Why Facebook is the New Yahoo

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Sure, Facebook looks massively successful. With a mind-boggling 750 million users, the social site can do no wrong, right?

Wrong.

Look closer, and it looks like Facebook can do nothing right. The company has tried and failed to launch or integrate new services that might thrill users. But users aren’t thrilled. And now its strategy appears to be: Just copy Google+.

Don’t look now, but Facebook is quickly becoming the new Yahoo.

Why Facebook Succeeded in the Past

In technology, timing is everything. In order to succeed, you need to have not only the right product, but come out with it at the right time.

Most of the startups that fail in Silicon Valley have killer ideas or great technology. But most of them are too late — they’re trying to succeed with an idea that’s already “out there.”

Another huge chunk of these failures result from great technology that’s too early. Companies run out of money before the public is ready to embrace what they’re offering.

Facebook’s success can be attributed at least as much to perfect timing as it can to the quality of the service.

Facebook emerged at exactly the moment when college students wanted an exclusive club, away from the rowdy teenagers and noisy bands that dominated MySpace. The site started in 2004 as a private networking site for elite Harvard students, and soon students at other Boston colleges, Ivy League schools, NYU, MIT and Stanford.

Later, the site rolled it out to all college students, then later still to all high school students, and then to employees of a few elite technology companies.

Facebook got famous for keeping the riff-raff out when exclusivity was prized in social networking. But then social networks stopped being about social climbing, and started being about facilitating existing connections.

At just the moment when the world was ready for everybody using social networks, Facebook let everybody in.

Here’s the thing: Facebook’s “idea” isn’t particularly interesting. Its design isn’t revolutionary. The company’s engineering isn’t especially impressive. But Facebook’s timing has been perfect.

Why Facebook May Fail in the Future

Facebook knows what its members apparently do not, which is that today’s Facebook won’t allow the service to survive on the social Internet of tomorrow.

Facebook used to be special. But now social is everywhere. Facebook finds itself trying to sell snow to Eskimos.

The only way for Facebook (or any online service for that matter) to succeed is to re-invent itself. Facebook is scrambling to do so, trying this, trying that, desperately looking to thrill users with expanded engagement with existing social graphs. And Facebook has failed again and again.

Facebook tried to become the default e-mail client for members when it rolled out Facebook Messages, which enabled people to use a facebook.com e-mail address. Remember that?

Neither do I. Nobody uses it.

Then Facebook saw that FourSquare and Groupon were gaining some traction with social location check-in and coupons, and so it launched Places and Deals.

Nobody cared, and Facebook killed both of them.

Facebook would get a huge boost from usage on tablets — tablets and social networks were made for each other, because they’re both used in the same way at the same time (most heavily while at home during leisure time). Yet Facebook has failed to come out with a tablet app, even though the iPad shipped a year and a half ago!

Now Facebook’s desperate new strategy appears to be: Just copy Google+.

Knowing that Google+ would use “circles” to segment actual social networks (“Family,” “Friends,” “People I Secretly Despise,” etc.), Facebook launched Groups and Lists, which hardly anyone used. These features were rolled out well after people had already friended most of their social networks — nobody wanted to go back and re-categorize everybody.

So this month, Facebook is rolling out Smart Lists, which uses algorithms to slot people into “Close Friends” and “Acquaintances.” But this is really not much more than another way to interact with Facebook’s EdgeRank algorithm, which censors your feeds based on who Facebook thinks matters and who they think doesn’t matter.

This week, Facebook rolled out a “Subscribe” button, which copies Google+’s core feature of enabling “Public” posts.

Google+ rolled out from Day 1 of its private beta a shockingly cool service called Hangouts, which is way better and way cheaper than Skype.

A week later, Facebook unveiled Skype integration. Hardly anyone uses Skype on Facebook. Why would they?

The Skype integration appears to be the other part of Facebook’s strategy: Throw everything in there. Facebook is expected to announce a new music service next week, which will enable users to stream music from partner companies.

All this copying of Google+ and integration with third-party services smacks of desperation and lack of vision. All these scattershot changes erode Facebook’s identity, and make the service even more complex and confusing.

Facebook appears to be very worried about its own decline. And it should be. While Facebook is still gaining members, a careful look at its growth reveals that the leading countries — the ones that were first to jump on the Facebook bandwagon — are actually abandoning Facebook.

The most recent numbers show that during the month of May, Facebook lost 6 million US users, 1.5 million Canadian users and hundreds of thousands of users in the UK, Norway and Russia.

I don’t think Facebook will die. In fact, I think the company will continue to survive indefinitely. I think Facebook will become the new Yahoo. Here’s what I mean.

It’s hard to remember now, but there was a time when Yahoo was the hottest company in Silicon Valley. Everybody knew, or thought they knew, that information portals would yield all the power and influence online.

As millions and billions of people got Internet connections, they would all need directories to help them find resources online, as well as search. Yahoo leveraged its traffic to drive usage of e-mail and a gazillion other services.

But the portal era faded away, replaced by the search era. Google rose to dominance to become the hottest Internet company in Silicon Valley.

But you know what? Yahoo is still a going concern. They still have a lot of traffic and bring in a lot of revenue.

But as a driving force, as an influential driver of news and information, Yahoo is out in the woods. Once the darling of Silicon Valley, Yahoo has become this… thing — a service nobody can describe, a kind of machine that acquires companies, then closes them down.

Yahoo has no vision. It has no purpose. It’s dispensable. Yahoo continues like a zombie, animated by the life it once had.

And that’s what Facebook is becoming. Yes, they’ll continue to have users. And yes, they’ll continue to make money. But Facebook is looking increasingly like a one-trick pony that doesn’t have the vision to reinvent itself for the post-Facebook era.

Facebook is the new Yahoo.