The Facebook Effect Part 12

Think of it like having a piece of software that in effect contains your friends-or at least a persistent and potentially live connection to any of them. That "software" will allow you to stay abreast of whatever they do, and tell them whatever you want about yourself. Anytime we are doing anything online and have a question we will be able to turn to our friends. We may be able to converse with them in real time as well, through chat, voice, or video.

This experience will increasingly go with us as we traverse the real world as well, since most people will carry devices with an always-on connection to the Internet. Facebook's iPhone, BlackBerry, and Google Android applications Facebook's iPhone, BlackBerry, and Google Android applications as well as those on other mobile phones are already used by more than 100 million users worldwide. In some countries this is already the primary way people use Facebook. In the future, the main way people will use Facebook will be on a mobile device. as well as those on other mobile phones are already used by more than 100 million users worldwide. In some countries this is already the primary way people use Facebook. In the future, the main way people will use Facebook will be on a mobile device.

Here's a possible scenario: Imagine you're at a football game and your mobile device shows you which of your friends are also in the stadium-perhaps even where they're sitting. Maybe it could tell you who in your section of the stands has attended exactly the same games as you in the past. Or who is a fan of the same teams as you. This may seem cool to many users. To others it may feel Orwellian.

Shopping is another arena that could be transformed. Wouldn't you want to know, whenever you were considering an expensive purchase like a car or a refrigerator or a camera, exactly which of your friends had purchased-or maybe just considered-the same purchase? Some developer will probably figure out how to get Facebook to tell you that. It will also have to ensure that all that information flies around only with the user's consent.

Facebook might even begin to function as a sort of auxiliary memory. As you walk down a street you could query your profile to learn when you were last there, and with whom. Or a location-aware mobile device could alert you to the proximity of people you've interacted with on Facebook, and remind you how. The software could even start to make elementary decisions on your behalf. Platform marketer Ethan Beard says you will probably be able to simply tell your TiVo to record whatever shows your friends are recording. And here's a scenario he suggests: "Imagine I can get in my car and just say, 'I want to go to David Kirkpatrick's house.' It knows who I am and can go inside Facebook, find out where David lives, and direct me there using GPS. Ideas like that are so powerful, how could they not happen?"

In early August 2009, Facebook acquired FriendFeed for about $50 million, by far its largest acquisition. It really was the FriendFeedization of Facebook. Bringing into Facebook both FriendFeed's technology as well as its ex-Google founders, star coders that they are, was intended to significantly bolster Facebook's ability to compete with Twitter.

In keeping with Facebook's more elastic conception of itself, in September it launched Facebook Lite. It was the first true brand extension-to Facebook as Diet c.o.ke is to c.o.ke. Lite is intended for people who use a mobile phone or do not have broadband Internet access or for some other reason need a smaller, less data-intensive window into Facebook that does not consume much bandwidth. It is a stripped-down version of the service without things like videos. As Facebook heads toward 500 million users, Zuckerberg is embracing user segmentation. Facebook has implemented a daunting parade of changes, even as it continues its headlong growth. Zuckerberg was becoming resigned to protests from the relative few so long as more and more people found value in his service. He started saying he couldn't wait for 2010 so he could stop wearing that d.a.m.ned tie.

17.

The Future.

"My goal was never to just create a company."

Mark Zuckerberg is sitting under the beams of an elegant old Swiss restaurant in Davos during the January 2009 World Economic Forum, the celebrated annual gathering of government and industry leaders. To his right is Sheryl Sandberg, and at the other end of the small table is Larry Page, Google's co-founder. Accel Partners, Facebook's primary venture capital investor, is hosting an annual Davos gathering for technologists and scientists called the "Nerd's Dinner." This year Accel has flown in not one but two American sommeliers to present several varieties of $600-a-bottle California wine. Zuckerberg, who has drunk a couple of gla.s.ses, leans forward.

"Larry, do you use Facebook?" he asks.

"No, not really," Page replies without affect in his high-pitched nasal voice. Zuckerberg seems disappointed.

"Why not?" he persists.

"It's not really designed for me," Page answers. Zuckerberg starts to ask him another question, but is deterred by Sandberg.

"Mark! Don't talk about that in front of David!" she scolds. (That is me, sitting on Zuckerberg's left.) Sandberg is well-versed in managing journalists.

But in asking such a question so openly of the co-founder of Google, Silicon Valley's king and Facebook's rival in many ways, Zuckerberg displays a few facets of his character. He may be a tad naive, but he is simultaneously fearless, compet.i.tive, and supremely confident, even c.o.c.ky. He is not afraid of Google, though he remains a little obsessed with it. He really wants Page to like Facebook, but he also wants to see what will happen when he asks.

Zuckerberg will almost certainly continue to rule over Facebook with absolute authority. He wants to rule not only Facebook, but in some sense the evolving communications infrastructure of the planet. Yet he believes that Facebook's continued success depends on its ability to retain the confidence of its users. As he told users during the vote on the terms of service, he wants to govern Facebook fairly, through an "open and transparent" dialogue. It remains more important to the young CEO to further the honest transparency he believes in and to facilitate more sharing and communicating than to turn Facebook into a profitable business, though he believes he can pursue both goals in tandem.

