The billion dollar deal in under 2 years

App Instagram success team

California has been famous since the gold rush for creating fortunes overnight. The Golden State was a dream factory for get-rich-quick schemes from pioneers with pickaxes to beautiful people aiming to be Hollywood stars.

But only in Silicon Valley can a couple of 20-somethings turn 551 days, or 78 weeks, of work into a $US1 billion fortune.

Kevin Systrom, 28, joined the long line of technocrats turned plutocrats on Monday in the US when he sold Instagram, a profitless photo-sharing app that’s less than two years old, for $US1 billion.

He sold it to that other wunderkind, Mark Zuckerberg, 27, the Facebook founder whose social network is now worth an estimated $US100 billion.

Systrom, a former Google employee, is understood to own about 40 per cent of Instagram, which is now worth $US400 million.

His co-founder Mike Krieger, 25, is believed to have about 10 per cent, worth $US100 million. The rest will be shared with investors and the company’s other employees – all 11 of them.

Even by Silicon Valley standards, it’s a remarkable haul for a company that has been around for less than two years.

If Facebook had been paying Instagram from the start it would work out that Instagram was making roughly $US1.8 million a day from the social networking giant, or $US12.7 million a week.

Instagram was not the first, or the only, mobile app offering people a way to share their photos on Twitter, Facebook or Flickr. Nor was its use of filters to add visual effects to those shots a new idea. But what made it stand out was its success.

Last week Instagram raised $US50 million from venture capital firms, valuing Systrom and Krieger’s baby at $US500 million. Zuckerberg had reportedly already approached Systrom and asked to buy the firm but, after the funding, he came back with an offer that could not be refused: double the price.

Instagram might not make a cent but it is the hottest mobile app in the world and Facebook is preparing for the biggest IPO in tech history.

To date people have questioned Facebook’s mobile strategy. Zuckerberg started his social network in the days when PCs and browsers ruled the internet. Even 20-somethings can look a bit dated in these fast moving days. And $US1 billion is a small price to pay for new school cool, if you are worth $US100 billion.

Systrom, a Stanford University graduate like so many Silicon Valley multimillionaires, grew up in Boston but was an early witness to the dotcom boom. His mother, Diane Systrom, worked at Monster.com during the first internet era and is now an executive at Zipcar, the online car rental business.

The history of the billion-dollar deal goes back to his university days where he was studying for an engineering degree. Systrom, a big photography fan, started looking at ways to share photos online. His interest subsided as he looked for a job, ending up at Google, where he spent two years in product and corporate development.

Systrom’s next job was at Nextstop, a trip-recommendation site that Facebook bought for a rather measly $US2.5 million.

Systrom then started Burbn, named after his favourite liquor, a company that focused on the super-hot area of mobile but whose basket of services seemed to lack any clear identity. It had photos but also check-in capabilities, such as Foursquare, and other apps.

Along came Krieger, another Stanford graduate, and the two started talking about narrowing their focus.

On the Q&A site Quora, Systrom explained the genesis of Instagram: “We decided that if we were going to build a company, we wanted to focus on being really good at one thing.

“We saw mobile photos as an awesome opportunity to try out some new ideas. We spent one week prototyping a version that focused solely on photos. It was pretty awful. So we went back to … Burbn. We actually got an entire version of Burbn done as an iPhone app, but it felt cluttered, and overrun with features.

“It was really difficult to decide to start from scratch, but we went out on a limb, and basically cut everything in the Burbn app except for its photo, comment, and like capabilities. What remained was Instagram. (We renamed because we felt it better captured what you were doing – an instant telegram of sorts. It also sounded camera-y.)”

The rest is Silicon Valley history. Launched in October 2010, Instagram was an instant hit. More than 30 million people have downloaded the app now. When the firm launched an Android version this month, it attracted 1 million downloads in 12 hours. People love sharing their photos online and making them look like their dad took them in 1980 with a camera he borrowed from his dad.

And the app they want to do it with is Instagram.

Share and Enjoy

Pinterest Blogger captures stardom by pinning 5700 images on site.

