Mark Zuckerberg's paternity leave plan 08-21

As he did after the birth of his first child in 2015, Facebook CEO Mark Zuckerberg is taking two months’ paternity leave from the company when his second daughter arrives. This time, Zuckerberg will break up the leave, spending one month at home with his children and wife Priscilla Chan right after the baby’s birth and taking the rest of the leave in December.

Zuckerberg is using only half of the four months of paid parental leave that Facebook allots male and female employees. It’s still far more time than the typical father takes off work for the birth of a child in the US, where only 15% of companies in a national survey last year offered paid paternity leave.
The lack of paid leave for men hurts parents who want to share the experience of caring for their babies, and contributes to the persistent lag in women’s wages and workforce participation. Fully paid paternity leave is key to breaking a vicious cycle in which employers pay women less and bypass them for promotions in anticipation that they’ll take time off to raise children, making the lower-earning female partner the natural choice to take unpaid or partially paid leave that’s ostensibly offered to both parents.

As Quartz’s Gwynn Guilford pointed out in a 2014 analysis of parental leave policies in Sweden and Japan, the more parental leave men take, the sooner women go back to work. A 2010 study in Sweden found that a woman’s future earnings rose 7% for every month her partner took under the country’s paid parental leave system, which incentivizes both parents to take time off. Sweden has one of the world’s highest rates of working women, and a nearly non-existent wage gap.

But it’s not enough for companies to offer paternity leave. Men have to actually take it, and this is where Zuckerberg’s decision to make his family plans public is significant. In a 2014 survey by the Working Mother Research Institute, men reported a significant gap between the availability of family-friendly, flexible working policies and the degree to which they were encouraged to take them. Those who did feel supported by their employers reported more satisfaction with the company, their careers, and their home lives.

“At Facebook, we offer four months of maternity and paternity leave because studies show that when working parents take time to be with their newborns, it’s good for the entire family,” Zuckerberg wrote in a Facebook post. “And I’m pretty sure the office will still be standing when I get back.”
Meanwhile, there’s no better way to encourage employee behavior than to lead by example.


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No, Facebook Did Not Panic and Shut Down an AI Program That Was Getting Dangerously Smart 08-04

Image credit : Shyam's Imagination Library

In recent weeks, a story about experimental Facebook machine learning research has been circulating
with increasingly panicky, Skynet-esque headlines.

“Facebook engineers panic, pull plug on AI after bots develop their own language,” one site wrote. “Facebook shuts down down AI after it invents its own creepy language,” another added. “Did we humans just create Frankenstein?” asked yet another. One British tabloid quoted a robotics professor saying the incident showed “the dangers of deferring to artificial intelligence” and “could be lethal” if similar tech was injected into military robots.

References to the coming robot revolution, killer droids, malicious AIs and human extermination abounded, some more or less serious than others. Continually quoted was this passage, in which two Facebook chat bots had learned to talk to each other in what is admittedly a pretty creepy way.

Bob: I can i i everything else

Alice: balls have zero to me to me to me to me to me to me to me to me to

Bob: you i everything else

Alice: balls have a ball to me to me to me to me to me to me to me to me

The reality is somewhat more prosaic. A few weeks ago, FastCo Design did report on a Facebook effort to develop a “generative adversarial network” for the purpose of developing negotiation software.

The two bots quoted in the above passage were designed, as explained in a Facebook Artificial Intelligence Research unit blog post in June, for the purpose of showing it is “possible for dialog agents with differing goals (implemented as end-to-end-trained neural networks) to engage in start-to-finish negotiations with other bots or people while arriving at common decisions or outcomes.”

The negotiation system’s GUI. Gif Credit: Facebook AI Research

The bots were never doing anything more nefarious than discussing with each other how to split an array of given items (represented in the user interface as innocuous objects like books, hats, and balls) into a mutually agreeable split.

The intent was to develop a chatbot which could learn from human interaction to negotiate deals with an end user so fluently said user would not realize they are talking with a robot, which FAIR said was a success:

“The performance of FAIR’s best negotiation agent, which makes use of reinforcement learning and dialog rollouts, matched that of human negotiators ... demonstrating that FAIR’s bots not only can speak English but also think intelligently about what to say.”

When Facebook directed two of these semi-intelligent bots to talk to each other, FastCo reported, the programmers realized they had made an error by not incentivizing the chatbots to communicate according to human-comprehensible rules of the English language. In their attempts to learn from each other, the bots thus began chatting back and forth in a derived shorthand—but while it might look creepy, that’s all it was.