I once asked Zuckerberg if he ever worried that Facebook could get into financial jeopardy. "Well, there are different levels of jeopardy," he replied. "Is it sustainable? Will it go out of business? I don't spend any time worrying about that. It's fine. Can it be a $10-billion company or something like that? Okay, I think we have a really good chance of getting there."

Some colleagues say Zuckerberg's desire to prioritize openness and fairness over profit shows he is good at delaying gratification. Or maybe he's just so driven that gratification is irrelevant. "He's always striving to do the next thing," says an executive who has worked closely with him. "For most people there are plateaus and milestones you hit and it allows you to sit back and celebrate and feel a sense of accomplishment. That doesn't really exist for Mark."

Zuckerberg's pursuit of growth over money does not seem to have diminished Facebook's financial prospects. Board member Marc Andreessen has as much perspective on these matters as anyone. "Mark has never argued that Facebook will not make a lot of money," observes Andreessen. "On the financial side really it's a timing thing. Focusing on anything other than establishing a global franchise is a waste of time."

Andreessen is among the very small number of people Zuckerberg regularly turns to for advice, so his views count. ("Marc is in a position to say things and have Mark Z. believe it. I don't think any of the rest of us are," says David Sze of Greylock Partners, a big Facebook investor.) Andreessen's strong advice is to keep investing for growth. He explains himself in a fall 2009 interview in a cushy Silicon Valley hotel lobby, talking so fast it's lucky I have a recorder. "How much cash has the company burned to date?" he asks. "A few hundred million, right? So how many active users do they have? Three hundred million? So the company has spent a dollar or so per active user and has built a global franchise, a global brand, with real staying power, stickiness, network effects, R&D, compet.i.tive advantage, and a whole future roadmap of technology that's on its way out the door. For a dollar a user? Like, you would do that over and over and over again.

"So, okay, let's ask the question-What if the potential here is to get to 500 million active users, or a billion active users, or two billion, right? Would you keep spending that dollar to get there? Of course! The answer is-of course! You would. Compare that to the cost of building anything of any similar scale and you'd say you have the bargain of the century." Andreessen is very tall, and he leans his large, bulbous, shaven head in toward me as his forceful words careen toward what is in his view an irrefutable conclusion. He is difficult to argue with. If you have him on your board he will carry a lot of sway. No matter. He and Zuckerberg agree.

Zuckerberg's mentors and advisors have evolved as the company has grown, from Eduardo Saverin, his friend who knew something about business, to Sean Parker, who had started companies and knew how to deal with financiers, to Don Graham, who ran one of the country's largest media companies, and now to Andreessen and Steve Jobs, widely considered the most influential businessman in the world. Zuckerberg admires Jobs and has been spending an increasing amount of time with him.

Facebook's board has always been small. Thanks to the machinations of Sean Parker in 2004, Zuckerberg has always controlled it. He expects it to support him in his long-term approach to managing the company. When I ask Andreessen what he thinks about Zuckerberg's control of the company, he blurts out, "Oh, that's a good thing." Only very strong founder CEOs, he says, can build big enduring tech companies. He compares Zuckerberg to Bill Gates, Jeff Bezos, and Jobs himself.

Each board member works with Zuckerberg in his own way. Jim Breyer, who joined when Accel invested in 2005, weighs in on organizational structure and hiring. ("Mark always wanted a hacker culture and creative chaos," says Breyer. "My point to him is you want that around product innovation but not in areas like sales, human resources, or legal.") Andreessen gets involved in management but also with product design. He feels protective of Zuckerberg, and tries to keep him from making the same mistakes he made as a young entrepreneur. On the other hand, Peter Thiel, appointed when he invested $500,000 in 2004, is less interested in management and talks to Zuckerberg more about long-term corporate strategy and the overall economic environment. Zuckerberg describes their ongoing discussions: "It's mostly like 'Raise money now.' 'Don't raise money.' 'Keep this money in the bank.' 'You should sell the company now.' 'You should not sell the company now.' I listen to him on that."

Zuckerberg talked about adding Don Graham of the Washington Post Company to the board as far back as 2005, even after Accel outbid Graham to invest in Thefacebook. But both agreed then that the company was still too small. Zuckerberg landed Graham in 2009, finally filling all five board seats (though both Graham and Andreessen serve at his pleasure). Zuckerberg admires Graham's long-term view of his business as well as the structure of the Washington Post Company that enables it.

