Facebook CEO Mark Zuckerberg gave a surprisingly interesting keynote interview today at SXSW 2008. (Photo by skidder.) Not only because interviewer Sarah Lacy drew Zuckerberg out from his normally quiet shell, but also because it caused the SXSW crowd to turn on Lacy for too much pedantry.
A quick tangent on the hubbub: The audience grew frustrated with Lacy's decision to storytell rather than to interview. The audience members that I spoke to also wanted her to dig into new, interesting topics that hadn't already been beaten to death in the mainstream and tech press. e.g., tell us more about how Facebook is supporting the guerrilla government revolt in Columbia? The best snippet may be that Lacy told Zuckerberg that if he wanted to know the real story behind his company, he needed to read her upcoming book of Silicon Valley startup lore. No doubt, the strange interactions will be called out in depth on the gossip sites, and there's a good deal of commentary on twitter.
This being said, let's get back to the details of the Zuckerberg interview. Lacy's drawing-out of Zuckerberg is what made the SXSW crowd warm up to him. Here's the gist of the discussion:
Lacy: A lot of people have misunderstandings about the actual Facebook site itself. What should we know?
Zuckerberg: Facebook is about helping people to connect and communicate more efficiently; to create more empathic relationships. Facebook has a relatively large population in Latin America. We just launched internationally on February 11th with a Spanish-language site, and were surprised to see that one of the first uses was to organize activities around the revolt in Columbia.
Lacy: The Internet has been connecting people openly for years. What’s the big deal about Facebook?
Zuckerberg: A lot of people are using our tools to communicate with the people they already know; it’s not intended to create a new community. It’s more efficient than just using the Internet.
Lacy: Facebook is the real world playing out on the web. Can you tell some stories?
Zuckerberg: At this point, people understand that fundamentalism doesn’t come from hatred, it comes from a lack of empathy and understanding. Some youth in Lebanon have been able to keep in touch with their childhood friends that have gone out into the world, and it’s keeping them informed and familiar with what’s going on in other countries.
Lacy: Are there things that you’re doing proactively as a company to cultivate this?
Zuckerberg: There are a lot of pressing issues that need to be solved in the world. The best thing that Facebook can do is to create a platform that can be used to solve these problems. For example, building an organization with enough political clout that it can effect change and combat poverty. The world is increasingly complex, and in order for movements like this to work, they need to be built from the bottom up. We’re running the business at breakeven right now, and are focused on the infrastructure that best supports those efforts.
Lacy: Web 2.0 companies are so focused on community and conversation, they have a much richer impact on people’s lives. It’s also why they’re so addictive. Oh, and aren’t you launching in France tonight?
Zuckerberg: Thanks for taking away my announcement! Yes, we’re launching in French tonight.
Lacy: I’ve observed that a lot of Web companies have a hard time scaling, particularly internationally. You’ve navigated it better than most. Why is that?
Zuckerberg: We’re tapping into a universal need. Everyone has relationships, and connection is a fundamental human thing. There has to be a platform that enables this, whether or not it’s Facebook.
Lacy: What can you tell us about the Microsoft investment? Are they getting their money’s worth?
Zuckerberg: A lot of people focus on the various deals we’ve done and the valuation. We’re focused on a system for communicating and connection. Anything that helps us to achieve this goal makes sense. We want the way that we make money to be in line with how people use the site. People use it by sharing information with each other – movies, music, etc. - and a lot of that is very commercial. The monetization system is in line with this, since it’s how people are using the site. If we give people enough control over this, then it should have significant overlap with how we monetize the site. And then there’s Microsoft, who has been a very good partner for us.
Lacy: There’s a sense that the Microsoft revenue isn’t sustainable, so there’s pressure on you to crack the larger nut before you run out of money in three years. Is Microsoft happy? Are you still trying to figure out how monetization works?
Zuckerberg: We’re pretty sure that they’re happy. We got ahead of ourselves, and announced that we had more figured out than we actually did. We want to build a system that helps people share information. The economic engine behind the site needs to be behind how people use it, but we have more to build before we get there.
Lacy: You see building the social graph, ads, etc. as a ten-year process, right?
Zuckerberg: We see developers as playing an instrumental role in this, and it’s going to take 10 or 20 years.
Lacy: Let’s all have an open mind and hear what you intended with Beacon.
Zuckerberg: We think that social networks are going from being large, monolithic sites to a collection of social services – some of which we develop (profiles, Beacon, etc), and then an increasing number that we won’t be building. Our DNA isn’t set for this, and other people are more talented in different areas. The primary thing that we were trying to do is build a platform for those people to build services. An increasing amount of this will be in the rest of the web, outside of Facebook.com. Sharing information, pushing information to friends, etc. Beacon was meant to be a first step for people’s actions in the rest of the Web to be brought to what they do inside Facebook. We view it as a very important trend in the world for social services to be distributed out, and to increasingly come together outside of our walls. We made a lot of mistakes in communication and interface design in Beacon, and we’re learning as a company.
