LAUNCH002: What I Learned from Zuckerberg's Mistakes

by Jason Calacanis

In May I "ghosted" my Facebook page based on my feelings that Facebook was a bad actor, not worthy of our trust and very bad for our industry.

[ Ghosted: removing all content and leaving a note explaining why you left. ]

After a seven-month hiatus from the service for everything except a) reviewing new features (as an angel investor and pundit must do) and b) using Facebook Connect to log in to various services, I've got some observations I'd like to share.

My hiatus has lead me to answer a couple of questions, including "Is Facebook evil, clueless or unlucky," and I've actually had an epiphany around how products are made.

Have I changed my stance on Facebook screwing our collective user base over and over and over again? Not really, but I've learned to appreciate Zuckerberg's process.

Let's start, shall we?

1. Facebook: Evil, Clueless or Unlucky? -=-=-=-=-=-=-=-=- Answer: None of the above. At an industry event a couple of months ago, I met a couple of the first two dozen Facebook developers and prepared for one of the often-uncomfortable discussions I've been having since I started criticizing the Golden Child. Here's the composite, paraphrased conversation. Names have been changed to protect the newly rich. "Bill and Bob, this is Jason Calacanis," said the mutual friend. "A pleasure to meet you... I'm guessing you're not a fan?" I responded, hoping to defuse the issue head-on with a smile. "Actually, I really enjoy your writing," said Bob with a smile while I shook his hand. I was happy in the knowledge that prose can still soften the blow of blunt criticism. "Can I ask you a question then?" I said. "Sure," said Bob. "All these privacy issues I've brought up in my newsletter, you know, all these examples of users getting screwed for lack of a better word, were these designed with bad intent?" I asked. "Actually, no... we just didn't have any oversight or process in the early days, and we were encouraged by Zuckerberg to just push changes to the site," Bob said. "Can I get an example of that?" I asked. "Sure. Photos was built by two people in a couple of days, and they just pushed their changes to the site without showing it to anyone. Zuck encouraged us to just push changes and not worry about it," Bob explained. "Wait a second... you're saying there was no product review, no product manager... no thought to just pushing changes to the server of one of the most popular sites in the world?" I asked, perplexed. "Yes," Bob said. Like a clueless moviegoer watching the final scene of "The Sixth Sense," I dropped my jaw and could only say "Oh my God, he's dead," as the wedding ring rolled across the floor [ ]. I then had a career-changing epiphany. Like Bruce Willis' dead protagonist, the reality of why Facebook is the way it is had been staring me in the face for the last couple of years. I had just been enamored of a misleading, well-crafted, story. [ Mini-epilogue: The former developers and I then ate Kobe burgers and truffle fries, discussing the nuances of product development and life in the Bay Area. ] -=-=-=-=-=-=-=-=-=-=-=-=-=-SPONSOR-=-=-=- Really intelligent and good-looking people read the LAUNCH newsletter. If you would like to reach 22K brilliant people like yourself in this text ad, email -=-=-=-=-=-=-=-=-=-=-=-=-=-SPONSOR-=-=-=- My Epiphany -=-=-=-=-=-=-=-=-=-=-=- Facebook's success -- and mistakes -- are based on its developer-driven culture, not because Zuckerberg is some evil mastermind. The Zuckerberg Doctrine: Developers design products with significantly improved speed and functionality compared to product managers and designers, outweighing potential mistakes and drawbacks. Said another way: "Misunderstandings and neglect create more confusion in this world than trickery and malice. At any rate, the last two are certainly much less frequent." - Johann Wolfgang von Goethe, "The Sorrows of Young Werther," 1774 [ ] My mind immediately started cataloging all of the great developer-driven companies I'd seen in the last two years at Y Combinator, TechStars and Open Angel Forum. Heck, I've got a bunch in my own portfolio. Wait a second, how is my own company being run? Who's driving product? I am a product-driven founder, of course, but who else in my own organization is driving innovation? Sadly, I came to the conclusion that innovation was largely coming from community managers, designers and product managers, not our developers. This system is how 90 percent of the industry works, and has worked, for decades. Developers were brick layers, product managers were architects. But as amazing as Mahalo has done in the past 40 months (160th largest site in the US), the results are not as fast and amazing as they need to be in order for us to make it into the top 100 sites and then the top 50 (my personal goal). Then it really hit me: Developer-driven startups always produce product faster. This stands to reason: our nontechnical people are having discussions and debates while Zuckerberg is coding his next feature. This is why no one has been able to keep up with Facebook! While MySpacers debated how to iterate on their product, Facebook