In November 2009, Zuckerberg implemented a shareholder arrangement at Facebook similar to that of the Washington Post Company. It a.s.sures that he and his allies-all existing shareholders were converted to the new "Cla.s.s B" stock with the change-will retain control of Facebook after it goes public. Google had created such a structure for its own IPO in August 2004. Afterward, management and directors controlled 61 percent of Google's voting power through shares that carried ten votes each, while common shares were allotted one vote. Facebook's new share structure has identical voting provisions. Facebook won't go public until it reaches at least $1 billion in annual sales, a level it will almost certainly achieve in 2010. But board member Jim Breyer said in January 2010 that the company would definitely not go public this year. When the company goes public will depend on whether Zuckerberg believes that an IPO will benefit the company in other ways, for example by making it more prominent in the ranks of business. He will never do it just because he wants to cash out his own wealth. And once he does take it public, he will face inevitable pressures from Wall Street. It will become considerably harder to maintain his resolute emphasis on his vision of sharing and on growth above short-term revenue.

Zuckerberg owns about 24 percent of Facebook's stock, worth about $3 billion at the price the stock traded at privately as of early 2010. The second largest block is Accel's at about 10 percent, plus about 1 percent controlled by Jim Breyer personally (the result of that $1 million he invested back in 2005). Dustin Moskovitz owns about 6 percent. In may 2009 Russia's Digital Sky Technologies bought 2 percent from the company, about 1.5 percent from miscellaneous employees, and later another 1.5 percent from various holders to make it Facebook's second-largest outside investor, with about 5 percent. Eduardo Saverin owns 5 percent, Sean Parker about 4 percent, and Peter Thiel around 3 percent (he sold about half his holdings in late 2009, mostly to Digital Sky). Greylock Partners and Meritech Capital Partners each have between 1 percent and 2 percent. Microsoft owns about 1.3 percent, and Hong Kong billionaire Li Ka-shing about .75 percent. Advertising giant The Interpublic Group owns a little less than half a percent, the happy heritage of an ad-and-equity deal in Facebook's early days. A amall group of current and former employees own a substantial share but less than 1 percent. They include Matt Cohler, Jeff Rothschild, Adam D'Angelo, Chris Hughes, and Owen Van Natta. Others with sizable holdings include Reid Hoffman and Mark Pincus, who invested alongside Peter Thiel in the company's very first financing round, as well as Western Technology Investments (WTI) which loaned the company a total of $3.6 million in its first two years, and invested $25,000 in that same initial round. Employees and outside investors own the remaining 30 percent or so.

Though Digital Sky bought its shares from the company at a price that valued it at $10 billion, it's hard to say what Facebook is really worth. As recently as late 2008 the so-called fair market value placed on its shares gave it a total value of only about $2.5 billion. This is the price Accel, for instance, placed then on its own Facebook shares for bookkeeping purposes. "I know it will end up a big number someday," Breyer told me around that time. "So I don't really care what it is now." (His Accel VC firm purchased some of the employee shares along with Digital Sky at a valuation of about $7.5 billion in mid-2009.) Breyer's fellow board member Thiel, however, is not so certain. "The range of what it may be worth from here is extremely big," he said in an early 2009 interview. "It may be worth a lot more. It may be worth nothing at all." These guys must have pretty interesting conversations in the boardroom. Thiel also talks about "the incredibly high anxiety levels people have about-is this going to be the most successful thing ever, or is it going to weirdly spiral out?" Even though the company remains private, insiders have begun periodically selling Facebook's stock on specialty exchanges like SecondMarket and SharesPost, at prices that put the company's valuation as high as $14 billion by early 2010.

For all his conviction about the inevitability of ever-growing transparency, Zuckerberg remains concerned about a corollary issue-who controls your information. "The world moving towards more transparency could be the trend driving the most change over the next ten or twenty years," he says, "a.s.suming there's no ma.s.sive act of violence or other political disruption. But there's still a big question about how that happens. When you ask people what they think about transparency, some get a negative picture in their mind-the vision of a surveillance world. You can paint some really dystopian futures. Will the transparency be used to centralize power or to decentralize it? I'm convinced that the trend towards greater transparency is inevitable. But I honestly don't know how this other piece [whether or not we'll be subject to constant surveillance] plays out.

"Let me paint the two scenarios for you. They correspond to two companies in the Valley. It's not completely this extreme, but they are on different sides of the spectrum. On the one hand you have Google, which primarily gets information by tracking stuff that's going on. They call it crawling. They crawl the Web and get information and bring it into their systems. They want to build maps, so they send around vans which literally go and take pictures of your home for their Street View system. And the way they collect and build profiles on people to do advertising is by tracking where you go on the Web, through cookies with DoubleClick and AdSense. That's how they build a profile about what you're interested in. Google is a great company..." He hesitates. "But you can see that taken to a logical extreme that is a little scary.

"On the other hand, we started the company saying there should be another way. If you allow people to share what they want and give them good tools to control what they're sharing, you can get even more information shared. But think of all the things you share on Facebook that you wouldn't want to share with everyone, right? You wouldn't want these things to be crawled or indexed-like pictures from family vacations, your phone number, anything that happens on an intranet inside a company, or any kind of private message or email. So a lot of stuff is getting more and more open, but there's a lot of stuff that's not open to everyone.