Christine Martinez spent the past week frolicking on the Caribbean island of St Barts after becoming a star by sharing her sense of style at Pinterest.com.

Pinterest has become the web’s hottest young website, particularly among women, by giving people virtual bulletin boards that they decorate with pictures showcasing interests in anything from food to sports, fashion or travel.

“Gawd I love Pinterest,” fashion blogger Martinez said in a Twitter message fired off between flights on Friday as she made her way back to her home in the Californian city of Oakland

Nearly a million people have signed up to follow Martinez at Pinterest where people “pin” pictures they have taken or, in most cases, plucked from elsewhere on the internet.

“I have a penchant for pretty,” Martinez said in her Pinterest profile, which had a picture of her with her cherished dog ‘Miles.’

As of Saturday, she had 43 Pinterest boards with more than 5700 images reflecting her taste in jewellery, swimsuits, and more.

Pinterest is such an influential fashion venue that chic beachwear label Calypso St Barts took her to the French island territory for a week to “live pin” the label’s swimsuit photo shoot.

“Pinterest is the latest procrastination tool of the masses,” Avery Spofford of fashion website shefinds.com wrote in an online post citing Martinez’s adventure as evidence of Pinterest’s clout.

“Mostly, people just like to look at photos of puppies and cake and interior design,” Spofford continued. “Us, too!”

Pinterest was launched in early 2010 and has been growing at a dizzying rate in the past six months despite being invitation-only. The website reportedly has more than 13 million users.

Pinterest is driving more online traffic to retail websites than social networks LinkedIn, YouTube and Google+ combined, according to a January report from Shareaholic.

The first investor to back in the venture, Brian Cohen, is delighted with its results so far.

“Pinterest’s traffic charts aren’t hockey sticks – they’re rocket ships,” internet tracker RJ Metrics said in an analysis released last month.

“Pinterest is the hottest young site on the internet.”

Brands are leaping onto Pinterest, setting up pages to appeal to prime shopping demographics or forming collaborations such as the one between Martinez’s MilestoStyle.com blog and Calypso.

“The amount of free advertising a brand gets on Pinterest is ridiculous,” blogger Kerry Sauriol wrote at WomenInBizNetwork.com.

“Without even having their own Pinterest boards, clothing companies, furniture designers, tech companies, and on and on have their products pinned and adored,” she continued.

“Think of the marketing power of a brand that does have a board.”

Other websites have begun adding “pin it” buttons inviting visitors to decorate Pinterest pages with images using a single click, according to co-founder Ben Silbermann.

“The last few months have been a whirlwind here at Pinterest,” Silbermann said in a recent blog post. “It’s humbling, and exciting.”

The small Pinterest team works in box of an office in single-story building in downtown Palo Alto in Silicon Valley.

About a dozen engineers were working at rows of desks in an undecorated room when an AFP correspondent visited.

Pinterest said it was too swamped with attention from users and media for interviews.

Rampant pinning of images snagged from the internet has raised concerns about copyright violations at Pinterest.

The website follows procedures set out in US copyright law and has a form at the site for reporting violations, Silbermann explained. Each “pin” has a flag icon for marking pirated content.

“We care about respecting the rights of copyright holders,” Silbermann said.

“Copyright is a complicated and nuanced issue and we have knowledgeable people who are providing lots of guidance.”

Pinterest fans include Dave Morin, a longtime member of the Facebook team who left the leading social network to start Path.

Morin sees Pinterest as part of a trend for people in “the world’s biggest club” Facebook to form sub-groups based on interests or close relationships.

“Now that the world understands how to be social through the internet people want unique experiences in different contexts,” Morin said, noting that Path lets people intimately share with family and close friends.

“Pinterest has a space where you can talk about your deep interests,” he continued. “In my case, deep interests in ski gear or photography gear.”

Share and Enjoy

F-Commerce has not delivered expectations.

Last April, Gamestop opened a store on Facebook to generate sales among the 3.5 million-plus customers who’d declared themselves “fans” of the video game retailer. Six months later, the store was quietly shuttered.

