Facebook kicks it up a notch

Feeling pretty humble right now. As far as this whole crazy Interweb-thingy is concerned, I like to think that I’m pretty well traveled. I read a lot, subscribe to all the best RSS feeds, spend waaaaaaaaaaaaaaay too much time dicking around online, and even – get this – think about what I see and formulate my own opinions and conclusions.

Sometimes I even flatter myself with a little insight, and truth be told I credit myself with having predicted some of the cooler developments in the space of late. Hell, I even included some if my picks for the big moves of this year in my current CV.

Soooooo… imagine my dismay when I tuned in to CNN Money (via Techmeme) this morning and read about the latest developments at Facebook:

No longer will Facebook consider itself merely another social network. Instead it is becoming a technology platform on which anyone can build applications for social computing.

The short version is that Facebook is taking its two major assets – its 24-million-members (growing at about 150,000 per day) and its strong technology underpinnings – and making them available to all comers.

“We want to make Facebook into something of an operating system so you can run full applications,” (Facebook founder and CEO) Zuckerberg told me, saying it would be analogous to the platform that Microsoft Windows provides for developers. Outsiders can now develop Internet services on Facebook’s infrastructure, he explains, that will have full access to all its members. Just as it is when someone writes a program for Windows, programmers won’t need any permission from Facebook or any special business relationship with the company.

How did I not see this coming? It makes so much sense!

This is so cool and so ground-breaking that I hardly know where to start. Let’s start with the obvious: Remember all those rumors circulating recently about a possible trade sale of Facebook? I won’t speculate on the if/who/when question, but it’s clear that the ‘how much’ has just gotten a whole lot trickier. Why?

Yesterday Facebook was a popular and lucrative social networking website. Today it is the centre of its own industry – an industry in which many (currently 65, but surely soon to number in the hundreds) companies have a clear interest in adding value and attracting users to that site.

This immediately reminds me of SalesForce.com. Never heard of them? Here are a couple of mentions they’ve had in recent weeks:

Salesforce.com Announces Record Fiscal First Quarter Results. First Software-as-a-Service Company to Exceed $600M Annual Revenue Run-rate. Company Raises Full Fiscal Year ’08 Revenue Guidance. Record Revenue of $162M, up 55% year-over-year, surpassing company guidance. Record Q1 Operating Cash Flow of $37M, up 197% year-over-year.

Google, Salesforce.com Discuss Alliance. Although details are still being negotiated, the alliance would most likely involve blending Google mass-market applications like instant messaging, word processing and spreadsheets with Salesforce.com’s business programs for managing customer relationships. Founded near the height of the dot-com boom in 1999, Salesforce.com now boasts 32,300 customers and is expected to generate than $700 million in revenue this year. Benioff expects Salesforce.com’s revenue to top $1 billion next year. Salesforce.com’s success has helped the company’s stock price more than quadruple from its initial public offering price of $11 nearly three years ago.

Oooooooooooh! That SalesForce.com? Yup. We started using SalesForce at Marker about 2 years ago, following a long and grueling evaluation process. As far as CRM systems go it’s got pretty much everything, including a subscription model – which is an obvious plus if you don’t have gazillions of cap-ex dollars lying around. However, two key factors put SalesForce over the other systems:

  • Flexibility. Love the system but it doesn’t do 100% of what you need? No problem – you can build your own modules using their API.
  • Supporting industry. Because it’s an open system with lots and lots of users, this presented an immediate opportunity for developers – build custom SalesForce modules and sell them to SalesForce customers. As such, product development is accelerating at an incredible rate. Too cheap / lazy to commission a custom module? No problem – just check out the AppExchange.

I’m drifting from the point a little bit here, so let’s get back to it: SalesForce.com experienced astonishing growth as the result of a similar strategy to that just announced by Facebook (building a supporting industry). Given that none of Facebook’s competitors seem in any way positioned to follow, my money points to a period of phenomenal growth and soaring profits for the former darling of the college scene. If Yahoo! is still waiting in the wings with check-book in hand, the $750 million initially rumoured won’t even get them a call-back now.

I could be mistaken. But I doubt it.


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