“Agents will drift off understandable language and invent codewords for themselves,” FAIR visiting researcher Dhruv Batra said. “Like if I say ‘the’ five times, you interpret that to mean I want five copies of this item. This isn’t so different from the way communities of humans create shorthands.”
Facebook did indeed shut down the conversation, but not because they were panicked they had untethered a potential Skynet. FAIR researcher Mike Lewis told FastCo they had simply decided “our interest was having bots who could talk to people,” not efficiently to each other, and thus opted to require them to write to each other legibly.

But in a game of content telephone not all that different from what the chat bots were doing, this story evolved from a measured look at the potential short-term implications of machine learning technology to thinly veiled doomsaying.

There are probably good reasons not to let intelligent machines develop their own language which humans would not be able to meaningfully understand—but again, this is a relatively mundane phenomena which arises when you take two machine learning devices and let them learn off each other. It’s worth noting that when the bot’s shorthand is explained, the resulting conversation was both understandable and not nearly as creepy as it seemed before.

As FastCo noted, it’s possible this kind of machine learning could allow smart devices or systems to communicate with each other more efficiently. Those gains might come with some problems—imagine how difficult it might be to debug such a system that goes wrong—but it is quite different from unleashing machine intelligence from human control.

In this case, the only thing the chatbots were capable of doing was coming up with a more efficient way to trade each others’ balls.

There are good uses of machine learning technology, like improved medical diagnostics, and potentially very bad ones, like riot prediction software police could use to justify cracking down on protests. All of them are essentially ways to compile and analyze large amounts of data, and so far the risks mainly have to do with how humans choose to distribute and wield that power.

Hopefully humans will also be smart enough not to plug experimental machine learning programs into something very dangerous, like an army of laser-toting androids or a nuclear reactor. But if someone does and a disaster ensues, it would be the result of human negligence and stupidity, not because the robots had a philosophical revelation about how bad humans are.

At least not yet. Machine learning is nowhere close to true AI, just humanity’s initial fumbling with the technology. If anyone should be panicking about this news in 2017, it’s professional negotiators, who could find themselves out of a job.

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Did you know? Facebook knows how much money you make and the stores you shop in! 01-05

 

Facebook already knows a lot about your online activities and you are pretty much aware of it. But a
new media investigation has revealed that the social networking giant buys data on your offline activities without your knowledge.  

The information that Facebook collects can include things like how much money you make, the stores you shop in, and even the number of credit cards you own, according to the investigation by ProPublica.

At the heart of the issue is that the tech giant gives users little indication that it buys far more sensitive data about them than what the social media platform declares it knows.

Facebook uses algorithms to categorise its users in tens of thousands of micro-targetable groups for advertisers.

"Facebook's site says it gets information about its users 'from a few different sources'," ProPublica said in its report on Tuesday.

"What the page doesn't say is that those sources include detailed dossiers obtained from commercial data brokers about users' offline lives. Nor does Facebook show users any of the often remarkably detailed information it gets from those brokers," it added.

"They are not being honest," Jeffrey Chester, Executive Director of the Center for Digital Democracy, was quoted as saying.

"Facebook is bundling a dozen different data companies to target an individual customer, and an individual should have access to that bundle as well," Chester noted.

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Top of the Unicorn Club: these are the 10 most valuable private companies 5-25

Top of the Unicorn Club: these are the 10 most valuable private companies

Image credit : Shyam's Imagination Library

There are some businesses around the world which expand at a dizzying rate. These companies have achieved "hypergrowth", doubling their revenues in less than two years.

In the past few years, the number of companies that have mastered hypergrowth has increased. This is mainly due to the digital transformation of economies, more accessible (and cheaper) capital, and the emergence of new global markets such as the Asian middle class, according to a study from the World Economic Forum, 'Mastering Hypergrowth'.

While companies from a range of sectors are experiencing hypergrowth, unsurprisingly, technology start-ups provide prominent examples of the trend. One example is Finnish mobile games developer Supercell, which recorded a $2.3bn revenue in 2015, just three years after launching its first product.

If a start-up grows quickly enough, it might turn into that mythical and elusive creature: the unicorn, a private company valued at $1 billion or more. There are currently 174 companies on Fortune's Unicorn list, and below are the 10 highest-valued private companies. 


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Facebook's News Feed changes have been "catastrophic" for non profits 02-11

Facebook's News Feed changes have been "catastrophic" for non profits

Bruno needs a new home, and to look at him, you might think he’ll have no problem finding one. The energetic 2-year-old pit bull is friendly, gets along well with other dogs, and has a soulful set of deep-brown eyes that complement his brindle fur and regal profile. But despite his many agreeable traits, the young shelter dog may forever remain an orphan, in part because the animal rescue organization trying to match Bruno up with the right owner relies on Facebook for community outreach. And these days, that hasn’t been going so well.