Gamestop has company. Over the past year, Gap, JC Penney and Nordstrom have all opened and closed storefronts on Facebook’s social networking site.

Facebook, which this month filed for an initial public offering, has sought to be a top shopping destination for its 845 million members. The stores’ quick failure shows that the California-based social network doesn’t drive commerce and casts doubt on its value for retailers, said Sucharita Mulpuru, an analyst at Forrester Research in Cambridge, Massachusetts.

“There was a lot of anticipation that Facebook would turn into a new destination, a store, a place where people would shop,” Mulpuru said in a telephone interview. “But it was like trying to sell stuff to people while they’re hanging out with their friends at the bar.”

A year ago, investors hailed so-called F-commerce as the next big thing, speculating that the company had potential to threaten Amazon.com and PayPal. Facebook is the most-visited website in the world. Some people thought that persuading visitors to shop would be easy, Mulpuru said.

David Fisch, Facebook’s director of business development, said in June that the site would make shopping online, previously a solitary experience, more social.

Hanging out

“This is where people are hanging out,” Fisch said at the Internet Retailer Conference & Exhibition in San Diego.

Facebook planned to profit from retailers buying ads to drive traffic to their on-site stores. Business consultant Booz & Co. predicted in January 2011 that physical goods sold through social commerce would balloon to $US30 billion from $US5 billion by 2015, with Facebook contributing a majority of sales.

Even as some businesses shut storefronts, many companies continue to devote advertising dollars to the social network. Facebook’s sales surged 55 per cent to $US1.13 billion in the fourth quarter. The company aims to use e-commerce more as a way of getting users to stay longer than as a way to boost revenue, said Krista Garcia, an analyst at EMarketer in New York.

Chris Kraeuter, a Facebook spokesman, declined to comment.

Customers had no incentive to shop at Gamestop’s Facebook store rather than the company’s regular website because purchasing online is already convenient, said Ashley Sheetz, who is the Grapevine, Texas-based company’s vice president of marketing and strategy.

Shut quickly

“We just didn’t get the return on investment we needed from the Facebook market, so we shut it down pretty quickly,” Sheetz said in a telephone interview. “For us, it’s been a way we communicate with customers on deals, not a place to sell.”

Gap, which has 5.6 million Facebook fans from its namesake, Banana Republic and Old Navy pages, opened and discontinued a storefront last year, said Liz Nunan, a company spokeswoman. The San Francisco-based company also discovered customers preferred shopping on its own sites, she said.

“We will continue to evaluate if this is something we want to bring back in the future,” Nunan said in an emailed statement.

Nordstrom tested ways to make shopping “seamless through Facebook” and decided on a broader social media focus, Colin Johnson, a spokesman, said.

JC Penney featured assortments in a Facebook “shop” tab beginning in 2010, and took it down in December 2011, Kate Coultas, a spokeswoman said in an emailed statement.

Other advertisers, such as Procter & Gamble, have kept their F-stores running, including Olay, Tide and Cover Girl.

An Australian online business, however, had a re-think about selling its goods through a Facebook store, after considering the costs.

Eugene Tan, director of Aquabumps, a business selling daily photographs of Bondi and other beaches, has a meaningful fan page on Facebook but declined the offer to create a new e-commerce engine or merge his current one on the social network.

“I had a look at some of the guys providing the service to create a shop and I thought (the site) was slow. A lot of apps that run on Facebook are slow. And I can’t control it. I’d rather people come to me (from Facebook).”

Tan said he also didn’t like to put a “hard sell” on his Facebook page. “We’re very subtle on the sell. My buyers would switch off.”

Tan stores about 1000 images on his site and offers 12 permutations in framing and sizing options.

“It’d be very difficult to have two stores, and expensive too. They (third party) wanted a monthly fee and a percentage of sales. With my own site I can control the costs – I paid a one-off fee to create it and pay the credit card transaction fees; that’s nothing,” Tan said.

Cracks in model

Wade Gerten, chief executive officer of social media developer 8thBridge, previously known as Alvenda, opened a Facebook store for the florist 1-800-FLOWERS. Minneapolis-based Gerten went on to develop commerce strategies for Delta Air Lines, Diane Von Furstenberg Studio and denim-maker Seven for all Mankind.

