Facebook’s Strategic Volatility

Isn’t it strange that Facebook can do something so smart (releasing a JavaScript client so you can host a FB application on other Web sites) yet stumble so badly with a key strategic initiative (Beacon).

I can understand all the excitement (Mr. Blodget describes it as “another brilliant move”) about the Javascript announcement but, frankly, Beacon is/was far more important because it was/is going to be a cornerstone of how Facebook makes revenue and, in the process, help justify its $15-billion valuation.

You really have to wonder how Facebook screwed up so badly with Beacon.

It may be that Facebook is still a technology-driven company trying to become a business. Or it could be that Facebook is still trying to find its way strategically as the social networking market evolves so strategic stumbles will happen along the way.

The big question is whether it can find a business model that works for users and advertisers. Clearly, the first iteration of Beacon missed the mark. Facebook CEO Mark Zuckerberg has admitted mistakes were made, so we’ll see if the company has learned its lessons and can reload successfully.

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  • Daniel Gibbons

    This will sound horribly reactionary, but the only business model that actually could have made sense for Facebook is some kind of monthly paid subscription. The interesting analogy for me is Club Penguin, where the (correct) assumption was that parents would pay for the value of the walled garden.

    But by “could have” I mean 10 years ago it could have worked. It simply doesn’t work any more for a general audience, and there’s no evidence that an ad-supported model will give them the kind of revenue growth they need either. Where next?

  • Slava

    >> “Isn’t it strange that Facebook can do something so smart yet stumble so badly with a key strategic initiative”

    Meh, doesn’t seem that strange at all, since Facebook is probably one of the most risk-taking (both UX and business wise) companies on the web right now.

    Sure they can play it safe and avoid faux pas like Beacon, but then by definition, they wouldn’t be taking risks necessary to create hits like News Feeds, FB Apps, Profile tagging in Photos, etc.

  • Mark Evans

    Beacon wasn’t a risk-taking proposition; it was a concept that clearly wasn’t thought out well. To be forced to retreat (and apologize publicly in the process) was embarrassing. It was like they got together and rolled it out with any market testing. In hindsight, they should have played it safe with Beacon as opposed to what they tried to do.