Doing Business on Facebook: What Are the Risks?

>> Is there a risk and do you think that there's gonna be some sort of fee, or, Jerry, you called it rent, that you might have to pay? And what are the risks of depending on these platforms?

>> Sure, I'm happy to dig in. I think my situation with building searchware, what we want to do is provide transparency across both social networks and the web is a little bit different. So what we want to do is provide users wherever they may be an opportunity to find people they might not have connected with or people who are interested in topics that they're not currently aware of. So from our perspective I think the most important thing is for us to just stay on top of it. It's really important to have good relationships with the people at the networks and it's really important to also create value that is unique that is hard to copy. And I think, you know, we were talking about this back stage that's really, you know, it's one of the number one rules of doing anything you've got to make sure you really create value. What we're seeing is that it's increasingly important that users resonate with what you provide and if that exists then you're in a good position. I think that the idea that these networks are now where users go, you know? I ran Search at AOL for about 5 years and one of the things that happened while I was there was people used to go to a destination site to find stuff and, again, this is something else we were talking about back stage. You go to a destination site to find stuff. The way it is now users actually go where they're most comfortable which is with their friends and the people that they know, and so now it's all about moving into that environment. So from my perspective the risk long-term is that it's important for us to be able to find the opportunities for transparency. Openness is fantastic I'd love to see Facebook be more open and provide more visibility into the fantastic conversations and expressions that are taking place there. So there's the risk of what might go away and having to pay rent for that and I'd actually love the opportunity to buy the full Facebook fee or to buy the full Twitter fee. And then the other risk is that the opportunity to really provide that visibility might not happen over time and that's one that I'm really interested in understanding as well.

>> I think it goes back to a little bit of what we talked about. It's like if you wanted to have a presence and engage with people or you have a business or what not. So the business example would be, you know, hundreds of years ago you would have to open up a store and put your name up there and say, okay, I'm -- you know, this is my business I'm the butcher in the town and people knew where to go for that service. Then when the telephone came around you needed to get a telephone number and that what became the communications protocol for people to reach you and engage with you. And then when in the 90's when the web came around and, you know, you had to get a dot com address and people knew, okay, that's where I go. Today, basically, I mean Facebook and Twitter and all of these to us they've become the communications protocol in which we are integrating services like, you know, SGN and Aardvark and a lot of other services like yours.

>> So you have expectations that one day you're going to have to pay some sort of toll or fee, or it's not out of the question. I think Matt too said that it's actually inevitable.

>> I don't know what to expect but I think the perfect example is we do business on the iPhone and we do business on Facebook and iPhone gets 30% of everything that we sell for a Premium app, and we're happy with that, right?

>> Yeah

>> So on Facebook, you know, they didn't ask for that initially and maybe they regret that today because there's quite a lot of activity. So the idea of there being a payment system, for example, for transactions inside of that platform that is opt in is not a bad idea, and I think a lot of people would, who are actually building multi, multi million dollar businesses in those platforms would be happy to engage in that.

>> Sure

>> And I think that the big risk and the big difference relative to exactly these examples that you site, you know, setting up a store or having a telephone or having a website is that these are proprietary platforms they're not not for profits, they're not sort of open federations and that they will want to extract their fair share of whatever value you're creating along with them. And I think, Larry, you raise an excellent point which is that you have to sort of be cross platform. If you're gonna build on Facebook or Twitter it shouldn't be one and only one and I'm sure that Josh's comment was towards building a business exclusively on one of these sort of shifting giants. And if you do build a cross platform business and you're working on different IM networks and you're working on different social networks and you're working on different equivalents to Twitter and micro blogging sites and they're all successful then you sort of know you're the one creating the value it's not any individual player. And that said, I also think that these platforms are both extremely smart so they want to create situations where people are incented to behave correctly and not only get their own value but give value to the platform itself. And the other nice thing which is gravy but you can't really expect it is that these guys are also idealistic so, you know, having come from Google do no evil was not just lip service the company behaved differently from it and Twitter and Facebook both have their very own strong versions of that because of their founders and that sort of makes it easier than if you had sort of blood thirsty monopolists out there who at some point is gonna take every penny. I don't think that's gonna be the case even if they could because that's not sort of the personality of those companies.

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==== Transcribed by Automatic Sync Technologies ====