"This is one of the most important problems for the next ten or twenty years. Given that the world is moving towards more sharing of information, making sure that it happens in a bottom-up way, with people inputting the information themselves and having control over how their information interacts with the system, as opposed to a centralized way, through it being tracked in some surveillance system. I think that's critical for the world." He laughs a little nervous laugh, realizing he sounds awfully pa.s.sionate. "That's just a really important part of my personality, and what I care about."

Facebook's position in all this is not entirely benign, despite Zuckerberg's high-minded tone. Regardless of Google, Facebook has not always protected personal information carefully. It initially made wrong choices about such information in the News Feed, Beacon, and terms-of-service incidents. It got enormous criticism in the late 2009 for strongly encouraging members to select the "everyone" privacy settings for their personal information.

For all the protections it can offer our data from the potential depradations of others, Facebook the company will always be able to see our data. It is itself a centralizer, gathering all this information about us under one corporate umbrella. It is comforting that Zuckerberg is so personally pa.s.sionate about the importance of protecting people from information predators. But what guarantee could Facebook's users possibly get that his good intentions will last indefinitely? In a worst-case scenario, possibly in some future when Zuckerberg has lost control of his creation, Facebook itself could become a giant surveillance system.

Zuckerberg's big-picture adviser and board member Thiel makes a similar point about Google. It's clearly something they've spent time talking about. "Google in many ways is an incredible company with an incredible founding vision," says Thiel. "But a very profound difference is, I think, at its core Google believes that at the end of this globalization process the world will be centered on computers, and computers will be doing everything. That is probably one of the reasons Google has missed the boat on the social networking phenomenon. I don't want to denigrate Google. The Google model is that information, organizing the world's information, is the most important thing.

"The Facebook model is radically different. One of the things that is critical about good globalization in my mind is that in some sense humans maintain mastery over technology, rather than the other way around. The value of the company economically, politically, culturally-whatever-stems from the idea that people are the most important thing. Helping the world's people self-organize is the most important thing."

Some aspects of the contrast Zuckerberg and Thiel point to is already evident. Facebook poses a concrete threat to Google's mandate to index and organize the world's information. "What happens on Facebook's servers stays on Facebook's servers, "What happens on Facebook's servers stays on Facebook's servers," wrote Fred Vogelstein in an insightful July 2009 article in Wired Wired magazine t.i.tled "The Great Wall of Facebook." "That represents a ma.s.sive and fast-growing blind spot for Google." Insiders at the search company confirm that this is a much-discussed worry there. If data inside the largest and fastest-growing Web service is off-limits to Google, its ability to serve as the definitive search site could be in jeopardy. The quant.i.ty of information we're talking about is considerable. Status updates alone on Facebook are estimated by company insiders to amount to more than ten times more words than on all blogs worldwide. The Compete research firm reports that in January 2010, 11.6 percent of all online time in the United States was spent on Facebook, vs. 4.1 for Google. magazine t.i.tled "The Great Wall of Facebook." "That represents a ma.s.sive and fast-growing blind spot for Google." Insiders at the search company confirm that this is a much-discussed worry there. If data inside the largest and fastest-growing Web service is off-limits to Google, its ability to serve as the definitive search site could be in jeopardy. The quant.i.ty of information we're talking about is considerable. Status updates alone on Facebook are estimated by company insiders to amount to more than ten times more words than on all blogs worldwide. The Compete research firm reports that in January 2010, 11.6 percent of all online time in the United States was spent on Facebook, vs. 4.1 for Google.

The problem for Google is compounded as personal information begins to help us all search for information online. If a friend has previously found benefit from some data source, or purchased an item you're looking at, that's something you're going to want to know when you conduct a search. In a rare public admission, a Google product manager In a rare public admission, a Google product manager conceded to journalists at a May 2009 Tokyo meeting that for many types of searches, users find information more trustworthy if it comes from friends, and that Facebook can potentially help users achieve that level of trustworthiness better. Then, in a public appearance in late 2009, Google CEO Eric Schmidt conceded that one of the top challenges his company faces is figuring out how to search, index, and present social media content like that created in Facebook. He called this issue "the great challenge of the age." conceded to journalists at a May 2009 Tokyo meeting that for many types of searches, users find information more trustworthy if it comes from friends, and that Facebook can potentially help users achieve that level of trustworthiness better. Then, in a public appearance in late 2009, Google CEO Eric Schmidt conceded that one of the top challenges his company faces is figuring out how to search, index, and present social media content like that created in Facebook. He called this issue "the great challenge of the age."

Facebook itself continues to improve its own tools for searching content on its site, but it isn't very good at it, either. Now it's possible to search all Facebook commercial pages as well as data for which individuals have removed privacy controls so "everyone" has access. The company aims to further encourage use of the "everyone" setting even as it improves its search tools. This not only tweaks Google, but also helps fend off Twitter, whose success has been aided by the fact that tweets can be searched easily. For standard Internet searching from inside the service, Facebook adds insult to injury by using the Bing search engine from Microsoft, Google's archrival.

