Facebook is looking to generate greater revenues. Duh. A classic case for virtually every company. So how do you increase revenue? With a standard, basic, Business 101 product, you can increase volume or you can increase price, assuming the other factor of revenue (PxQ) remains constant, to increase revenue. As companies expand, age, and gain pressure from private investors or that of Wall Street, a regeneration of sorts occurs. Some companies respond with price changes. Others change effective quantity size to increase volume (which is essentially a price increase). Others buy companies to supplement or complement their core business, by praying their M&A activity doesn't incorporate such a large core adjacency disparity to turn off investors or at the very least distract from the core (hopefully cash cow) business. Others take a more expansive, expensive, and daring route; they innovate.
So the big deal here is, how does Facebook innovate? Facebook was nevertheless just a social network, portals that existed before, exist elsewhere on the Internet, and will continue to be created in perpetuity. What innovation remains? What tools are needed to create such innovation? Can this innovation, once public and user-ready, be imitated and improved upon by teenagers developing the "next best thing in their parents basement"?
Before focusing on the future by way of innovation, a company needs to look to its past. REvisit its founding. Get back to the core. Ask itself what it is in the business of doing. What customers it supports.... wait a second, customers. How else do you drive revenue? You need customers. Facebook gains most of its revenues based on eyeballs and traffic, which attracts advertising revenue in the digital space that was historically spent on different mediums. So, assuming the customer of ads is plateaued, how do you monetize individual users?
To tackle this last question, lets go back to the beginning: What was innovative of the initial launch?
The answer: Focus.
Focus played a huge role in the success of Facebook. Exclusivity. The need for an edu domain to register an account. And not just any edu domain. Harvard. Then other top schools, then most schools, then the expansion to any domain, leading to global prescene. But, it wasn't just exclusivity that drove users to the site. It was the clean layout, the "never crash" ideology, the intuitive interface (why the iPhone is so successful).
But back to focus. The core consumer was college-aged people. The typical 18-22 year old. Where are these folks now? What are they doing? What if Facebook was a success strictly because of this sliver of a generation that made it a success. What if Facebook were launched today, or in 1998, would it have been as successful. One can never tell, but one can be certain that small subset of the population drove usership via usage, word-of-mouth, and to mention it again, usage.
So, if Facebook were to revisit its core, think about this user group that led usage and drove popularity such that even uncle Larry wanted to join, then where are these folks now? what are they doing? and how can Facebook reach out to them again, and this time for receiving money directly from the user as opposed to attracting advertising dollars?
I think, this user group is now getting married and having kids. Some of them are even using Facebook to sign-up their babies. Yes, a baby has a Facebook profile. What is included in this profile? Pictures, videos, postings, and most importantly, stories about what happened on a particular day. Why is this special? Because it's a record of someone's life. So what can Facebook do about it? Partner with a printing company to have users develop Baby Books. They are able to take existing content that they already uploading and have it in printed, tangible form. Some may argue there isn't a lot of money there, but the idea itself has money in it.
And where is the money? From Baby Books comes the all important, yearbooks. Elementary school, junior high, senior high, and even some colleges/universities. What if Facebook went up against Jostens for yearbook revenue? I think Facebook would win. So long yearbook club. Now, with Facebook on the scene, the whole class gets to develop the yearbook. Individual student pictures are provided by each student via content already on Facebook. No more one time chance in the lunch room or gymnasium on picture day to have the perfect picture that will follow you forever. No more Seniors Only different pictures. The user controls it. But what does it also do? It engrains users into the highest of exist costs. Imagine, after one yearbook in 7th grade was user generated, trying to go back to the Jostens format of pictures with the same background and a hand full of students deciding the rest of the content. Good luck, the people will always want to contribute.
After all, isn't that the closest thing to Facebook's core? Being a picture book of friends, just online?