simply tried stuff. Yahoo has been in strategy, reorg and cost-cutting meetings for the past five years, and is run by an amazing operational CEO, Carol Bartz. But what was the last good product Yahoo released? AOL has been branding itself wonderfully to Madison Avenue, hosting really awesome parties and wooing Wall Street on their roadshow with dashing, advertising-driven CEO Tim Armstrong. But what was the last good product AOL released? Yahoo and AOL have had the raw materials to compete with Facebook since its inception, but neither has been able to release a single kick-ass competing product. Let me say that again: AOL and Yahoo have not released a single, kick-ass product in a decade. I include here my three-month stint trying to build a "digg-clone" with the last 5M Netscape browser-default users (i.e., folks who didn't know how to change their default landing page) in that long list of failures. I mean, it's taken over five years for Yahoo and AOL to catch up to what Gmail was doing five years ago -- and aging inboxes are Yahoo and AOL's lifeblood! Google? Everyone knows that Larry, Eric and Sergey (and Salar, Lior and Marissa) run the show together, and as such the company is two-thirds (or maybe five-sixths) product-driven. Eric's role is to keep the business on the rails, show Larry and Sergey where the potholes might be and generally make sure Wall Street understands the unique nature of Google as well as anyone can. His job is decidedly NOT to set the product vision. Google has had never-ending revenue growth and a product release schedule that is best described as purposefully manic. Google has launched Gmail, Google Buzz, Google Talk, Wave, Android, Google Maps, Google TV and Hotpot, among many other products, in the past decade. Oh yeah, and they're working on cars that drive themselves. And 20 percent time is still religion at the Googleplex. Will a developer always make a better product than a nondeveloper? Not always, but they will always move faster. Moving faster means you can try more things, and the person who experiments more learns more, so in the long run I'm betting on developer-driven culture. It means you make more mistakes, but as we've learned, mistakes mean nothing in our industry -- even if they come with huge PR blackeyes, settlements and fines. Said another way, more doing equals more mistakes, more understanding and more innovation. Fail faster! I immediately looked in the mirror and realized I had to take action: Mahalo had to reboot its product development process. [ Note: If you have the greatest product producer in the world, Steve Jobs, working at your company, all these rules go out the window. Sadly, you and I do not have Jobs on the payroll. ] Fortune Favors the Bold -=-=-=-=-=-=-=-=-=-=- "We're moving to a developer-driven product process, and here is how it's going to work," I told my top-two technical lieutenants. "Isn't this something we should discuss?" Lieutenant Two asked. "Sure, let's discuss it," I responded. "But you've already made your decision!" he countered. "Yes, but that doesn't mean I'm not willing to discuss that decision," I said. Ironically, the most resistance to the process I heard was from the existing managers of my technical team! They were concerned our developers couldn't do it, or might not want to make decisions. "Just to be clear, we're giving developers -- your teams -- more decision-making power, more responsibility and more freedom and you're resisting it?" I asked. "Umm... I guess that is a little strange. We're just not sure everyone wants to make decisions. Some just want to code," Lieutenant One responded. "Then we have the wrong developers, I guess," I said. "So you want to fire the whole team?" Lieutenant Two asked. "If we have to, sure. Whatever it takes to get to a developer-driven culture," I said. Then I continued: "That's not going to be the case. The developers are going to love having the power and decision-making. They are going to love not having a product manager, community head and designer between them and the users." These were uncomfortable but fruitful discussions. In under 30 days, we completely overhauled our product-development process, removing everything between the developer and iterating on the product. We eliminated positions and process. We made it clear the developers were to make the decisions even if those decisions resulted in a developer being 50 percent slower because they were busy *thinking* about the product (as opposed to just transcribing features from the product manager wireframes). Now, as a side note, I'm a content, product and branding guy -- not a developer. I've run a bunch of successful content companies that leverage technology heavily, but at Mahalo we're equal parts technology and content. As such, I'm only going to be able to compete with the Quoras and Bings of the world (to the extent we need to) if I embrace a developer-driven model (which both of those products have). [ Note: we'll release our latest product on stage in January at the DLD conference in Munich on January 23rd. ] No Wireframes, No Mockups -=-=-=-=-=-=-=-=-=-=-=-=-=- No more formal wireframes is Rule #1 at Mahalo. You