The compet.i.tion between Facebook and Google will remain heated, though it could be resolved a number of ways. One cannot rule out the possibility of a rapprochement-even possibly some sort of deal or business combination that enabled the two companies' data to somehow intermingle, despite Zuckerberg and Thiel's protestations. Google probably would still like to buy Facebook, but as the search giant encounters more and more regulatory and anti-trust resistance, the chances that it would be allowed to make such a purchase diminish rapidly. Alternatively, if Facebook got closer to Microsoft its rivalry with Google could become more acrimonious. Most likely Facebook will continue to play the two giants against one another, as it did when Microsoft invested.

In the meantime, Facebook and Google battle for online market share and mindshare as well as for executives and engineers. Facebook has become the clear number two Internet company worldwide in numbers of users, behind Google, even as it has surpa.s.sed Google and all other sites in the total time its users spend there. As for employees, Zuckerberg's hiring of Sheryl Sandberg, as well as top Google communications executive Elliot Schrage, did not go over well at Google. In January 2008, Zuckerberg rode to Davos on the Google jet, chatting much of the way with Sandberg, just prior to hiring her. Neither of them was offered a ride in 2009. Google got some revenge in 2008 when it lured back one of its other prominent defectors. The talented programmer and manager Ben Ling had been in charge of Facebook's platform for only ten months before he returned to Google. A large number of Facebook's employees are former Googlers.

I tried to get Google CEO Eric Schmidt to respond to Zuckerberg's comments about Google and surveillance. "My preference is not to comment on things others say about Google," he replied diplomatically in an email. "Mark has done a masterful job of navigating a tough set of waters over the last few years, and he is obviously an exceptional leader and strategist, especially given his relatively young age."

Facebook may soon begin to share something else with Google: the perception that it has become too big. Regulators in Europe opened a formal ant.i.trust investigation into Google in early 2010. Microsoft became so powerful that the Department of Justice moved to break it up. Though that effort failed, Facebook's ambitions and potential to exert control over both users and platform partners are at least as great. "Facebook controls its platform more tightly than Microsoft ever did," says one close observer. "Facebook can flip a switch and turn you off. Anybody. Anytime." If Facebook keeps growing and Zuckerberg appears not to abide by his intended path of user consultation and corporate benevolence, such a development could begin to invite scrutiny from the world's ant.i.trust enforcers.

The closer Facebook gets to achieving its vision of providing a universal ident.i.ty system for everyone on the Internet, the more likely it is to attract government attention. Facebook could have more data about citizens than governments do. Canada's national privacy commissioner spent a year examining Facebook privacy policies before negotiating a number of changes announced in August 2009. It was telling that the inquiry emerged from Canada. A larger percentage of Canada's online population A larger percentage of Canada's online population is on Facebook-42 percent-than in any other major developed country, according to is on Facebook-42 percent-than in any other major developed country, according to The Facebook Global Monitor The Facebook Global Monitor.

In the extreme view, Facebook could take over key functions from governments. Says Yuri Milner, the company's big Russian investor: "Facebook Connect is basically your pa.s.sport-your online pa.s.sport. The government issues pa.s.sports. Now you have somebody else worldwide who is issuing pa.s.sports for people. That is compet.i.tive, there's no doubt about it. But who says issuing pa.s.sports is government's job? This will be global citizenship."

Privacy and ident.i.ty experts are certain such a transition cannot happen smoothly. Says John Clippinger, an official Says John Clippinger, an official at the Berkman Center for Internet & Society at Harvard and author of at the Berkman Center for Internet & Society at Harvard and author of A Crowd of One: The Future of Individual Ident.i.ty A Crowd of One: The Future of Individual Ident.i.ty: "Facebook is coming up against a crucial civic and legal and national security infrastructure. The ident.i.ty system is a building block of our civil liberties. Sure, creating social graphs can be a new way of authenticating people. But should Facebook own it? And have no restrictions over it? It is an Orwellian power play. Facebook is trying to control a very fundamental resource and right."

Such views could suggest a rocky road ahead for Facebook. One thing is clear: if Zuckerberg is going to play the role of statesman, he is going to have to spend a lot of time in coming years explaining himself.

As Facebook approaches a membership number in the billions, the need to successfully navigate the shoals of regulation will undoubtedly become a more pressing concern. I asked Thiel about the risk of government intervention. "Facebook will have the maximum amount of legal and political leeway in a world where it's seen as friendly and not threatening," he replied. "I think it isn't threatening, It's not really displacing anybody. I see it as a very hopeful sign that the company has made as much progress as it has, and has received as little resistance as it has. We're at 175 million people [this was February 2009] and no lobbyists in Congress are arguing for Facebook to be shut down."

True enough. But the scrutiny is certainly increasing. For instance, John Borthwick, a prominent New Yorkbased technology investor (he owns a piece of Twitter, among other companies), thinks that in late 2008 Facebook deliberately reset controls that determine whether users receive email notifications of new activity inside the service. Facebook says the resetting was accidental, the result of a technical glitch. But in the process, Borthwick notes, it was able to resume sending all users email notifications about things like messages they'd received. Though he has no proof, he thinks it was a deliberate effort to draw people back into the service in order to increase activity and page views.

