To say that Facebook is an innovative company is a bit of a stretch. A better description of Facebook is a well-managed organization that’s driven by capitalization.
Mark Zuckerberg and his co-founders saw an opportunity during college to create social platform when social networks were springing up left and right. They began with a simple philosophy: cater older teens and young adults. The Facebook platform, in its early days, was simple, and there weren’t much to do except check your buddy’s status and post your own. Gradually, the company began to add more functionalities as it grew, but it retained its users through careful planning and manipulation of its competitors.
So why did MySpace die out while Facebook grew leaps and bounds? For simplicity sake, let’s just say the platform’s simplistic and demographic-oriented (you were required to use an @ edu email address at one point) nature attracted a growing generation of computer users. Facebook’s greatest initial asset was perhaps timing—that is, it grew because people got bored of MySpace and all the baggage and bad press that the platform was accruing.
Fast forward several years and the people that originally signed up for Facebook are still using the platform to stay in touch with their friends and families. Some may not be using the platform quite as often as before, but their account are still active enough to be of value to the Zuckerberg matrix.
Then there was that big IPO leap a few years back. This injected heavy cash into the company to help it maintain its foothold in the industry. With several billion dollars in its coffer, Facebook was now tasked with buying out hot startups and competitors.
Perhaps the company’s biggest acquisition was WhatsApp, which was a $19 billion deal that knocked the wind out of every onlooker. At the end of the day, it was not WhatsApp’s ‘innovation’ that helped drive the multi-billion dollar deal. Rather, WhatsApp had an impressive user-base, and that was worth more than any innovations Facebook engineers could come up with. WhatsApp, therefore, became a $19 billion leverage for Facebook to obtain a global audience.
Other smaller acquisitions such as the $2 billion Oculus and $1 billion Instagram deals are also notable. On one front, the Instagram deal continued the company’s quest to drive out competitors, but on another is Facebook’s desire to beef up the platform’s level of user engagement.
Virtual reality is touted as the next major step in gaming, but Facebook is translating that into increasing the viability of attracting and retaining users. Facebook execs envisions users one day being able to strap on a virtual reality headset to hang out with their buddies even if they’re an ocean apart. This is a tantalizing proposal and most are certainly looking forward to using these features.
But at the end of the day, Facebook is in the people business and it’s not a company that puts heavy emphasis on the innovations of its own engineers. Sure, the engineers are toiling to help develop fun features, but if that was the case Facebook would be buried under the volcanic eruptions of the digital age.
Facebook has, and will always be, a company that focuses on user information—the more, the better. The company currently possess a large database of users that are now grown people with money to spend, which makes it such a valuable company.
Moving forward, however, it appears Facebook is having a hard time attracting a new users—especially in the teenage segment—and it will be detrimental to the company’s overall business model it doesn’t figure out a way to do so soon. Virtual reality, AI or just flat out acquisitions might help the company maintain its dominance, but when it’s all said and done the company’s primary assets are the business minds that are conducting studies and strategies to keep the Facebook brand on the front page.