build your wireframe in HTML -- or maybe on a white board or bevnap at a bar. No more mockups is Rule #2. Instead of having a product design team, we're outsourcing our site design to independent design shops and individual designers of note. This is a much better deal economically, of course, because you would spend $60-100K on a serviceable or world-class designer (all-in) in Los Angeles. For that cost, you could easily hire 20 amazing designers or design firms a year to do design reviews of your various pages/products for $5K each. For background, most designers and design firms charge between $50 and $100 an hour, and a typical individual page might take 12 to 25 hours for three iterations. Most products only have three or four main pages, and developers can build the rest of the pages around that template. Now every time we have a new product to build, the developers get a design budget. They take our design standard to individuals outside of Mahalo for ideas and mockups of what the developer has already built. This means the *developer* is engaged and managing the design process -- as opposed to the other way around. In the past two months developers have become more involved, and we didn't have to fire any developers for resisting having more control (shocking!). I'm certain this process will have some drawbacks, and Facebook has shown that releasing HUGE mistakes into the wild is the biggest. Please God, let us all make the mistakes of Zuckerberg. -=-=-=-=-=-=-=-=-=-=-=-=-=-SPONSOR-=-=-=- The LAUNCH Conference, Feb. 23rd & 24th San Francisco - /conference Get 10% off tickets with the code ilivetolaunch -=-=-=-=-=-=-=-=-=-=-=-=-=-SPONSOR-=-=-=- The Cost of Mistakes -=-=-=-=-=-=-=-=-=-=-=-=- Facebook's relentless success makes any lawsuit, by the Winklevoss twins or a local attorney general, trivial. A $65M settlement to the twins, $10M for Beacon and the inevitable EU shakedown of $500M will be as forgettable as the $2-3B Microsoft was fined by regulators over the years [ $MSFT 2010 Annual Report: ]. There is a clear signal being sent to startups and technologists by the market, and I've even heard venture capitalists say it: bending and breaking the rules of the game is part of being a revolutionary. Said another way, "Just f@#$k go for it, the worst that can happen is you say you're sorry and pay people off with your winnings, or shut down and start over again." Remember the old adage: "Better to beg for forgiveness than ask for permission." At the end of the day, all the pundit scrutiny will cost Facebook, at most, some PR woes and a couple of hundred million dollars -- or even a billion or two -- in fines and settlements. That's peanuts for what will be a $100B company with $5-6B in revenue in 2012. Certainly, I'm not advocating intentionally breaking the rules -- and I don't think you should screw your partners and users. Nor do I think you should cheat or lose your ethics. However, I do think you need to iterate and push features with a certain reckless abandon, and clean up as you go. I personally love breaking the rules as it relates to tradition and convention -- but screwing over users just isn't in my playbook. The truth is the good guys are going to have to work harder in order to win as the "win-with-speed" mentality. Facebook Is Bad, Right? -=-=-=-=-=-=-=-=-=-=-=-=- Is Facebook a bad actor? Well, since I stopped writing about Facebook, in part to keep myself from getting in the way of LPs among my investors whose long knives were drawn (not kidding) and much more importantly to get myself invited back to the biggest poker game in the Valley (not kidding), a number of things have happened: a) Google threw down the gauntlet, warning users looking for their friends on Facebook with the Gmail address book that the social network didn't share data. b) Steve Jobs told Zuckerberg to pound sand, and that not only would he not use Facebook Connect on his musical social network Ping but he would incorporate Twitter's connect! c) The Web's creator, Tim Berners-Lee, came out and said Facebook was a threat to the open internet and that it chipped away at the web's founding principles. When people infinitely more successful and important than I am not only admonish you but also take steps to exclude you from participation, you're not a good actor. That being said, Zuckerbeg did go on Oprah (after she begged him) to give $100M to Newark's public school system, and he did pledge to give away most of his money when he dies. Do I trust Facebook? No way. Would I trust them with my email? Ummm, would you trust any email provider that won't even let you export your own address book? Would I partner with them? Not unless I was okay with waking up with my throat slit from ear-to-ear after a night of cuddling and sweet nothings. And if the terms were correct, I might be. Facebook's behavior since the spring is marginally better, and certainly nowhere near as good as Zuckerberg's media training. The dude crushed it on "60 Minutes" after the D Conference near-fainting episode. Not to mention that they've released groups, a new messaging platform, a new layout and countless other unpublicized interations. They might have poor judgment at times and they may steal more than the average startup, but they are the Gold Standard for product development, second only to Apple. In Conclusion -=-=-=-=-=-=-=-=-=-=-=-=- Results speak, and Zuckerberg's brilliant results, from user engagement to product development and his lemons-into-lemonade PR strategy, are important case studies. All start-ups should take the following to heart: 1. No one remembers how you got there, only that you got there. 