“We just haven’t had many applications for him,” said Erin Jenkins, a volunteer in Boston for Karuna Bully Rescue.

It’s not for lack of trying. The Facebook page for Karuna Bully Rescue has more than 4,700 fans, people who have “liked” the page presumably because they’re interested in updates about dogs in need. But nowadays, very few of those fans ever see Karuna Bully’s Facebook posts. The tiny animal-rescue group is a victim of Facebook’s news feed and its notoriously diminishing returns, and in that sense, it’s in the same boat as major news organizations and multinational brands.

“It’s getting out of control,” Jenkins said. “No one can really use Facebook anymore.”

Recent changes to Facebook’s news feed algorithm have brought about a significant decline in “organic reach,” the number of people who see a post that hasn’t been boosted by paid advertising. Two years ago, organic reach for many posts was at about 16 percent, but over the last several months it’s been throttled to 2 percent or even less. That means a typical post by Karuna Bully may reach only about 95 people unless the group pays money to boost it.   

facebook.com/karunabullyrescueDespite having 4,700 Facebook fans, Karuna Bully Rescue has trouble attracting engagement due to Facebook's algorithm

Discussion around the issue -- and there’s been lots of it -- has tended to focus on the immense frustrations of brands and marketers, many of whom have been understandably shaking their fists at the gods of social media. But nonprofit organizations are getting caught in the algorithmic filter too, and some say the change has crippled their ability to share critical information and maintain the online communities their memberships rely on.

“It’s an absolute catastrophe for us and every organization that’s paying attention,” said Seth Ginsberg, president of the Global Healthy Living Foundation, an advocacy group for patients living with painful joint conditions like rheumatoid arthritis.

Ginsberg said it’s now almost impossible for his organization to reach a majority of its more than 75,000Facebook fans. He said the reduced engagement is a threat in a community where social interaction is vital. Rates of depression are higher among people suffering from chronic pain, and Ginsberg said his membership over the last several years had come to rely on Facebook as a place for helpful information, articles and discussions, which can help sufferers feel less isolated.

Even more problematic, he said, the organization has been unable to spread important health news relevant to the community it serves. “If the FDA has a drug recall because they find shards of glass in a medicine, we have to blast that out to our membership,” he said.

A spokesman for Facebook Inc. declined to comment on the plight of nonprofits that use the site. But across the nonprofit sector, executives and staffers at organizations large and small are expressing similar concerns.

“We’ve heard quite a bit about it,” said Rick Cohen, a spokesman for the National Council of Nonprofits. “Ice Bucket Challenge notwithstanding, the algorithm changes that Facebook has made just makes it a lot more difficult for nonprofits to expand their reach.”

Facebook Giveth…

An obvious solution here would be for organizations to accept that the free Facebook ride is over and revert to the methods they used before Facebook existed. The social network is only a decade old, after all. But nonprofit executives say Facebook, with its rapid growth and unrivaled penetration, has replaced many of the outreach strategies groups used before the advent of social media. Whereas nonprofits once poured resources into email campaigns and direct marketing, some switched gears a few years ago and began accumulating "likes" under the promise that a Facebook page could serve as a mass communication tool. Now that tool is crumbling.  

Ginsberg said GHLF, which has an annual operating budget of about $1.8 million, spent $30,000 on Facebook advertising to build up its page, and now he’s unable to reach those fans without paying more to boost each post. “It’s the ultimate bait-and-switch,” he said.

For some newer groups and younger volunteers, Facebook is the only outreach strategy they’ve ever known. “I got involved in animal rescue because of Facebook,” Jenkins said. “For the nonprofit community, Facebook is a bulletin board. It’s how we get donors, volunteers. It’s so incredibly vital to how rescues operate now, and losing this venue is just detrimental to us.”  

Earlier this week Jenkins launched a Change.org petition calling on Facebook to stop throttling the organic reach for nonprofit pages. She said part of the issue is that Facebook treats every page like a marketing tool when, in fact, many are trying to raise awareness about important causes. “There should be an easy enough way to understand the difference between a nonprofit page and a page that’s profitable,” she said. 

Elise Amendola/APThe “Ice Bucket Challenge” helped raise more than $100 million for ALS, in part through sharing on Facebook. While high-concept causes tend to do well on the social network, critics say engagement for nonprofits is not always about viral hooks.

