Fogeys Flock to Facebook

(page 2 of 2)

Greasing the Wheels

Today, Facebook's main professional value is "building social capital" among business contacts, says co-founder and vice-president of product engineering, Dustin Moskovitz. He's referring to the informal banter, such as through status updates and games with industry friends on the site, that can grease the wheels for interaction when work needs to get done. Is anyone using Facebook to add new contacts to their Rolodex? "They're certainly doing it with us," says Moskovitz, who says his Facebook inbox is starting to function a lot like traditional e-mail.

Informal interaction could be just step one in Facebook's plans to burnish its professional credentials. Microsoft is helping the company with technology that could turn Facebook's trove of data on members' names, ages, connections, and tastes into directories of users accessible by business software programs. "They may very well be building one of the next interesting collaborative platforms, and it may have business applications as well," says Dan'l Lewin, a corporate vice-president at Microsoft. "They're learning in real time, and the audience is speaking."

In May, Facebook announced that it would let third-party software developers tap into its user data to build miniature software programs that could make the site more useful. So far, the results have been mostly programs such as iLike, which lets users share music preferences, or SuperPoke, whereby users can virtually slap, spank, or pinch pals (see BusinessWeek.com, 5/24/07, "Facebook Aims to Socialize All Online Services"). Microsoft envisions more sober applications: It recently released design software that can let nontechnical users combine Facebook data with elements of other Web sites and blogs like Microsoft's Virtual Earth and Yahoo's Flickr to create new programs.

In the Driver's Seat

Facebook's expanding scope could also increase its market value. Bear Stearns (BSC) analyst Robert Peck estimated in an Aug. 1 report that Facebook could fetch $4.9 billion in an acquisition; he argued that Yahoo! (YHOO) should buy it or another social site to capture Internet ad revenue flowing to such networks. Facebook's revenue could more than double, to $358 million, in 2008 from $140 million in 2007, Peck said.

Facebook has turned down an acquisition offer from Yahoo, and according to reports it also rebuffed Google, Microsoft, and Viacom (VIA). Now, those snubs could look shrewd. In other signs the company is girding for expansion, if not an IPO, in July it hired a new chief financial officer, Gideon Yu, who was CFO at YouTube before the company sold itself to Google. The same month, Facebook hired Chamath Palihapitiya, an investor at venture capital firm Mayfield Fund as vice-president of product marketing and operations.

On July 19, Facebook made its first-ever acquisition, snaring two creators of the open-source Firefox Web browser. Facebook director and early investor Peter Theil said in a recent interview with The Deal that an IPO wouldn't come until 2009 at the earliest. Facebook "is focused on being an independent company," says a spokeswoman, who declined to comment on the prospect of an IPO or make Zuckerberg available for an interview.

Speed Bumps Along the Way

To be sure, Facebook has experienced growing pains. High-profile users say they're starting to get unwanted requests from strangers who try to horn in on their network to ask for favors. Some college-age kids see the influx of users old enough to be their parents as an affront. And a couple of Zuckerberg's old Harvard University classmates sued the company in July for allegedly stealing their ideas. In 2006 the company had to quell complaints from users who said Facebook's broadcast of their every move on the site violated their privacy (see BusinessWeek.com, 9/8/06, "Facebook Learns from Its Fumble").

What's more, Facebook's world of pokes, spanks, and party photos can't hold a candle to LinkedIn's more professional milieu for executives who want to make connections, says Reid Hoffman, LinkedIn's co-founder, chairman, and president. "Many of the bloggers don't really understand the use case for LinkedIn," he says.

Still, Hoffman admits that people are "piling on and taking a look around" Facebook. "If you're going to recruit college students, heck, I'd go to Facebook," he says. Given the flock of older professionals joining the Facebook crowd, before long it won't just be headhunters who have business to do there.

Ricadela is a writer for BusinessWeek.com in Silicon Valley.