Cracks in the model showed quickly, Gerten said in a telephone interview. Clients “have taken a different approach,” shutting stores or scaling back their offerings.

“It was basically just another place to shop for all the stuff already available on the retailer websites,” Gerten said. “I give so-called F-commerce an ‘F’.”

Share and Enjoy

BRISBANE AUSTRALIA SPAWNS A NEW FACEBOOK LIKE CONCEPT USING LIVE VIDEOS AS THE COMMUNICATION MEDIUM

A first name isn’t the only thing Mark Cracknell has in common with Mark Zuckerberg.

Like the Facebook founder, Cracknell is a young man with big dreams and a background in computing. He also has a website, Kondoot, which, like Zuckerberg’s famous social network, enables users to share their lives online.

Mark C may not have emulated Mark Z’s stratospheric success just yet, but the comparison is already being drawn – by no less than the Wall Street Journal – after the 21-year-old Brisbane-based entrepreneur and partner Nathan Hoad returned from the US with $3.2 million in funding for their site.

Sourced & published by Henry Sapiecha

Share and Enjoy

RUPERT MURDOCH ACCUSES GOOGLE OF AIDING FILM PIRACY

News Corp chairman and chief executive Rupert Murdoch has accused internet giant Google of aiding film piracy.

The Australian-born media mogul used his recently activated Twitter account to blast the search engine, branding it a “piracy leader”.

“Piracy leader is Google who streams movies free, sells advts around them,” Murdoch wrote.

A short time later he added to the rant, saying film making was “risky as hell”, with piracy hurting actors and writers.

Murdoch then added: “Google great company doing many exciting things. Only one complaint, and it’s important.

“Just been to google search for mission impossible. Wow, several sites offering free links. I rest my case.”

That was a reference to the latest Tom Cruise movie Mission: Impossible – Ghost Protocol.

The comments were among Murdoch’s most outspoken since launching his Twitter account on January 1.

He’s used the social networking site to pass judgement on a number of subjects, ranging from serious comment on US politics to his own error-prone typing.

“Re complaints about my spelling! Problem is my pathetic typing. Sorry, if anyone really cares,” the media mogul wrote on January 10.

Share and Enjoy

INDIAN GOVERNMENT TAKES STAND AGAINST IT GIANTS

IT IS SENSITIVE ABOUT POSTINGS ON SITES.

GET A GRIP MATE-JOIN THE REAL WORLD

India’s government has authorised the prosecution of 21 internet firms, including Facebook, Yahoo! and Google, in a case over obscene content posted online, sources say.

The approval could lead to company directors being called to a trial court in New Delhi to answer serious charges such as fomenting religious hatred and spreading social discord, an official and a lawyer said.

A criminal case against the web titans was first filed in a lower court by local journalist Vinay Rai, who complained that the sites were responsible for obscene and offensive material posted by users.

He also claimed they had broken laws designed to maintain religious harmony and “national integration” in India.

Rai’s lawyer, Sashi Prakash Tripathi, said: “We had applied for the government’s sanction and the ministry of communication and IT has filed it directly in the metropolitan magistrate’s court.”

The companies targeted have filed a petition in the Delhi High Court seeking to have the lower court’s case against them stayed. The hearing of the petition is to resume on Monday.

The lower court yesterday ordered that summons be served on the 10 foreign-based companies, including Facebook, Google, Microsoft, Yahoo! and YouTube.

The government’s sanction to prosecute represents an escalation of a recent tussle between social networks and the government.

Communications Minister Kapil Sibal last month pledged a crackdown on “unacceptable” online content and urged social networks to exert more control over their platforms.

He provided examples of religiously-sensitive images and obscene photoshopped pictures of Indian politicians.

Mukul Rohatgi, a lawyer for Google India, told the High Court on Thursday: “No human interference is possible and, moreover, it can’t be feasible to check such incidents.”