What’s In A Like?

Facebook has long been consistent in its explanation for the decline of organic reach. Part of it, the company has said, is basic mathematics. As activity on the site has grown, news feeds have become increasingly crowded and posts are competing with more content.

The second component has to do with Facebook’s proprietary algorithm, which culls news feeds so that users see -- or supposedly see -- only the content most relevant to them. Tweaks to the formula have resulted in a decline in reach for content the algorithm deems uninteresting or overly promotional. Facebook calls these changes improvements, but critics say users should have more control over what they see in their feeds. “Liking” a page, they say, is the equivalent to opting in to receive its posts, and the visibility of those posts shouldn’t be determined by the whims of a machine.   

“There’s a lack of transparency about the weight of their engagement algorithm,” said Brian Steel, a social media manager for PayScale Inc. “What exactly is going on? It’s not really clear.”

Facebook currently offers no option to view an unfiltered news feed, and to users who want one, its pitches about “relevant content” ring particularly hollow. Even if users wanted to see every post from a particular page, there is no way to make them appear in their news feed. (An “all updates” setting was quietly done away with.) Facebook does let users receive notifications when new posts appear, but page administrators say the extra step is burdensome and tiny red notification indicators are no replacement for news feed visibility.

“It is not very effective,” said Dana Keithly, an animal shelter volunteer in Southern California. “When an animal’s life is at risk, or there is a time-sensitive cause, you don't really think about, ‘Oh, I need to turn the notifications on.’ If I have liked the page, that should be enough.”

All of which speaks to disagreements over Facebook’s evolving role in community engagement.

Ginsberg said major tech firms Google Inc. and Twitter Inc. have done a better job recognizing the utility-like role they now play in society and have accommodated the nonprofit sector accordingly. For instance, he said his group receives about $40,000 a month in advertising from Google’s Ad Grants program. He said Facebook could offer a similar program for its news feeds. “We’re hoping that Facebook will grow up, quite frankly,” he said.

Back at Karuna Bully Rescue, Jenkins agrees. By Friday, her petition had reached almost 2,000 signatures, and she said she’s heard from a number of users who say they want to receive all the group’s posts, not just the ones Facebook robots deem relevant. She said for dogs like Bruno, nothing could be more relevant than simply being seen. “It’s not about bringing in money or having the most likes,” she said. “At the end of the day, it’s about saving animals, and that’s all we want from all this.”

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Facebook just took a huge shot at Google 12-12

Facebook just took a huge shot at Google

Facebook’s new search feature is a thinly-veiled shot at Google.

Facebook is making a change this week that, if it works, may finally sound the death knell for Google Plus, the search giant’s rival social network.

One of Facebook’s biggest weaknesses is that its internal search isn’t very robust. If you suddenly remembered your best friend posted about a cool new band on your wall a couple months ago and you wanted to go back and find that post, good luck. It’s the exact opposite experience you might have on Google services like Gmail, which turns your inbox into a vast trove of easily-searchable info.

And that was one of the most promising things about Google Plus, when it launched three years ago: The idea that Google  might turn all your online social interactions into an easy-to-search repository. From a user’s perspective, that would be handy because the stuff your friends share directly with you is often more relevant to you than what you can dig up in a general web search.

But Google Plus was even more crucial from Google’s perspective. With more of the content that’s most relevant to us appearing on our social networks rather than the broader web, it makes sense that we might think to search on social media before we search the wider Internet. If Google didn’t have an answer for that potential trend, it could result—in the very long run—in fewer people using its biggest moneymaker, search.

Search remains a vastly profitable business for Google. Revenue from Google-owned websites made up 69% of the company’s total $16.52 billion in revenue for the third quarter of this year. Google doesn’t break out exactly how much of that is from the ads it sells against your search results, but several estimates are in the 50% and up range. And its Android platform for cell phones has helped it lock down mobile search, an area as hot as social.

Still, Google’s search business is starting to slow. And that’s where Facebook  comes in. The social network announced an improved internal search feature this week that the company promises will make it easier to find stuff our friends shared with us in the past. The search upgrade is specifically designed to work well on mobile, an area where Facebook is already considered king in terms of driving traffic.

If Facebook’s new search function works well, more of its users might be inclined to search there rather than heading to Google, especially on their phones. And that would give Facebook an opening to take a run at Google’s dominance in search.

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Facebook’s Future 04-11

Facebook’s Future

Today, we follow Facebook and update friends on our doings. In the not too distant future, predicts Mikolaj Piskorski, Facebook will follow us and call half the planet customers.

