Why is there so much glee over Mark Zuckerberg's IPO woes?
Among the historic aspects of Facebook's mid-May initial public offering (IPO) is the schadenfreude that followed. Yes, there are good criticisms to be made of the IPO, not to mention of Facebook's privacy protections and user experience. But read between the lines of the anti-Facebook rants, and it becomes clear that many are slamming the company for acting in its true nature: as a profit-seeking business.
There was a palpable sense of glee as the media deemed the much-hyped IPO a flop and more still as the stock price proceeded to fall, from $38 per share at the opening bell on May 17 to below $28 two weeks later. Some declared they were leaving Facebook for good, and there's even a Twitter feed, @not_on_Facebook, tracking Facebook defections.
This is not simply a reaction to the much-maligned IPO. At the core of the public backlash is the growing belief that Facebook is profiting by selling out its users. My question is: Why the surprise? We project our own aspirations onto companies like Facebook, wanting them to be about intimate connection, self-expression, and even revolution. Then we feel weirdly betrayed when they act in their commercial interests. But Facebook is a business: It's time to get over it.
Facebook can be a thoroughly personal experience. People entrust it with their relationships and their memories. More importantly, they use it to define themselves. And even though some use Facebook for commercial self-promotion or to sell their wares, many others use it to express their personality, shape their identity, and interact with others. "It creates a conflict, real or perceived," says Alexander Chernev, a professor of marketing at Northwestern's Kellogg School of Management. "People don't want their self-expression to be used with commercial intent."
Now that Facebook is enormous -- 900 million active users and counting -- people feel like they have to be there. Andrew McLaughlin, vice president of Tumblr, says Facebook has become a kind of "social utility." We've come to view Facebook as if it were a cable, phone, or electricity company, and people "always feel jerked around, underappreciated, and underserviced by utilities," McLaughlin told me over email. In Facebook's case, "they take for granted its amazing features and get grumpy about the company's perceived (and, in my view, unavoidable, at Facebook's scale) indifference to them as individuals." In the end, we've created this monster: Facebook feels unavoidable because so many people have chosen to be there.
The problem is that nobody wants to pay for it. The storage of billions of digital photographs, not to mention the labor of thousands of employees, is not free. Facebook makes much of its revenue by allowing marketers to target users based on information they have shared. This rubs some people the wrong way. But it's unlikely that Facebook would be as big as it is today had it imposed a monthly subscription fee.
When companies try to make money off user-generated content, some users will resent them for it. Many unpaid bloggers for the Huffington Post were angry when the company was sold to AOL for $315 million. Some even sued Huffington Post and AOL for profiting from their free labor. But hadn't they benefited from the free platform and promotion the Huffington Post had provided?
In Facebook's case, adding insult to injury is the fact that CEO Mark Zuckerberg, a man in his 20s, made so much so quickly. "The pace of technological change is so fast, companies go from underdog to schadenfreude in a heartbeat," says Andy Kessler, a writer and investor based in Silicon Valley. People are less resentful of Warren Buffett, Kessler added, in part because he is perceived to have accumulated his wealth over a long period of time.
There is a feeling that by getting rich, Zuckerberg has somehow sold us out. But while Facebook celebrates the larger values of openness and connectivity, Zuckerberg doesn't pretend that Facebook is anything other than a business. He even said that the role of social media in the Egyptian Revolution was "overblown." Zuckerberg may not be the most likable guy, though it's hard to tell how much The Social Network has shaped our impressions of him. In any event, our expectations seem unrealistic. It's a real problem if people feel that Zuckerberg can't be trusted to protect our privacy or data. However, if he just seems greedy, and maybe a bit of a jerk, he wouldn't be the first CEO to have those qualities.
People spend so much time on Facebook (in just one month last year, on average users in the aggregate were there for nearly 10 billion minutes per day) that it has become part of our collective identity. People thus want to think of the company as having a loftier mission. Because if not, what does it say about us? Facebook is a transformative, even revolutionary, technology. It liberated Egyptians from three decades of tyranny! It can't just be a corporation … can it?
Facebook is hardly the only technology company on which we've projected our hopes and dreams. Mike Daisey, his fabricating troubles aside, highlights our complex relationship with Apple in his monologue "The Agony and the Ecstasy of Steve Jobs." He points out the inherent tension in the fact that our aesthetically divine iPhones, so much a part of how we see ourselves, were built on the backs of cheap Chinese labor, making Apple very wealthy in the process. Google suffers from a similar problem of having to square its whimsical image and "Don't Be Evil" mantra with its role as one of the most powerful corporations on the planet. (Everyone still loves Twitter, but just wait until they start making real money.)
Nor should we let schadenfreude distract us from the larger story. Facebook, Twitter, Google, and Apple are among the most powerful ambassadors of Brand America. Their success reflects well on us as a country -- we make products that hundreds of millions of people around the world love to use -- so why aren't we celebrating it? James Othmer, a global creative director at the communications firm Young & Rubicam, puts it this way: "At a time when American innovation is at an all-time low, supposedly, you have this company whose invention is creating untold wealth, at least for its founders, and it is completely reviled."
Dov Seidman, author of How: Why How We Do Anything Means Everything in Business (and in Life) argues that across the board, people are demanding more from corporations. People don't want to feel like they are just "clickthroughs" or "pageviews," Seidman told me. For customers to stick with any company, there needs to be a "deeper glue," such as trust.
In the case of Facebook, where people are providing personal data, the need for trust is even greater. And that's fine. We should hold the company to a high standard. But it shouldn't be punished for acting like a business.