Some things Facebook plans will almost certainly create strong outside reaction. For instance, Facebook "credits" could begin to function as a virtual currency, and a transnational one at that. "The currency becomes a way to monetize connections between users," says Facebook's Dan Rose, responsible for monetization. People could use it to transfer money between one another. Since this new mechanism for purchases is ident.i.ty-based, it might help reduce credit card fraud. And it could enable new conveniences. For instance, you could buy a friend a present online without knowing their address. Just select the present and tell the retailer the name of the friend. The two companies' systems could work out the rest for you, with payment drawn from your Facebook credits. A universal online payment system for hundreds of millions of consumers worldwide might be a huge convenience. It could also trump national boundaries and enable Facebook to begin operating as a truly global economy. But don't be surprised when banks and others begin asking if that should be a role for Facebook.

Zuckerberg professes a deep desire to make sure that Facebook remains a benign force on the Net and in society. "You need to be good in order to get people's trust," he says. "In the past people just didn't expect goodness from companies. I think that's changing now."

"I often say inside the company that my goal was never to just create a company," Zuckerberg explains, staring at me intently as we sit alone in a conference room. "A lot of people misinterpret that, as if I don't care about revenue or profit or any of those things. But what not being just a company means to me is not being just that-building something that actually makes a really big change in the world." His stare is a bit unnerving, but he is concentrating. He continues.

"The question I ask myself like almost every day is 'Am I doing the most important thing I could be doing?'" he says with uncharacteristic expansiveness. "Because if not, we've built this company to a good enough point that I don't have to be doing this, or anything else. That's the argument a lot of people have given me for why we should have sold the company in the past. Then we could just go hang out. So then you face this question of what's important to you. Unless I feel like I'm working on the most"-he lingers on these words for emphasis-"important problem that I can help with, then I'm not going to feel good about how I'm spending my time. And that's what this company is."

In the end Mark Zuckerberg's vision is to empower the individual. For him, the most important thing that Facebook can do is to give people tools that enable them to more efficiently communicate and thrive in a world in which more and more information surrounds us all no matter what we do. He wants to help keep individuals from being overwhelmed as large inst.i.tutions both in business and government gain ever more vast computational and information resources.

His subordinates have mostly come to endorse this way of thinking. "What is the key reason we are at this point, with all this success?" asks Kevin Colleran, Facebook's longest-serving advertising sales executive and a good friend of Zuckerberg. "The key reason is that Mark is not motivated by money." Chris c.o.x, the vice president of product and who works alongside Zuckerberg almost daily, says, "Mark would rather see our business fail in an attempt to do what is right and to do something great and meaningful, than be a big, lame company." A watchword over the years at Facebook has been "Don't be lame." c.o.x says it means don't do something just to make more money or because everybody is telling you to. It is Facebook's counterpoint to Google's motto 'Don't be evil.'"

Though Facebook is filling out with executives of all ages, people in their twenties still const.i.tute a critical ma.s.s. They understand how Zuckerberg thinks because they are much like him. They take the impact of their work with profound seriousness, even as they seem to spend much of the day wiggling erratically around the vast office on two-wheeled RipStick skateboards. Many naturally gravitated to Facebook after developing deep convictions about the social implications of a service they used daily. When I'm in their offices I often feel this could be the smartest bunch of young people on the planet today. The average age of the 1,400 employees The average age of the 1,400 employees is thirty-one. is thirty-one.

The company moved in May 2009 from a hodge-podge of rented offices scattered across downtown Palo Alto into a big 135,000-square-foot former manufacturing plant a few miles across town. The office was deliberately picked for its funky undecorated quality-Zuckerberg and Sandberg didn't want to move into fancy digs like the ones occupied by Google or Yahoo. They talked about the perils of the "you have arrived" corporate office. Their view was that it could lead employees to become complacent. But even the new office was quickly filled and the company rented another even bigger industrial building nearby for further expansion.

Facebook has shown a peculiar durability. Ever since it began, critics have predicted it was at risk of losing its "coolness" and would soon begin to decline: "If it lets in Harvard staff...If it goes beyond Harvard...If it includes colleges outside the Ivy League...If high school kids can join...If adults are allowed...everyone else will leave." The "end of Facebook" article has become a cliche.

Meanwhile, the service has just kept growing and has not measurably lost the collective allegiance of any cla.s.s, age, or nationality of user. This trend cannot last forever, but it has shown no signs of stopping yet, as Facebook's relentless internationalization continues. "Even we are still trying to comprehend the scale and power of what it is we've built," marvels Chamath Palihapitiya, vice president for growth and internationalization. "We think this is a company that will build value for decades and decades and decades."

Facebook is changing our notion of community, both at the neighborhood level and the planetary one. It may help us to move back toward a kind of intimacy that the ever-quickening pace of modern life has drawn us away from.