Editor's note: Now 10 years old, Facebook's growth is starting to slow. That's one reason it purchased What'sApp last month in a jaw-dropping deal valued at $19 billion. What might the next decade be like? Harvard Business School Associate Professor Misiek Piskorski, an authority on why and how people use various online social platforms, makes some predictions.

In the first decade of its existence, Facebook, aided by the broad adoption of mobile devices and fast internet connections, emerged as a virtual Cheers bar where people share their lives with a legion of geographically dispersed friends and acquaintances and reconnect with faces from the past. First college students, then Millennials, and soon after, their parents and grandparents were drawn in by the allure of this pioneering social network that effectively shrank the world down to a portable and vibrant community.

The company recently celebrated its tenth anniversary, and for much of that time, Facebook's stunning growth—more than 1.2 billion users worldwide—has been the story. That said, the core Facebook functionalities have remained essentially unchanged for the past several years, and so pundits wonder whether Facebook's attraction has peaked. The apparent disappearance of teenagers from the site has made these concerns even greater. I disagree with this conclusion. Teenagers will return to the site when they are older, and Facebook will continue to grow in size, particularly in India, Indonesia, Brazil, and Africa.

“HIS CREATION WILL THEN UNDOUBTEDLY BEAR LITTLE RESEMBLANCE TO ITS CURRENT LOOK AND FEEL”

But what will Facebook look like a decade from now? In 2024, Facebook founder Mark Zuckerberg will turn 40. His creation will then undoubtedly bear little resemblance to its current look and feel. A decade of technological progress will result in major changes, and I believe the site will morph into a potent and active force in people's lives.

Today, Facebook is a passive vehicle where users manually post pictures, status updates, and YouTube videos. And then they quietly observe what others have posted, occasionally offering a comment, but often just scrolling down through content. As such, Facebook is a retrospective medium, a place to share experiences already completed and then put them on display. But the company does little to capture information as it happens, and even less to help us organize the future.

But this will change as Facebook becomes a prospective medium—a dynamic, real-time driver that will automatically gather current and future information that wearable devices will automatically broadcast about us, match it with what our friends are auto-broadcasting, and then deliver recommendations on what we should do socially. This will help us get off the mobile phone and actually meet up in the offline world. This way, Facebook will become less of a website to visit than an invisible conduit to the most important aspects of people's lives, a way to keep a closer eye on their children, plan social interactions, be alerted to pertinent products and services, and accelerate the value of a person's connections.

Two trends will lead to this outcome. First, people are already sharing private information generated by their wearable devices, such as Nike FuelBand. The device is a part of a greater Nike+ ecosystem that has attracted over 18 million users who happily share their athletic achievements with others. Just do a search on #nikeplus on Twitter, and you will discover a Nike-related tweet every 10 seconds in every conceivable language. Second, many companies are already encouraging us to share private information automatically. For example, if you are using Google Maps on your iPhone, you are most likely sending information to Google about your location and speed—data the company aggregates to present us with up-to-date traffic maps. It won't be long, however, before the two trends converge, and we will start broadcasting personal information automatically as we go through our day. As soon as Facebook develops appropriate algorithms to deliver the right social information to the right people and demonstrates their utility to us, adoption will soar.

While all this is happening, Facebook's marketing influence will accelerate dramatically, providing a growing revenue stream for the company. When Facebook first started it was no more than a mechanism to attract eyeballs for businesses. Since then it has evolved into a sophisticated marketing machine that enables marketers to serve targeted messages on the basis of our email address or mobile phone number.

But in 2024, technology will make possible real-time marketing possible. As we auto-broadcast our social data, Facebook can respond to them immediately with targeted offers in response to what we need right now. If I walk down the street and feel hungry, for example, Facebook will suggest a set of friends who live nearby and seem available and then advertise a restaurant that we all might like. Or if my nanny suddenly becomes ill and can't pick up my four-year old from preschool, Facebook will automatically display an advertisement for a substitute nanny who has worked for four close friends and who can step in and pick up my child.

Granted, this has the heavy feel of the movie "Minority Report" taken to its ultimate limits, and the road to 2024 will undoubtedly be bumpy and filled with controversy related to privacy. Over its first decade, Facebook has been no stranger to controversy, specifically about privacy controls, and it is to the company's credit that its growth has continued despite such concerns.

