Some Perspective Before the Facebook IPO

As we approach the pricing of the Facebook IPO, and before we get too carried away with watching the deserved valuation, these are my thoughts on where Facebook may have settled in the Internet ecosystem.

On the positive side, its revenue numbers are incredible, despite the low quality of much of the display advertising on the social network and the lack of an advertising model for the mobile applications.  This reflects the incredible amount of user engagement with Facebook and the aggregate dollars being pumped into online advertising.

It’s great that the advertising is so strong, because on other measures, Facebook has been a disappointment.  There was, perhaps still is, this line of thinking that Facebook’s control of the social graph would take the life out of other social applications by moving them onto Facebook.  In my estimation, the evidence over the last year has proven this to be completely wrong.  Let’s count the ways.  Twitter is a better content sharing platform, Instagram is hotter for photosharing, Foursquare beat out Facebook check-ins, Facebook Deals (its Groupon competitor) died off quickly, social shopping has not taken off, and we have heard little since the massive media kickoff about Facebook Messaging which was supposed to kill off everyone else’s emails.  In sum, Facebook has had no success extending its control of the social graph into applications.

This is not a bad thing.  It suggests that Facebook will be positioned as a platform that is an enabler, rather than a killer of entrepreneurship.  Indeed, perhaps its future is as a platform that’s not itself particularly hip, but as an utility for the new, new thing to plug into the social graph, utilizing people’s sunk investments in establishing and maintaining their connections, so a new application can ride the social graph in a bid to publicize, go viral, and grow quickly.