Lacy: You're getting beat up around issues of privacy.
Zuckerberg: We need to give people complete control over their information, which will actually enable more sharing. 25% of people on Facebook have their cell phone number shared, and that’s because they can choose to only share it with their friends. Giving the control is what allows that sharing to take place. And the more people share, the more we can grow. Every mistake we’ve made has been because we didn’t give people enough control.
Lacy: A lot of people criticize the application ecosystem because it’s frivolous.
Zuckerberg: The applications you get are a result of the incentive system we’ve set up. We allow developers to do everything they want up to a point. If you get too spammy, you get filtered, and it’s a single threshold. So people get as close to that line as possible. If we can, we'll make it so that as more people accept your requests, the more requests you’re able to send. The more people click on your notifications, the more you can publish. We’re going to try to optimize the system so that the most useful, trustworthy applications get through the most. We’re trying to change the rules of the system.
Lacy: Is it true that you’re launching an iTunes killer? Is it a business that is appealing and makes sense for Facebook?
Zuckerberg: Music is a known vertical that we haven’t gone after, like photos. But as soon as we opened up the platform, a lot of developers showed up to fill that niche. As a company, we’re out talking and building relationships with those developers, but at this point we have nothing music-specific to talk about.
Lacy: According to Forbes, you’re the youngest billionaire on their list. Obviously it’s because of the Microsoft valuation. But you don’t actually think Facebook is worth $15 billion, do you?
Zuckerberg: We wanted to raise money with the smallest dilution possible and on the most favorable terms. We weren’t thinking about the literal valuation. We just think about what we’re building, not what the valuation is. In general, this is more positive than not. We want people to join the company because they’re passionate about what we do, not because o the valuation. We want to communicate stories about what we’ve done and what we’re doing. The valuation news can self-select for the folks that care about valuation and getting rich quick, which is why we’ve made it a point to say we’re not going public anytime soon.
Lacy: Getting a huge valuation closes the door on speculation. Is this a side benefit?
Zuckerberg: We’re not averse to going public, it’s just that we’re not focused on it. We’re not achieving milestones because they validate going public, we're achieving them because they get us closer to our mission. And we didn’t reject the Yahoo! offer because it was a lower value; it was because we are building a platform that fundamentally changes how people interact, and we weren’t ready to be bought.
Lacy: Some people think that you’re a know-it-all kid. But I think it's good when you fire people that don't match your vision.
Zuckerberg: A lot of hiring is about expectations and what people are trying to get out of it. A lot of people who started with us are still around, but those who are ready to be done aren’t.
Lacy: Sheryl Sandberg's been called the token grownup. How does she do in your male-dominated environment?
Zuckerberg: We talk about decisions together. Sheryl’s amazing, and she helps to expand globally and scale quickly. I feel really lucky to have her, and she has a great network of relationships that supports us. Gender’s not an issue. We have over 200,000 developers now. As we scale and build out different teams such as product management, being CEO becomes more of a full-time role than I may have said it was.
Lacy: Why do you want to be CEO? Many founders, like Kevin Rose or Marc Andreessen, hate being CEO.
Zuckerberg: The CEO sets the tone, and being in the CEO role myself is a good way of making sure that we stay focused on connection. As we grow, we need to keep our eye on what's important.
Lacy: You've defined yourselves as a technology company rather than a media company, or as a fixed community.
Zuckerberg: Having a technical background is pervasive in our culture, and it allows us to build and focus on the platform. Being technical is a fundamental part of our company. And it's not about how individuals fit into a community - it's about giving them the utilities they need to communicate.
Lacy: Has site development stayed close to the original ideas in your journals?
Zuckerberg: A lot of the original design comes from the people on the team who spent months doing it.
[At this point, the audience revolt ensued, and Lacy opened it up to the audience after battling the hecklers.]
AUDIENCE: Are you going to give more control to users?
Zuckerberg: We want to, but it's reasonably complicated. We want people to have control, but we're somewhat limited by architecture and the need to keep it fairly easy for people to set up their account, much less decide what default settings should be.
AUDIENCE: What's the biggest obstacle you face?
Zuckerberg: Building systems that give people control and privacy while keeping the product easy to use. And to build a framework that extends this to application developers.
AUDIENCE: Is Google pissed that Facebook is trapping so much information?
Zuckerberg: I'm not trapping information! There are different types of information, such as semi-private information like your cell phone number that you share with a limited set of people. Search is important in that it indexes all of the information out there, but our semi-private information won't be included unless the users make it fully public.
AUDIENCE: I think that the Facebook messaging implementation is flawed. Are you going to fix it?
Zuckerberg: We weren't planning on becoming an email competitor. Messaging was intended to be as simple as a poke, but now it's being used as frequently as email by some. We haven't focused on it before because it wasn't meant to be used like that, but it's something that we're looking at.