“GRANTED, THIS HAS THE HEAVY FEEL OF THE MOVIE ‘MINORITY REPORT’ TAKEN TO ITS ULTIMATE LIMITS”

This time, however, given the amount of information disclosed, Facebook will need to execute as flawlessly as possible. If it gets the privacy component wrong and infuriates its users, its survival is not guaranteed. Some other startup, maybe from China or maybe a US-based open source venture, will step in and grab that territory. And there is much to grab, with the world population soaring to 8 billion people by 2024. But if Facebook does get it right, it can easily grab half that population.

Is this an optimistic scenario or a Big Brother nightmare? There are a vast number of ways that this might potentially make our lives better and happier. And there are just as many ways that Facebook can go awry. If the main driver is to use the technology for invasive and intrusive paths toward profit, Facebook's future may well be questionable. If it can incorporate a real and active impetus to do the right thing for humanity, it will be much more successful in the years ahead than it has been in the past decade.

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What made Facebook like WhatsApp 02-24

What made Facebook like WhatsApp - Biggest technology acquisition from Simplify360

Is Facebook Paying Too Much for WhatsApp? 0-22

Is Facebook Paying Too Much for WhatsApp?

With $19 billion, Facebook could have purchased Sony or Gap or four aircraft carriers.  Instead, it bought WhatsApp, a tiny startup that so far had accumulated barely $60 million in funding, mostly from Sequoia.  This is nuts, you might say; although the world of mobile messaging is upon us, that is an awful lot of money.

But think about what exactly Facebook is buying:

Young users.  WhatsApp acquired about 450 million monthly active users in 5 years, 70% of whom are active each day, which is about three times as many as Facebook had after 5 years and almost 10 times more than Twitter or Skype had.  To be sure, these numbers translate into minuscule revenues and most of the users are probably on Facebook anyway.  On the other hand, they are just the people Facebook is most worried about losing.

A new business model. Unlike Facebook and most other Internet giants of that generation, WhatsApp employs a subscription-based revenue model, charging its users $0.99 a year after the first year of use. Further, in a decidedly different approach from Facebook, there is a commitment to no advertising and presumably no commercial exploitation of user data. The acquisition could help Facebook understand how to successfully execute on a business model that could replace its own.

Enhancements to the existing business model. The daily messaging volume of WhatsApp approaches the SMS volume of the entire global telecom industry, and while Facebook has become the medium for big announcements of life events, daily connections are better captured by metadata from messaging apps. Undoubtedly this data could much enhance Facebook’s ability to pick out people’s most important relationships from among their acquaintances, which would presumably lead to better-targeted advertising.

Internationalization. Facebook Messenger is big in the USA but not in other countries.  In key markets like India and South America WhatsApp is MUCH more popular than Facebook Messenger.  And this is where, we think, the majority of the immediate real value is: the global turn to mobile is quite evident and Facebook wants to be a part of it as soon as it can.

If you list all these reasons for the deal, and throw in some competitive pressure from the likes of Google, the $19 billion number might not look so silly after all. Time will tell.  But regardless of how this deal turns out, the one unambiguous loser, in our opinion, is the telecom industry, which currently enjoys about $100 billion year in revenues from SMS services globally.

Moral of the story: If you don’t create an alternative yourself, others will disrupt your business model for you.

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Facebook likes WhatsApp 02-21

Facebook likes WhatsApp

$19-bn deal for text messaging firm includes $12 bn in stock and $4 bn in cash

The frenzy to acquire fast-growing technology start-ups reached new heights on Thursday as Facebook announced its largest acquisition ever, saying it would pay at least $16 billion for WhatsApp, a text messaging application with 450 million users around the world who pay little or no money for it.

The hefty price signals the lengths to which Facebook's co-founder & chief executive, Mark Zuckerberg, will go to protect his company's turf as the dominant social network on the web, and is sure to fuel the debate on whether consumer internet companies are overvalued.

Facebook, based in Menlo Park, California, will pay $4 billion in cash and $12 billion worth of shares for WhatsApp. But the ultimate cost of the deal could rise to $19 billion, with WhatsApp employees and founders receiving an additional $3 billion in restricted stock units, which would vest over the next four years.

By any measure, Facebook is paying a steep price for a service that is widely used internationally but is less known in the US. WhatsApp does not sell advertising and has very little revenue. It charges users a flat fee of $1 a year to use the service, and the first year is free.

The purchase price dwarfs the $1 billion Facebook paid for photo-sharing service Instagram. At the time of that deal in 2012, critics assailed Facebook for overpaying, and this megadeal is sure to attract similar scrutiny. And, the price is also much higher than the $3 billion Facebook unsuccessfully offered to acquire Snapchat, another messaging service, late last year.