The companies will now hope the High Court stays the prosecution, but they received some hostile comments from a presiding judge.

“You must have a stringent check. Otherwise, like in China, we may pass orders banning all such websites,” the Delhi High Court said.

Companies should “develop a mechanism to keep a check and remove offensive and objectionable material from their web pages”, Justice Suresh Kait was quoted as saying by the Press Trust of India

Sourced & published by Henry Sapiecha

Share and Enjoy

Private photos of facebook founder Mark Zuckerberg uploaded to his Facebook have leaked oot into the public internet following the discovery of yet another security flaw, one of the many that have plagued the social networking website since its inception in February 2004.

The flaw, which Facebook has acknowledged, appears to have first been posted about on a body building forum along with step-by-step instructions on how to obtain access to the private photos of any Facebook user.

The forum post has since been deleted and upon discovering the security flaw, Facebook said it “immediately disabled the system” used to obtain private photos and would only “return functionality” once it had confirmed a fix.

The flaw “allowed anyone to view a limited number of another user’s most recently uploaded photos irrespective of the privacy settings for these photos”, Facebook said in a statement, and was “the result of one of our recent code pushes”.

It was live for “a limited period of time”, it added.

One of the photos extracted from Facebook founder Mark Zuckerberg’s profile shows him holding a chicken upside down as if it were dead. Another shows him holding two plates, one with what looks to have battered chicken on it and the other, thinly-sliced potato chips.

If reports of Mr Zuckerberg only eating meat he has killed are anything to go by, it’s likely the chicken was slaughtered.

Other photos show him with “Beast”, his fluffy white dog, and girlfriend Priscilla Chan at their home.

There are also photos of Mr Zuckerberg with friends while eating and drinking, with US President Barack Obama and with children in costumes, likely taken during Halloween in the US.

Facebook has had a long history of access control vulnerabilities, especially around unauthorised access to photos, said Ty Miller, chief technology officer at the Australian security firm Pure Hacking.

In December 2009 a privacy overhaul of the social networking site saw almost 300 photos of Mr Zuckerberg and his friends as well as his calendar and wall posts made public to even non-friends. His access privileges were revised to “friends of friends” following reports of the photo treasure trove.

“Facebook users should expect variations of this type of security flaw to continue into the future,” Mr Miller said. “As a precaution Facebook users should ensure that they only upload content … that won’t negatively impact them if it is leaked.”

He added that the social networking giant should ensure that penetration tests were performed on all updates to the site to ensure that vulnerabilities like the recent one were detected prior to being released to the public.

Share and Enjoy

Facebook isn’t the only online community with a captive audience.

IT IS no coincidence the Academy Award-winning account of Facebook’s meteoric growth was entitled The Social Network.

Facebook.com

After all, with more than 800 million active users globally and at least 250 million photos uploaded every day, the little blue website that started in 2004 as a mere side project to co-founder Mark Zuckerberg’s university studies is now – indisputably – the social network.

Having long ago knocked the once-mighty MySpace out of its spot as the world’s No.1 social-networking website, Facebook is proving unassailable, even to fellow tech behemoth Google.

Google +

Google plus.com

Google’s social network, the four-month-old Google+, has lured just 40 million users.

Digg

Digg.com

Linkedin

Among the hundreds, if not thousands, of wannabe Facebook killers, only a few dozen have garnered serious numbers.

Twitter

Twitter.com

We might have all heard of Twitter (200 million-plus users) and perhaps even LinkedIn (120 million-plus users) but, especially in other parts of the world, none of these, not even Facebook, is king.

My space

Myspace.com

Why? Because though such mind-boggling figures matter when you’re courting investors or advertising dollars, they don’t if you are truly trying to create a social network where like-minded people can mingle, as is evidenced by the surprising number of smaller communities based purely on niche interests, such as languages, lifestyles or even a love of a specific animal, that appear with surprising regularity.

QZone

qzone.qq.com

With a whopping 480 million-plus users, QZone is bigger than Twitter, LinkedIn and MySpace (33 million-plus) put together.

