How Facebook Could Be Killed By Mobile (and what Kara Swisher understands better than perhaps the rest of the world)

Software IS famously eating the world (Marc Andreessen)
Why Software Is Eating The World 

Every business is becoming a software business, and being disrupted in the process.

In regard to mobile specifically, it may well be eating the Universe.

Mobile is disrupting the disrupters. 

Starting with Facebook.

The announcement that Facebook paid $19 billion for WhatsApp is a seminal event in the history of technology. I know that this sounds bold but it demonstrated just for starters that the days of purchasing a quickly built Instagram for $1 billion is far (very far, very very far) from a black swan event.

And it shows that Facebook, just recently considered the emergent dominant force in technology, is clearly on the defensive playing catch-up.

AND HIGHLY VULNERABLE.

You don't believe that? If mobile is eating the Universe, a lot of big companies who do not excel in mobile as a CORE COMPETENCY in the mobile space will die.

(Facebook's strengths in mobile will also be discussed)

Is the technology landscape starting to not only shift but explode?

Things could change, but how strong is Facebook in mobile compared to Google and Apple, for starters? (Think mobile operating system, detailed below)

Mobile competition is the defining factor. If Facebook cannot find a way to keep up with Google and Apple in the mobile space, they are (eventually) toast.

And at the prices that today's leading mobile apps are and will be selling for - no, WhatsApp will not be the higher water mark,and perhaps not by a longshot, Facebook, as rich as they may seem to be, could easily go broke in this arms race relatively quickly.

YOU READ IT HERE FIRST.

I read in one article that the WhatsApp purchase represented 9% of Facebook's stock. If accurate, (and I'm not sure or not whether it completely is as Facebook has a current market cap of $169 billion and change Page on google.com, but in any event the purchase represents a major major event for Facebook (and beyond)) I'm surprised that this huge bet on a single app by Facebook is not being more discussed specifically in regard to representing more than a moderate amount of risk for Facebook.

I don't know that this marks (pun intended) Facebook as being desperate, but clearly Facebook is highly vulnerable living on the buy side in a buy versus build mobile world.

Ok, you may not believe me, but listen to what Kara Swisher, who you love and respect, has to say about the WhatsApp purchase 

Facebook Price for Having No Phone OS? $19 Billion. A Must-Have Apps Play? Priceless. 

Kara writes in part:

"Translation: We have now established a price floor for what it costs not to have a mobile operating system in a world in which having a mobile operating system counts for an awful lot these days.

And that means, for all intents and purposes, Google’s Android operating system and Apple’s iOS. And not, despite various and sundry efforts, Facebook, which also has tried to create a mutated shell version of its own OS called Home. (Phone home, as it turned out, did not work as well as it did in the movie.)

But a mobile presence is a must-do in the current digital environment, and this massive acquisition makes it clear that Facebook has decided that its core strategy will be to create or buy up must-have apps that consumers demand to have on their mobile devices."

Facebook only has a finite amount of money for acquisitions of course, as big as it is, and there are and will be a lot of valuable apps out there.

$19 billion for one communication mobile app? $19 billion here, and $19 billion there. And pretty soon you're talking real money.

Bankruptcy money perhaps when you consider the terms of this purchase for Facebook and what it implies going forward in this mobile eats the Universe world (read till the very end to see what I mean, no spoiler provided).

And prices, obviously are hitting the stratosphere. Marissa Mayer has "bought in" on mobile as a core strategy 

Google has huge pockets.

Facebook is truly vulnerable in this new world.

In Facebook's Defense

Of course I am not saying that Facebook is toast. That might be ludicrous. But it doesn't sound quite as ludicrous as it did two days ago before the WhatsApp purchase was announced.

Of course Facebook builds in addition to buys. Paper for example. And they have their own messaging service, which they are keeping.

For Facebook, a company famously known for growing to the top in such a short period by building feature after feature themselves (Zuckerberg as a coder himself is an iconic image) isn't it ironic that in the mobile world, which is eating the Universe, that Facebook, seen to be the up and coming company displacing Google and Apple overall, is now in danger of being destroyed by Google or Apple in this mobile transformed technology world.

Or by another company. We're only at the very very very beginning of the mobile landscape. What if the next groundbreaking mobile company, say 2-3 years from now, is at that point (again, remember all the competitive bidding among the technology giants) now worth $100 billion.

And what if it decides not to sell but compete with the giants on its own.

Maybe Snapchat was totally crazy to turn down Zuck's $3 billion
Snapchat Spurned $3 Billion Acquisition Offer from Facebook - Digits - WSJ (or possibly not). But maybe some future hotshot breakout mobile startup will not be.

