, creating a sense of chaos on the site. MySpace’s customizable profiles would prove a huge stumbling block when it came to attracting older users who did not want to navigate through the somewhat psychedelic environment its younger first adopters had created.

  Facebook’s easy interface resulted in another advantage for end users: speed. All in all, users don’t want to wait for the web sites they visit to load. Slow load times can quickly bring about the early demise of a web service, as was the case with Friendster. Because of its horrendous foundation, Friendster’s pages loaded at a snail’s space; the site could take more than a minute per page to load!

  Since the launch of Facebook, Zuckerberg has continued to maintain his laser-sharp focus on simplicity. Take Facebook’s Photos functionality, for example. Compared with rivals like Flickr, Photos seemed like a poor product. The resolution of uploaded images was low, users were not allowed to print photos off the site, and you could not even order the photos to be printed by a third party. In the end, however, these apparent shortcomings did not matter to end users. What mattered was that, in keeping with Zuckerberg’s mission to enable online sharing, Photos allowed users to tag their friends in pictures in which they appeared. Photo tagging turned out to be yet another killer Facebook feature, and in short order, Photos dominated the online photo-sharing space.

  Elegant Design

  Although a basic—even elementary—design was appropriate for Facebook, it is not necessarily the best approach for every startup. As with everything, the intricacy, look, and feel of your product’s design depend entirely on its purpose. For example, if you want to create an app that allows users to “try on” digitally this season’s latest fashions, your product almost assuredly requires a rich multimedia experience. Fashion is not the only product category for which a more robust design experience is appropriate. Take Fab.com, which bills itself as a flash-sales site for “discovering everyday design.” When you navigate to Fab.com to search for potential purchases, you get the feeling that you have been included in a special experience. The site’s layout and design just has a way of pulling you in to buying things.

  An elegant design may also be necessary if the success of your app depends on establishing instant trust with your users. If your application deals with people’s money, it is particularly important that you design it in a professional yet accessible manner, lest potential users take one look at your product and decide there’s no way they would entrust their hard-earned cash to what appears to be an amateurish operation. How do you communicate that yours is a company to be trusted? Just look at Square. One glance at its interface tells you that Square is a company that cares about simplicity, professionalism, transparency, and quality. What’s not to trust?

  Engagement

  Your product needs to be habit forming—something that your users come back to every day, a central hub where they gather to spend huge chunks of their time. In other words, your product must be engaging. No doubt, fostering engagement has been a hugely important priority for Facebook. Features like Facebook’s News Feed and Photos were critical for creating user engagement—and for fending off rivals like MySpace. After all, the more time Internet users spend on Facebook, the less time they spend on rival social networking sites.

  Facebook is not alone in the importance that it places on engagement. If you look at other top consumer Internet products, they are all habit forming as well. Anyone who has used Skype, YouTube, Zynga, Twitter, or Instagram knows how easy it is to lose an hour or two of your day to these web sites. However, although it makes sense that users would return day after day (and often hour after hour) to hubs where they can access for free internationally integrated messaging, entertaining and informational videos, constant streams of international news and personal status updates, and visually appealing photos, there are certain categories of products in which user engagement is very difficult to achieve. Think, for example, about a theoretical site that caters to car buyers. Typical consumers purchase a car once every eight or nine years, so what reason would they have to return, time and time again—let alone day after day or hour after hour—to a site with the main purpose of helping users purchase a new car? The answer is: None. Car buyers only access the product site when they need it (which, in our example, is only once in a very long while), making it extremely expensive for this type of site to attract and retain users. Unless you come up with a unique business model—or an incredibly cheap way to attract and retain users—it is a good idea to stay away from product categories for which daily user engagement is difficult to achieve.

  Convictions

  If I had asked people what they wanted, they would have said faster horses.

  —Henry Ford

  All great product developers know that consumers do not know that they want or need a given product until they start using it. However, actually developing a product that consumers don’t know that they need is no easy feat! To make matters worse, consumers tend to be resistant to change, so it’
s extremely challenging to convince them to start using your new product in the first place. Regardless, few tasks are more crucial to a company’s success than creating a product that consumers grow to love and rely on in their day-to-day lives.

  When Zuckerberg first came up with the idea for News Feed, it made a lot of sense to redesign Facebook in such a way that users could view instantaneously what their friends were up to on logging on to the site. However, when the feature was launched, there was a huge uproar from users, who said that the redesign made Facebook feel too cluttered. Users also voiced concerns about privacy, even though News Feed did not provide any extra information on users than was already available on the site. The only difference was News Feed made information that once required a concerted search easily accessible in one central hub. But users, of course, were frustrated and uploaded a constant stream of messages to the tune of “I feel violated” and “You’ve ruined my life.”

  What would a typical CEO do if confronted by this same type of situation? Probably back off and kill the new feature. Yet had Zuckerberg done away with News Feed, Facebook would likely not have turned into the megaphenomenon it is today. Zuckerberg knew that users would eventually come to understand the value of News Feed because it was central to the mission of Facebook: to improve users’ ability to connect and share with one another. Within a few weeks of News Feed’s launch, the furor died down and News Feed became a must-have component of Facebook!

  There are, of course, risks to the approach Zuckerberg took with News Feed. A classic example is Digg. Founded in 2004, Digg was one of the pioneers in social media and gained instant traction. Over time, Digg was able to create a loyal user base that was interested in ranking the top stories of the day. This would change, though, in 2010, when the company underwent a major site redesign. As was the case with Facebook, users were outraged and began to flee to rivals like Twitter, but Digg remained committed to its new design and would not back down. In the end, the redesign was catastrophic, because it caused Digg’s user base to dwindle quickly.