It is the No.1 social network in mainland China, where Twitter and Facebook are banned. It’s not entirely free, with many features only accessible after paying a fee that allows users to access a Twitter-like micro blog, instant messaging, photo sharing and music streaming.

Pinterest

pinterest.com

Just 19 months old, the invitation-only Pinterest is a highly addictive image-based social network where users share their favourite images with friends.

It might not sound terribly interesting but for right-brained creative types who love collecting pictures of ”stuff”, it’s a digital dream. It allows users to share ideas and concepts that couldn’t possibly be conveyed in words.

Businesses such as ad agencies and graphic designers use it to get a feel for what clients want. Those planning weddings use it as a digital cork board filled with dress designs, ideas for cakes and colour schemes.

ASMALLWORLD

asmallworld.net

Founded by Swedish banker Erik Wachtmeister and his wife, Countess Louise Wachtmeister, ASMALLWORLD is an invitation-only social network for ”the elite” who don’t want to rub shoulders, even digitally, with the hoi polloi.

It is thought to have about 500,000 users, including James Blunt and Ivanka Trump, among others, and allows them to discuss important matters such as fine dining in the world’s great cities, seek out appropriately vetted flat mates and, most importantly, socialise with those of their own fine, well-bred and well-heeled ilk. Of course, we can’t verify any of this – we’ve never scored an invite.

Instagram

instagr.am

Snap-happy iPhone owners can share their daily goings-on via photos, which can be edited on the fly. It’s like Facebook without words or Twitter using only pictures.

Snap a picture and upload it to your Instagram profile to let your friends and followers know what you’re doing, when you’re doing it and where such excitement is occurring. You can’t even add a caption (but you can leave a comment).

Depending on how interesting – or good – your happy snaps are, others will start following and interacting with you and you’ll see some stunning photography. With more than 1 million photos shared every day, it is absolutely mesmerising and lets you do something useful with that bursting iPhone Camera Roll.

Orkut

orkut.com

Owned by Google, the multilingual Orkut was once massive in India and Pakistan – until Facebook came along.

Now its biggest audience is Brazil, where 58.7 per cent of its 66 million or so users reside. Indians make up 28 per cent of users, while Japan is the third-largest community – but only at 5.3 per cent.

Orkut offers a simple, youth-oriented interface that includes lots of ”cute” teen-friendly features such as ”cool” rankings. One of its most clever features is the ability to add people to your ”Crush List”, where, if both members independently add each other, they will be informed of their mutual admiration. It adds a digital twist to the age-old, angst-ridden notion of unrequited love.

Ning

ning.com

Netscape co-founder (and tech guru) Marc Andreessen is behind Ning, a DIY social-networking service that lets the likes of you and me take on Mr Zuckerberg. Well, not quite.

But you can build a website or social network based on your design and target market. Plans start from about $3.95 a month for a basic, home-spun social-networking site with no more than 150 users; you’ll pay between $29.95 (up to 10,000 members) and $59.95 (unlimited members) a month if your user base grows. Depending on which subscription plan you choose, you’ll be able to offer many of the features included on ”real” social networks, from live chat and photo sharing to uploading video in branded media players

Share and Enjoy

Also in Slate, predict how much The Social Network will take at the box office.

Adam Goldberg In a parallel universe, there is a blockbuster movie coming out soon about a Web site that changed the world. It’s called The Social Network. It stars Jesse Eisenberg as the site’s wunderkind creator. It features wealth and drama and Ivy League shenanigans. But it’s not about Facebook. It’s about another site, Campus Network, and its founder, Adam Goldberg, a guy who came within arm’s reach of a multibillion-dollar idea that ultimately just slipped his grasp.

As The Social Network dramatizes, Mark Zuckerberg founded Facebook after allegedly backing out of a commitment to work on another networking site, Harvard Connection. Lawsuits ensued, and Zuckerberg ended up shelling out tens of millions of dollars in a settlement with his one-time partners. What the film doesn’t mention are all the other college social networks that Facebook shoved aside as it expanded across the country. Of those sites, perhaps the greatest threat to Facebook’s dominance was Campus Network, then called CU Community after Columbia University, where it was founded.

