Mark Zuckerberg: Our focus is growth, not revenue
Mark Zuckerberg, CEO of Facebook, about the business model, advertising revenues, Windows Live Search, German competitor StudiVZ, Sheryl Sandberg, money for his employees and the IPO. (October 2008)
Mark Zuckerberg, CEO of Facebook, about the business model, advertising revenues, Windows Live Search, German competitor StudiVZ, Sheryl Sandberg, money for his employees and the IPO. Interview with german journalist Holger Schmidt (October 2008)
“The web 2.0 architecture is not necessarily a revenue opportunity. This is not where the money is”, said Eric Schmidt from Google. Do you agree with him?
Mark Zuckerberg: I disagree. He has a clear incentive for saying what he is saying…
… because he has no social network?
Mark Zuckerberg: Yes. But what every great internet company has done is to figure out a way to make money that has to match to what they are doing on the site. I don’t think social networks can be monetized in the same way that search did. But on both sites people find information valuable. I’m pretty sure that we will find an analogous business model. But we are experimenting already. One group is very focused on targeting; another part is focused on social recommendation from your friends. In three years from now we have to figure out what the optimum model is. But that is not our primary focus today.
Your primary focus today is growth?
Mark Zuckerberg: Growth is primary, revenue is secondary.
Do you expect a shift of advertising money from traditional media and search to social networks?
Mark Zuckerberg: In the last century there were a few large media entities broadcasting messages. But now, the internet gives everyone the ability to have a voice – in a blog, on Youtube or in a social network. If the way people are consuming media changes, the media companies have to change their way to make money with advertising. This is a pretty natural progression from entities like newspaper publishing information to a lot of people to people getting more personalized opinions from their friends or specific people they trust. The business model is going along with that. Social recommendations attached to the advertising content or the traditional media information makes it a lot more interesting to people.
Windows Live Search goes online on Facebook later this year. Is that right?
Mark Zuckerberg: Yes. It will integrate web search and will also have content from Facebook.
Will that be a boost for your revenue?
Mark Zuckerberg: We don’t work very much on search ads now.
When will you expand this product to other countries like Germany?
Mark Zuckerberg: The US is a good place to start. But if it works well that is absolutely what we can do in the rest of the world.
The market share of Microsoft in the German search market is 1 or 2 percent. They would be thankful for any help.
Mark Zuckerberg: Yes, but we can consider to work with someone else in other countries.
StudiVZ, the market leader in Germany, has 10 million users, the RTL-company wer-kennt-wen 3.5 million. How will Facebook close the gap?
Mark Zuckerberg: Right now we have 1.2 million users in Germany. In a lot of different countries like the United Kingdom and Australia or in Latin America we found that many people switched over to Facebook very quickly. In the UK and Australia a lot of people have been using MySpace. Now Facebook is the biggest network in both countries. Our strategy is mostly to grow naturally. When the people can use Facebook in their own language, we will grow.
Facebook has doubled the user base to 1.2 million within six month. But StudiVZ has grown faster. I can’t see a shift to Facebook right now.
Mark Zuckerberg: As percent of our user base we are growing faster. It might take a few years, but we have a very good chance to become the largest social network in Germany.
Facebook talked to the StudiVZ-owner Holtzbrinck to acquire StudiVZ. Why did these talks fail?
Mark Zuckerberg: We are talking to a number of people all the time. But now we have that law suit going on.
What is the status quo of that law suit?
Mark Zuckerberg: Law suits move pretty slowly.
You are looking for a general manager for Germany?
Mark Zuckerberg: Yes, for Sales. We start the process to look for people. But I’m not involved in that process.
Is Facebook on the way to be the new web operating system?
Mark Zuckerberg: The expression ´web operating system` is overused. Right now, web search is the starting point for most people. But as time goes on there will be more and more applications as starting points. Web search will not necessarily be the center of the internet forever. I don’t know if a social network will be that point, but I think the people will use more ways to get access to the information.
Will social networks cannibalize the E-Mail?
Yes, that is definitely possible. E-mail tends to have more functionality. But social network messaging tends to be very simple. One of the things people really like of the Facebook messaging is that there is very little spam. And if you meet someone you can send him a message – without knowing his e-mail-address.
What is the largest growth potential for Facebook? Is it music, photo sharing or gaming?
Mark Zuckerberg: People share tons of photos. Facebook is the number 1 photo site. But what we see is the shift that people are sharing more and more mobile photos. There is this trend that the people write very short status updates. Five status updates a day instead of one blog post a day.
Many Facebook managers like Matt Cohler, Dustin Moskovitz, Ben Ling, Adam D´Angelo or Owen van Natta left Facebook. Why?
Mark Zuckerberg: For different reasons. Several people had things they wanted to do for a long time and have planned exits. Cohler, for example. From the day I hired him for Facebook he told me to be a venture capitalist one day. Dustin has a passion for enterprise stuff. There is no trend. And there is quite a good inflow of talents come into the company. I am not worried about that.
Can you please describe your cooperation with Sheryl Sandberg?
Mark Zuckerberg: She is an excellent manager. She is very good in building our international organization. I’m focused on the direction of the company, especially of the product development, and the overall strategy. I spend a lot of time working with engineers and product developers. We work together hand in hand.
Who is the boss?
Mark Zuckerberg: Me!
Do you plan an IPO?
Mark Zuckerberg: No, we are really not planning to go public. For the next few years we are really focused on user growth.
Is it true that you allow your employees to sell their shares up to 20 percent up to 900000 Dollar?
Mark Zuckerberg; Yes.
Mark Zuckerberg: We are not going public for a while. So we want the people to have enough money to life for the period of time until we go public. In the early days of Facebook I was able to get 900000 dollar of liquidity. That made a pretty big deal to me. We want engineers or other people in the company don’t have to worry about simple things.