The Chenope Blog

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The Benefits of Not Totally Drinking The Koolaid


There were two big pieces of news in Silicon Valley this week: the Zuckerberg announcement of his plans to donate 99% of his estimated $45B worth of Facebook shares to charity over the course of his life and the news that Yahoo is finally being positioned for sale.

Some speculate that Zuckerberg was trying to distance himself from his less than flattering portrayal in the movie “The Social Network”of a few years back, and perhaps more generally set himself apart from the Silicon Valley Big Internet Company crowd that is losing its luster, especially in Europe.

I suspect that it is more than that.  Part of the reason that the aforementioned movie is so very good is that the essence of Facebook from a user perspective lent itself very well to Aaron Sorkin dialog.   The notion that exclusivity, not technology, was the key differentiator is explained in a brilliant scene.  (Initially one required a account to join Facebook, then it spread to Ivy League Schools and Stanford, then more broadly.) Indeed an earlier, generally comparable social network company named Friendster tanked largely because its user base skewed quickly and early towards the Philippines.   The Philippines has the largest expat community in the world, and Friendster provided a free and easy way to communicate with and send pictures to far away family and friends.  Unfortunately for Friendster, that Filipino user base wasn’t valued by the big dollar American advertisers.  Friendster was eventually sold to a Southeast Asian company and forgotten about.

Except perhaps by Zuckerberg, who has been quoted publicly as expressing surprise that Facebook remains so popular. Indeed, perhaps the reason that Aaron Sorkin’s latest film, the Steve Jobs one, was a flop is that Steve Jobs’ many contributions to the computer industry cannot be captured with a couple of cleverly written scenes about the value of exclusivity – and the invention of the all important “relationship status.” This is not to say that Facebook is not an innovative company, or that Zuckerberg won’t go on to do deeper and more varied things.  But I think it is fair to deduce that in the meantime, he wants to be known for something more. And not just promising to give away that much money, but also by structuring it in innovative way – as an LLC rather than a charitable foundation – so that it can invest in for-profit entities that he and his wife believe will further their philanthropic initiatives.  Kudos to Zuckerberg for managing to maintain a broader perspective.

Yahoo by contrast under Marissa Mayer executed the standard Silicon Valley playbook of a) generate lots of buzz, b) buy overfunded startups at grossly inflated prices, and c) promoting a rock star image complete with red carpet appearances and lavish bashes.   That even Google is having to pull in the reigns somewhat as Wall Street began to understandably fret that despite vast sums of money being spent by Google on so-called “moonshots,” something like 95% of Google’s revenue still comes from its original search / advertising business (on which comparatively little money is spent) seems to have escaped Ms. Mayer.   But there’s a small silver lining for Ms. Mayer in this week’s news: Aaron Sorkin will likely never write a screenplay about her.

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