At the same time, Facebook's global scale, combined with the quant.i.ty of personal information its users entrust to it, suggests a movement toward a form of universal connectivity that is truly new in human society. The social philosopher and media theorist Marshall McLuhan is a favorite at the company. He coined the term "the global village." In his influential 1964 book, Understanding Media: The Extensions of Man, Understanding Media: The Extensions of Man, he predicted the development of a universal communications platform that would unite the planet. "Rapidly, we approach the final phase of the extensions of man-the technological simulation of consciousness," he wrote, "when the creative process of knowing will be collectively and corporately extended to the whole of society." We are not there yet. Facebook is not what he describes. The world remains fragmented. But no previous tool has ever extended a "creative process of knowing" so widely. he predicted the development of a universal communications platform that would unite the planet. "Rapidly, we approach the final phase of the extensions of man-the technological simulation of consciousness," he wrote, "when the creative process of knowing will be collectively and corporately extended to the whole of society." We are not there yet. Facebook is not what he describes. The world remains fragmented. But no previous tool has ever extended a "creative process of knowing" so widely.

The overall contributions of Facebook's users const.i.tute a global aggregation of ideas and feelings. Some have gone so far as to say it could evolve toward a kind of crude global brain. The reason people sometimes talk like that is that once all this personal data exists in one place it can be examined by sophisticated software in order to learn new things about aggregate sentiment or ideas. One company project announced in late 2009 is the Gross National Happiness Index. a.n.a.lytic software measures the occurrence over time of words and phrases on Facebook that suggest happiness or unhappiness. That produces a chart that is intended to be "indicative of how we are collectively feeling," according to a post on the Facebook Blog. Initially it will only plumb data produced by English-speakers in the United States. But over time it will likely be extended more broadly, creating an unprecedented gauge of global sentiment. Such tools will become steadily more capable.

Facebook embodies stunningly efficient qualities of universal connectivity. Go to its search box and type in the name of anyone you've ever met. The chances are good you will be directed to a page with their name and photo. If you want, from there you can send them a message. Facebook aims to a.s.semble a directory of the entire human race, or at least those parts of it that are connected to the Internet. It creates a direct pathway between any two individuals.

These capabilities might conceivably over time lead to more global understanding. Or perhaps they won't. Maybe we will use Facebook merely to connect more closely to those we already know. Maybe doing that will reinforce our sense of tribal separation.

After all, Zuckerberg's original conception of Facebook, maintained rigorously until recently, was of a service to communicate with people you already are acquainted with in real life. As Facebook encountered the need to build its revenues, it embraced commercial pages and a marketing culture that has come to coexist alongside a culture of personal interconnection. Then, as the Twitter challenge emerged, it expanded its self-definition further to become a service where people communicate with everyone as well as with their friends. In some ways this was a natural consequence of another of Zuckerberg's founding premises-that "sharing" and transparency were becoming irresistible elements of modern experience.

But reciprocal personal connections packed with very private data may not coexist well with unbridled sharing. Does it really make sense to combine the original conception of Facebook with what Twitter and Mys.p.a.ce and a host of other, less-restrictive services do? Can a system based on trust ever evolve to become truly open?

The answer to such questions will depend on decisions that Facebook makes as it refines and improves its service. Zuckerberg cares deeply about Facebook's potential to serve as a bridge between people. He will work to turn it ever more into a town square for the global village. But as we have heard, he also has a conviction about the importance of helping people protect their most sensitive personal data. Maintaining the enthusiasm of hundreds of millions of people who joined originally to communicate with their friends will remain his ongoing challenge.

Postscript.

By the time you read this book, Facebook will likely have exceeded half a billion active users. It announced 400 million in February 2010 but has been adding about 25 million new users every month.

The company is increasingly embedded in the fabric of modern life and culture. One frequently overhears the word "Facebook" in conversations in public places in almost every country, no matter what the language. One dictionary named "unfriend" the 2009 word of the year. TV shows embed Facebook in their story line.

Facebook's social impact continues to broaden. For many adults all over the world, it has rekindled moribund relationships. Jon Weisblatt, a marketing consultant in Austin, Texas, wrote a note on the Facebook page I maintain devoted to this book (www.facebook.com/thefacebookeffect) in which he coined the phrase "Facebook vertigo." That's the feeling he gets "when I suddenly see the names and faces of friends from long ago." And for those looking for love, Facebook represents a chance to try again. Since more or less every former friend is accessible via a simple Facebook message, many are tempted to get back in touch with crushes from high school or college. So many people have renewed relationships in this way that a word has emerged to describe them-"retros.e.xuals."

But Facebook has also become yet another place for the antisocial to wreak havoc. Vandals and commercial miscreants now frequently set up phony sites that look like Facebook in order to harvest people's pa.s.swords. Then they log in to Facebook using the stolen pa.s.sword and send spam messages to that person's friends, often with the aim of stealing yet more pa.s.swords. Such a "phishing" page fooled even the chairman of the U.S. Federal Communications Commission, Julius Genachowski. A bunch of his Facebook friends received a cryptic message reading, "Adam got me started making money with this."