“If you talk to Mark, he’ll be the first to tell you he thought CU Community was the biggest competition that Facebook ever had,” says Goldberg, now 26 years old and living in New York City. While I was unable to confirm that Zuckerberg agrees with this statement—the Facebook CEO and the company’s PR reps didn’t respond to my requests for an interview—it is true that Facebook and CU Community were running neck and neck for a brief moment in Internet history. Facebook had Harvard, CU Community had Columbia, and both were mulling plans for expansion. Only one site would survive. It wasn’t to be Adam Goldberg’s.

Goldberg got the idea for Campus Network in 2003, during his freshman year at Columbia’s school of engineering. As president of his class, he heard a lot of complaints about the university’s lack of community spirit. Over the summer, he wrote a simple script for a social network for engineering students. The site let users share personal information, post photos, write journal entries, and comment on one another’s posts. In just a few weeks, Goldberg says, most of the engineering students had profiles. Over winter break, he rebranded the site CU Community and opened the site to all undergraduates in January. Goldberg says that nearly all  Columbia students signed up in just over a month.

On Feb. 4, Facebook launched. “At first I was like, Oh my God, they copied my Web site,” says Goldberg. Unlike Zuckerberg’s Harvard Connection adversaries, however, the CU Community founder quickly changed his mind. “I saw it was totally different. It had an emphasis on directory functionality, less emphasis on sharing. I didn’t think there was that much competition.”

As of early 2004, Goldberg’s social network was a lot more advanced than Mark Zuckerberg’s. The first incarnation of Facebook—known as The Facebook back then—let users post a photo and basic biographical information. It let them “friend” and “poke” each other. But that was about it. Fancier tools like photo sharing and Groups and the Wall didn’t come till later. Meanwhile, CU Community already had blogging and cross-profile commenting. Facebook’s simplicity and the fact that it was available only to Harvard students made it easy for Goldberg to dismiss. “We were the Columbia community, they were Harvard,” he says.

The illusion of safety crumbled a month later when Facebook opened its doors to students at Stanford, Yale, and Columbia. While Facebook grew exponentially at Harvard and Stanford, growth was slower at Columbia—in part, says Goldberg, because CU Community was already so entrenched. Some Columbia students launched a campaign to “Google bomb” Facebook by linking the search term “cucommunity ripoff” to TheFacebook.com and “worthless safety school” to Harvard.edu. The Columbia Spectator called the effort “marginally successful.” (I wrote for the Spectator at the time.) Despite this online agitprop, Facebook continued to grow. That summer, it overtook CU Community as the most popular social network on campus.

That spring, Goldberg started instant messaging with Mark Zuckerberg. In March, he met with Zuckerberg and Sean Parker, the Napster co-founder and early Facebook investor, at a Starbucks on 96^th Street. According to Goldberg, Parker tried to persuade Zuckerberg to acquire CU Community. Zuckerberg didn’t tip his hand, but Goldberg says they kept in touch. In June, he says, Zuckerberg invited him to Palo Alto, Calif., where the Facebook crew had moved to work on the site. Goldberg flew out and stayed with Zuckerberg and pals for two weeks. “I think we went to one Stanford party,” he says. There was “no crazy partying or drinking,” Goldberg says, despite what The Social Network may suggest.

The invitation to come to Palo Alto was basically a job offer, says Goldberg. “They didn’t give me a clear salary and working terms. It was, Come out here and work with us.” He remembers that Zuckerberg even offered to pay for Goldberg’s flight.

Goldberg said no, thanks. “I really believed that Campus Network was a better product,” he says. He spent the summer of 2004 coding a new site, rebranded it Campus Network, and launched it at five other schools in September. But Facebook was expanding, too. “We made a strategic decision to go after Big 12 schools,” says Wayne Ting, who ran business and legal operations for Campus Network. “But when we went to the Big 12, Facebook immediately went to the Big 12, too. They were clearly monitoring our activity.”