But Zuckerberg is clearly willing to spend big to acquire hot messaging technologies, which typically attract younger people more than Facebook does.

"Facebook is constantly working to not lose anybody," said Nate Elliott, an analyst with Forrester Research. "Sometimes that's them innovating on their own, sometimes mimicking competitors, and sometimes buying competitors."

The acquisition also reflects a new strategy at Facebook: The company intends to acquire or build a family of applications instead of simply buttressing its core social network.

Now a 10-year-old social network with 1.2 billion users globally, Facebook has become so ubiquitous in many countries that it risks losing some of the attention of users.

In buying WhatsApp, which is growing faster than its rival Twitter and other social services, Facebook gains access to customers who prefer communicating one-on-one or with very small groups rather than sharing information more widely.

Facebook also has struggled to gain traction in the message space in recent years, a big motivation for its failed offer for Snapchat. While Facebook Messenger, the company's chat platform, is popular with users, recent attempts to create its own direct messaging service have failed.

Facebook is justifying the price of this deal by citing WhatsApp's startling growth, which has been even faster than Facebook's own in its early years. On a conference call with analysts, David Ebersman, Facebook's chief financial officer, compared WhatsApp to companies with the potential to grow to one billion users.

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Facebook Says Its New Data Center Will Run Entirely on Wind 11-15

Facebook Says Its New Data Center Will Run Entirely on Wind

• BY KLINT FINLEY

An artist’s rendering of Facebook Iowa data center, due to open in 2014. Image: Facebook

Facebook passed another milestone in the green data center arms race today with the announcement that its Altoona, Iowa data center will be 100 percent powered by wind power when it goes online in 2015.

This will Facebook’s second data center — after its Lulea, Sweden location — to run on all renewable power.

The electricity for the new data center will come from a nearby wind project in Wellsburg, Iowa, according to a blog post from Facebook  . Both the wind project, which will be owned and operated by MidAmerican Energy, and the data center are currently under construction.

Green data centers have come a long way since environmental advocacy organization Greenpeace began railing against Facebook in 2010. Following criticism of their energy use patterns, companies like Facebook and Apple vowed to clean-up their acts. Since then, Greenpeace has upgraded its ratings of Apple‘s environmental practices andpraised Facebook’s energy use transparency.

But that’s not to say that these data centers are actually environmentally friendly as of yet. Reaching 100 percent renewable energy is tough to pull off. Apple claims that its data centers are powered by 100 percent renewable sources, but it’s using renewable energy credits to “offset” its use of coal and nuclear power. Google is working with regulators to find ways to buy more clean energy directly. Facebook has settled on a goal of powering its data centers on 25 percent renewable energy by 2015. eBay and Microsoft, meanwhile, have unveiled plans to use natural gas-based fuel cells to power new data centers. Natural gas burns far cleaner than coal, but still emits some carbon.

But one of the biggest impacts of these sorts of projects is a boost in overall availability of renewable energy, says Greenpeace IT analyst Gary Cook. “When Facebook said back in spring that they were going to Iowa, the utility company in Iowa, MidAmerican Energy, announced that they were shelving plans to build a new nuclear facility and then filed plans to build a wind plant instead,” Cook told us earlier this week. “If you look at the regulatory filing, this was because they have new customers, namely Facebook, that want more renewable energy.”

That fact is not lost no Facebook. “When we settled on Altoona as the location for our fourth data center, one of the deciding factors was the opportunity to help develop a new wind project in the state,” the Facebook blog says.

“The project will add up to 138 MW of new renewable wind capacity to the grid in Iowa – more than what our data center is likely to require for the foreseeable future.”

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Who Has 1 Billion Users And Is About To Overtake Facebook? 11-05

Who Has 1 Billion Users And Is About To Overtake Facebook?

It’s not Twitter, Google+ or LinkedIn. It’s a company that most people in the West don’t know. That, however, is set to change, with the explosive growth of China’s Tencent and its mobile messaging app WeChat...

Last week, Facebook, the current king of social networks, admitted that it’s losing teen users, and that the overall growth in its monthly active users has slowed to 18% year-on-year. This isn’t helped by the fact that it and other Western social networks are banned in China. By contrast, Tencent recently announced that WeChat’s users have almost tripled from the 85 million of the year before.

Source: WorldOfCEOs, JPMorgan, Credit Suisse, Bloomberg & company announcements

And Tencent’s reach – unlike local Twitter-equivalent Sina Weibo and Facebook-equivalent RenRen – is not just restricted to China. WeChat was rebranded from the more Chinese-sounding Weixin to appeal to an international audience, and it’s now virally coming across here. In just four months between May and September 2013, its overseas users have doubled from 50m to 100m.