Facebook's compet.i.tors in general-interest social networking are struggling. Mys.p.a.ce is losing money. Bebo, acquired in 2008 by AOL for $850 million, is now for sale. Both Mys.p.a.ce and Cla.s.smates.com, a long-standing if rudimentary social network focused on connecting old high school friends, have put some of their own services onto Facebook's platform and begun to use Facebook Connect.

For Zuckerberg one uncomfortable price of success is celebrity. He cannot dine out in Silicon Valley without being recognized and interrupted by people who ask for his autograph or take his picture.

A friend of mine lives in Palo Alto a few blocks from Facebook's offices. One weekend he was returning late at night from a long day of family activities with a car full of irritable children. He and his wife were relieved to finally be home. But as he approached his driveway, his car's headlights silhouetted a man standing on the sidewalk, blocking his path.

The small man with curly hair didn't notice them. He was oblivious, immobilized, hands clasped behind his back, head down, lost in thought. There was a gravity in the man's demeanor. My friend paused. Despite his family's exhaustion, his instinct told him not to interrupt. He waited. After a minute or so, the pensive Mark Zuckerberg looked up and continued slowly down the sidewalk.

Acknowledgments.

Thanks go first to Mark Zuckerberg. Had he not encouraged me to write this book and cooperated as I did so, it would likely not have happened. As I proceeded, I often said to myself and to others how much I liked writing a book about someone so committed to transparency. He tried hard to answer even questions that had embarra.s.sing answers.

It would have been impossible to spend so much time on this project without the support and love of my wife, Elena Sisto, and my daughter, Clara Kirkpatrick, who also often served as a two-person Facebook focus group. They formed the core team.

At Simon & Schuster I was blessed with not just one but two terrific editors. Bob Bender ran the project and oversaw everything with the aplomb and judgment that makes him such an admired industry veteran. In addition, Dedi Felman's advice on structure and her surgical editing were invaluable.

My superb agent Wayne Kabak guided me throughout the process with sage counsel, and I am deeply grateful. Thanks also to Jim Wiatt for convincing me I should write a book. Teri Tobias is my terrific international agent.

Julia Lieblich was a partner. Without her help I couldn't have pulled it off. Judy Adler was another critical ally.

At Facebook, Brandee Barker was my guru. She spent innumerable hours helping me figure out who to talk to and sitting patiently as I did so. Elliot Schrage, who heads all communications for the company, was hugely supportive and helpful. Larry Yu also did yeoman's service in the interview process, and Maureen O'Hara performed frequent scheduling miracles.

My close friend Brent Schlender read proposals and weighed in throughout with advice honed by a quarter century covering technology. Jessi Hempel contributed in a variety of ways. Other friends who helped include Jim Aley, Marc Benioff, Lynne Benioff, Brett Fromson, Frank Levy, Ellen McGirt, Rick Moody, Peter Petre, Julie Schlosser, and Della Van Heyst. Justin Smith and John Battelle contributed wisdom from the trenches. Tedd Ross Pitts and Gretl Rasmussen worked on the hard stuff. Ali Axon cheered me on.

Special thanks also to Matt Cohler, Joe Green, Chris Hughes, Dustin Moskovitz, and Sean Parker.

A Note on Reporting for This Book.

Facebook cooperated extensively in the preparation of The Facebook Effect, The Facebook Effect, as did CEO Mark Zuckerberg. Almost n.o.body connected to the company refused to talk to me. However, there was no quid pro quo. Facebook neither requested nor received any rights of approval, and as far as I know, its executives did not see the book before it went to press. Company employees, when confronted with a particularly probing question, periodically stopped and turned quizzically to the Facebook public relations person who was often nearby, but they were without exception encouraged to answer my question. And I talked to many people without supervision. as did CEO Mark Zuckerberg. Almost n.o.body connected to the company refused to talk to me. However, there was no quid pro quo. Facebook neither requested nor received any rights of approval, and as far as I know, its executives did not see the book before it went to press. Company employees, when confronted with a particularly probing question, periodically stopped and turned quizzically to the Facebook public relations person who was often nearby, but they were without exception encouraged to answer my question. And I talked to many people without supervision.

Some people submitted to multiple interviews. First among these is Mark Zuckerberg himself. Others who were especially generous with their time included Jim Breyer, Matt Cohler, Chris c.o.x, Kevin Efrusy, Joe Green, Chris Hughes, Chris Kelly, Dave Morin, Dustin Moskovitz, Chamath Palihapitiya, Sean Parker, Dan Rose, Sheryl Sandberg, and Aaron Sittig.

Other interviews at Facebook included Carolyn Abram, Aditya Agarwal, Ethan Beard, Charlie Cheever, Kevin Colleran, Adam D'Angelo, Gareth Davis, Dave Fetterman, Anikka FraG.o.dt, Naomi Gleit, Jonathan Heiliger, Matt Jacobson, Meagan Marks, Scott Marlette, Cameron Marlow, Mike Murphy, Javier Olivan, Jeff Rothschild, Ruchi Sanghvi, Barry Schnitt, Mike Schroepfer, Peter Thiel, Gideon Yu, and Randi Zuckerberg.