2. Almost any amount of bad behavior will be forgotten and forgiven if you have a big enough checkbook and unique user count. This is not what we should teach our kids, but it is something to keep in mind as an object lesson in the level of forgiveness that can occur. 3. There is no such thing as bad PR in the age when the "Jersey Shore" is creating millionaires out of individuals who have more ounces of gel in their hair than IQ points. 4. Developer-driven startups that move fast win, and "let the chips fall where they may" will win over considered, product manager-driven cultures.* all the best, Jason McCabe Calacanis (with insights, challenges and corrections by the fantastic four: Kate, Nick, Lon and Kirin). * That is until Dave Morin's slow product movement (see LAUNCH001: []) proves Zuckerberg wrong. ----------------- LAUNCH002 Survey Questions -=-=-=-=-=-=-=-=-=-=-=-=- Take the survey here: 1. Does your company have a developer-driven culture? a) Yes b) No c) Sort of 2. Which developer-driven company has the best products? a) Facebook b) Google 3. The developers in your company or generally a) Have the power to push product b) Are engaged in and/or manage the design process c) Only write code d) Other 4. Facebook is a) Evil b) Clueless c) Unlucky d) Other 5. Would you partner with Facebook? a) Yes b) No c) Other 6. As a user, do you trust Facebook? a) Yes b) No c) Yes and no d) Other LAUNCH001.1: Results of Survey -=-=-=-=-=-=-=-=-=-=-=-=- LAUNCH readers were overall conflicted about photo-sharing social network Path but less so about its future. Exactly 40 percent called Path "meh" and 40 percent "promising." Nearly half said Path is competing with Facebook and 39 percent with Instagram, though one person said it was a "forced choice" and another told us Path is competing with itself, adding, "the good startups always do." About 60 percent think Path should keep the 50-friend limit and 22 percent said remove it. One reader said "raise but never lift" the limit, and a Path alpha tester shared that they didn't get hooked on it but would now consider using it for private, members-only groups. On whether Path should offer a public option, readers split pretty evenly but leaned toward "yes." Half think Path will be something completely different in five years and almost a third think it will be largely forgotten -- less than 4 percent think it will be a viable Facebook competitor. As one person pointed out: "I just signed up, connected my Facebook account and no-one I know is there. Useless to me and now I'll reference it and move back to where everyone is until that changes..." ----------------- Housekeeping ----------------------- I. HTML vs. Text: We're in the process of creating an HTML template for LAUNCH. For now we are going to publish text only. II. LAUNCH Conference: Do you know of any amazing products or services launching in late February? Any new killer new versions of products for our 2.0 competition (where companies release their next version)? If so, email the details to III. Discussion Group: We're considering creation a private discussion group for LAUNCH subscribers. Couple of questions: Are you interested in a private discussion group? Would you pay a nominal fee for this (say $25-$75 a year)? What platform do you think would work best? IV. Suggest a topic, company or theme for LAUNCH by emailing ----------------- About LAUNCH LAUNCH is a media company that covers and celebrates new products, services and technologies in two ways: an email newsletter and an in-person conference. LAUNCH was founded by serial entrepreneur, former journalist and blogger and now angel investor Jason McCabe Calacanis. / About the LAUNCH Newsletter Our newsletter is compiled in a collaborative fashion by a half dozen writers, researchers and industry pundits we invite to our Google Docs from time-to-time. Our conflicts are many (i.e., Jason's angel investments: [ ] ), but our insights are always well-researched, honest and to the point. /newsletter About the LAUNCH Conference The LAUNCH conference brings together over a thousand startups, venture capitalists, angel investors, media, bloggers, pundits, recruiters, lawyers and fanboys to celebrate and commune around the launching of 40 new companies and/or products. The conference is designed to be the most accessible to startups, at only $400 ($360 if you use the code ilivetolaunch). There are two competitions at the conference: 1.0 for new companies and 2.0 for existing companies launching new versions and/or pivoting into new markets. So, if your company is already launched, you can still participate. /conference To advertise in LAUNCH: LAUNCH Coda #8: Ends don't justify the means -- they are the means.