And Snapchat, despite being today's media darling may still seem unimpressive to some, is not alone. Remember Twitter famously spurned Facebook, for example, as well.
When Twitter Met Facebook: The Acquisition Deal That Fail-Whaled 
(Kara again, gosh darn it)

Deja Vu All Over Again 

Look at Microsoft. The lost decade (and longer) famously involved Microsoft being very late to the Internet. And not understanding it well because it was invested so heavily in its legacy products.

Bill Gates' famous warnings have not been seriously enough heeded by the company. To. This. Day.

Goodbye Steve "Windows Mobile - Surface" Ballmer.

Apple and Google ate Microsoft (Microsoft is still in the game but clearly in "ketchup" mode). And Apple and Google (or somebody else) may destroy Facebook as well.

Zuckerburg Has Been Outvisioned by Larry Page and Jeff Bezos (and of course Steve Jobs as Well)

This headline might have seemed utterly absurd until recently.Mark Zuckerburg has long been viewed as a visionary, and an incredible one at taht. And he may well still be. But today, never moreso than after this acquisition, Facebook is looking rather small. Or more accurately, NARROW.

Not because of what Facebook is but because of what the world is, the Universe is, the landscape is in this post WhatsApp acquisition world.

Humpty Dumpty has fallen and cannot be put back together again.

Mark Zuckerburg, as incredible as he is, to survive much less prosper needs to take a lesson out of Larry Page's moonshots and Jeff Bezos' bringing together of convergent dominant technologies

Technology Convergence - How VC's and Larry Page are "Going Big or Going Home" 

And fucking quickly as well.

Bill Gates I believe it was, was famously quoted as being most scared by two kids in a garage. These two kids, now funded by TechStars or Y Combinator and an initial seed round, now have, believe it or not, in the next few years the capability to morph quickly into a hundred billion dollar company.

For real. Most won't of course. But all it may take is one.

Every company is at risk. Including, for example, Amazon:

It is famously said that people overestimate the amount of change in the short term, but underestimate the amount of change in the long-term.

For Facebook today, and many others in the coming days, that long-term has arrived today. 

Why The Future is Now

How much power do you have when you can command $19 billion, and you are predicated on a business model that might well be considered actually anti-monetization (and Facebook gives in to this anti-monetization model despite purchasing). 

I know it sounds crazy. Don't believe it. It's all in the blog post announcing the purchase from WhatsApp investor Sequoia Capital
WhatsApp | CrunchBase Profile 

which reads in part:
Four Numbers That Explain Why Facebook Acquired WhatsApp 
"Jan keeps a note from Brian taped to his desk that reads “No Ads! No Games! No Gimmicks!” It serves as a daily reminder of their commitment to stay focused on building a pure messaging experience.

This discipline is reflected in WhatsApp’s unconventional approach to business. After one year of free use, the service costs $1 per year — with no SMS charges. This can save users trapped in expensive data plans up to $150 per year.....

There's more. Get ready, here is the money shot quote from the Sequoia post:

"Facebook has assured Jan and Brian that WhatsApp will remain ad free and they will not have to compromise on their principles. We know that Jan, as a new member of Facebook’s board, will continue to champion the rights of WhatsApp users."

$19 Billion for an essentially free service that will remain so and without ads? A purchase that represents, frankly, a very substantial chunk of your company's worth? For one app?

THE WORLD HAS FUCKING FOREVER AND UTTERLY CHANGED.

Believe it (or not at your own risk)

The Future of Search - How the Law of Accelerating Returns is Disrupting the Disrupters and Giving the Advantage to Faebook, Twitter, Apple and Amazon (and one more)

Ray Kurzweil famously talks about the accelerating rate of technology change on an exponential basis.
The Law of Accelerating Returns 
"An analysis of the history of technology shows that technological change is exponential, contrary to the common-sense “intuitive linear” view. So we won’t experience 100 years of progress in the 21st century — it will be more like 20,000 years of progress (at today’s rate). The “returns,” such as chip speed and cost-effectiveness, also increase exponentially. There’s even exponential growth in the rate of exponential growth."

One implication of this is that it is easier than ever for the disrupters themselves to be disrupted. For the adoption cycle of new and disruptive technologies is becoming more and more and more accelerated and compressed.

Don't believe it? Look at Mobile. Facebook, for example, long considered a frontrunner in innovation is, in short order, now on the defensive in Mobile. Facebook is transitioning, at least in mobile, from primarily a build to a buy company - most recently and famously spending $19 billion for WhatsApp, a company that Facebook may or may not be able to monetize, depending upon who you ask.