Ting’s analysis squares with a description of Facebook’s “surround strategy,” as described in David Kirkpatrick’s book The Facebook Effect. “If another social network had begun to take root at a certain school,” Kirkpatrick writes, “Thefacebook would open not only there but at as many other campuses as possible in the immediate vicinity. The idea was that students at nearby schools would create a cross-network pressure, leading students at the original school to prefer Thefacebook.”

Beating Facebook would take all the time, energy, and cash that Goldberg had. He and Ting decided to take time off from school. They moved to Montreal, hired three employees, and set up shop in the offices of a programmer friend of Goldberg’s. They slept on the office floor. Every morning, they woke up early and put away the air mattresses before the employees arrived. “We didn’t want them to know we were homeless,” says Ting.

It quickly became clear that Facebook was winning. One factor was that Zuckerberg’s site had the financial means to expand. Goldberg says he turned down advertisers, including MTV, and didn’t seek out venture capital: “We would have if we thought the reason we couldn’t succeed was because of money.” By the time Facebook hit 1 million users, Campus Network had only 250,000. Goldberg knew there was no catching up. He returned to Columbia in the fall of 2005 and shut down Campus Network. Goldberg declined to put a figure on how much the whole effort cost him, but Ting estimated it was somewhere between $100,000 and $200,000.

In the meantime, Goldberg had launched a social network for high schools called Friendex. But he says he killed the project after a month at the request of Zuckerberg and the Facebook team. “They made me feel really bad for having launched it,” he says. “So I took it down.” Facebook soon expanded to high schools.

Why did Facebook succeed where Campus Network failed? The simplest explanation is, well, its simplicity. Yes, Campus Network had advanced features that Facebook was missing. But that wasn’t necessarily a good thing. Goldberg’s site smothered the user with doodads. Its pages were fully customizable, with multiple designs and backgrounds, not unlike MySpace. To sign up for Facebook, on the other hand, users had to fill in three fields: name, email, and password. User profiles were uniform, their contents intuitive—favorite movies and relationship status and class schedule. While Campus Network blitzed first-time users right away, Facebook updated its features incrementally. Facebook respected the Web’s learning curve. Campus Network did too much too soon.

Other factors contributed to Campus Network’s downfall. User profiles were open to the public, scaring off some potential enrollees and allowing cyberstalkers to satisfy their curiosity without joining. Campus Network didn’t expand quickly enough, either, allowing Facebook to get a first foothold in potential markets. And its aesthetics didn’t help. “It looked like somebody who loves Dungeons & Dragons,” says Ting. “It had that look and feel.” And of course there’s the H-Factor. “I think the name had a lot to do with it,” says Ting. “When we go to a school and say this site is from Columbia, it doesn’t carry the same marketing punch as, This is from Harvard.”

Neither site, of course, can claim to be the first social network—Friendster and MySpace already had large followings in 2003. But both Facebook and Campus Network had the crucial insight that overlaying a virtual community on top of an existing community—a college campus—would cement users’ trust and loyalty. Campus Network figured it out first. Facebook just executed it better.

Does Goldberg regret not hopping onboard the Facebook express when he had the chance? To borrow a phrase, it’s complicated. “In some ways I do, some ways I don’t,” he says. “I wasn’t ready to drop out of school, to give up my own project. I thought the best way to do it was to do it myself.” Ting tries not to dwell on it. “There are still moments when you feel a deep sense of regret, especially when I read an article about this movie or Mark Zuckerberg or see him on the cover of Time, and you ask, Could this be me? Could we have succeeded? I think that’s a really painful question. … There are fleeting moments like that. But I’m much prouder that we took a risk and we learned from it.”

Goldberg took two years off after graduation to study language in Argentina and France. He started writing a food blog. Now he’s getting ready to launch a new site, Topic.org, a Wikipedia-style forum where users lay out arguments on issues like the BP oil spill and the death penalty. He maintains a Facebook profile, but it’s hard to find unless you’re already his friend. On his Facebook page, Goldberg has this as his favorite quote: “One does not discover new lands without consenting to lose sight of the shore for a very long time.”

Sourced from slate & published by Henry Sapiecha

Share and Enjoy