And a statement that seemed utterly laughable just months ago. Utterly laughable. Now doesn't seem quite so.

Namely, that Facebook could die:
How Facebook Could Be Killed By Mobile (and what Kara Swisher understands better than perhaps the rest of the world) 

Die as into oblivion. Cease to be anymore. 

Grow or die has transitioned into innovate or die, and where this proves impossible, into buy or die.

One consequence of this has become, almost overnight as well, that "moon shots" have become the new normal.
Technology Convergence - How VC's and Larry Page are "Going Big or Going Home" 

The Future of Search

Remember the old truism that change is famously overestimated in the short term, but underestimated in the long term. Well, the long term is approaching for search now. And the tipping point could be a lot quicker, and a lot more disruptive, than people think.

My thinking was stimulated on this topic again today by reading this post
Hey Google, A Search War Is About To Explode 

Here are a few quotes from that post to set the stage for the current discussion.

"It seems rather clear that the evolution of search is such that the traditional search engine means less and less, as social networks continue to grow. Sure, Google may continue to dominate the comScore rankings well into the future, but if those rankings don't include a gigantic portion of another sort of search- social, then what's the point?...

And now, just a few weeks ago, Zuckerberg stated that Facebook will compete directly against Google in search. In 2014.

Google knows this, and the late-to-the-game Google+ social platform is proof that Google is worried. Social search is eating into standard search, and it makes sense: A Facebook user who wants to know what people think about a new Italian eatery in his city, the contact info for a reliable locksmith, or whether or not Kanye West's new album is worth buying- these are all things that would have been typed into a traditional search engine in the past...

I'd argue that the one thing that Twitter has over Facebook's head is global reach, at the cost of privacy. What this means is that a Facebook user might dip into his or her personal network of 750 Facebook friends and find information, or perhaps join a public Facebook group with another 2000 members, and get information there. But Twitter has no such limits. A user can simply Tweet what he is looking for, and unless the Tweet is protected, is now open for the world to see and comment on. Twitter is essentially a crowd sourcing search engine...

I pointed out the surreptitious Siri strategy here. But what really caught my eye was Apple's acquisition of Topsy, which is a Twitter search and analytics company.

After taking a look at Topsy, I realized immediately, that simply put, it is a new age search engine. "New age" meaning it searches Twitter, a huge bank of (social) data. On some level, Topsy is equivalent to Facebook's Graph search, but the difference is that because Twitter is a public platform, Topsy can operate independently from Twitter, and therefore allow a company like Apple to spread its tentacles throughout Twitter. And since Twitter is the only true social media competitor to Facebook (not including Pinterest), acquiring Topsy was an ingenious move by Apple to gain a hold in the social media world, which, as I argued above, is really the search world."

There are many important ramifications of the above, which could be discussed for days and still just scratch the surface.

But here's one: Microsoft and Yahoo!, Google's two closest search competitors by far, seem to be competing in search by today's rules.

While Facebook, Twitter, Apple and Amazon (you have to add Amazon, they know everything about what you want - at a minimum from a product perspective) are playing tomorrow's search game.

Today's search game vs. tomorrow's search game.

(of course we could also get into the notions of personal assistant search, voice command search, wearable search or any of a number of additional hypothesized notions in regard to the future of search).

And the Envelope Please

The future winner of search is..................

Google - but not Google.

The future of search may be (get ready to be surprised by something you already suspected might be true but didn't realize)

The future of search may be...................

YouTube.

I read somewhere that a healthy percentage of the younger set are using YouTube as their default search engine rather than Google, Bing or Yahoo!.

This makes sense to me. I am increasingly using YouTube as a default search engine as well. In many cases, video answers are proving better than text answers to the questions that I am asking. Which means that YouTube is a better search engine, for me, in these cases, than Google.

And this is happening more and more.

And here's the money idea:

If YouTube were organized as a search engine as well as Google, people might drop Google overnight. If you could get search results organized on YouTube as integrated and thorough as you can on Google, that could be a game changer.

Of course, Google (via YouTube) would be putting Google out of business, to a degree at least, if it did that.

Cannibalization (marketing) 

I realize that Google results already include YouTube listings, and that another company may come up with their own hybrid model (or something completely different).

The Sound of One Hand Clapping 

Google, Facebook, Amazon and the other behemoths are looking more and more like each other every day. They compete in many major markets, and the distinctions between them (the companies and sometimes also the markets) are blurring.

Search in the future may exist across many different types of activities. This may occur to the extent that the notion of search as something distinct loses some or all of its meaning.

If that ever occurs, then search may become everything, and/or nothing at all.