So, in an increasingly crowded mobile messaging, what is Tencent and WeChat doing right?

First, it has managed to differentiate its product with some killer features that keep users coming back for more. On the messaging side, users can “hold-to-talk” and send free walkie-talkie style messages that bypass the need for voicemail. Yet what keeps its network growing are fun discovery features that can connect users locally and across continents.

WeChat has neatly fused together the open approach of social networks such as Twitter, where anyone can follow anybody, and more closed networks such as Facebook, which rely on mutual friend connections. It’s growing virally through social connection and not just social media.

For instance, the ability to identify “People Nearby” can make the daily commute or a night out with friends much more interesting. Here is a quick summary of my results when looking for other WeChat users in London...

Alternatively, you can “shake” your smartphone, and be connected with other users anywhere in the world who are shaking their phones at the same moment.

In growing its international user base, Tencent has brought on board brand ambassadors, such NBA star LeBron James, soccer star Lionel Messi and Bollywood actors Varun Dhawan and Parineeti Chopra, who users can follow and interact with.

Massive Value Creation

Shaking and tapping on smartphones are not just gimmicks: floated on the Hong Kong stock-exchange in 2004 (the same year as Google), Tencent has far outstripped Google in the rate of appreciation of its share price, up 104 times on it IPO price compared to Google’s 8.5 times price appreciation.

With a $101bn US market cap (still some way off Google’s $343bn valuation), Tencent joins Yahoo!, eBay and Amazon among the world’s most valuable internet companies.

From Copycat To WeChat

Like many of China’s tech companies, Tencent’s roots lie in the “copycat innovation” and localization of what was happening in Silicon Valley. The company was founded in 1998 by Shenzhen University computer sciences graduate Huateng “Pony” Ma, and five classmates. Its first product, OICQ or Open ICQ, was a Chinese copy of the popular ICQ desktop instant messenger that had been acquired by AOL in the same year. When AOL filed a lawsuit in March 2000 for violation of its intellectual property, Tencent eventually lost the battle and changed the name of the product from OICQ to QQ, as it is still known today.

With an increase in user numbers but unable to cash in on its huge user base, Pony and his co-founders nearly had to sell the company. A big early success was in attracting venture capital – in 2000, Pacific Century CyberWorks and IDG invested $4 million for a 40% stake, proving to be the kick-start that Tencent needed.

A big part of the success of WeChat has been down to the fact that, when other companies continued to develop for the desktop, founderPony Ma made a big bet on mobile. A CEO known for his understanding of and investment in long-term growth, a few years ago Pony made the smart move to shift more than half of its 20,000 employees to focus on mobile. Although Tencent’s mobile business has not been the source of its revenue (70% of its revenue is from user payments and the rest from commerce), Tencent expects that eventually “the real value is the connection of the phone with business offline.”

Pony is currently ranked third in Hurun Rich List and fifth in Forbes Chinese Rich List. Reflecting on the “copycat years”, he attributed his early success to a combination of copying and luck:

“When we were a small company, we needed to stand on the shoulders of giants to grow up.” Paraphrasing a quote attributed to Isaac Newton, he added, “If I have seen further it is by standing on the shoulders of giants.”

Pony is known to pay attention to details that most big companies ignore, drawing comparisons with the late Steve Jobs. Indeed, even Jobs owned up to a degree of copycat innovation in launching new products – when he unveiled the iBooks app at the launch of the iPad in 2010, he acknowledged that it bore similarities to Amazon’s Kindle: “Amazon’s done a great job of pioneering this functionality with the Kindle. We’re going to stand on their shoulders and go a little further.”

However, Pony didn’t want to stop with copying, adding:

But copying others can't make you great. So the key is how to localize a great idea and create domestic innovation.”

A company veteran added: “it was entrepreneurship, concentration and passion that helped Pony succeed.”

WeGlobal?

Despite WeChat’s frightening domestic and overseas exponential growth rate, it doesn’t have it all its own way in the global market. Martin Lau, President of Tencent, acknowledges that the US remains something of a sticking point, commenting at a conference at Stanford University last month, “US is a very tough market. You have your free SMS which takes away the cost appeal of microchat. You have [Apple’s] iMessage… We will try to find ways to provide differentiated services.”

WeChat is also up against WhatsApp, a hypergrowth American startup that also almost doubled its monthly active users to 350m from 200m in April. Other competitors, such as Viber and Japan’s Line exist, but tellingly, they won’t reveal their monthly user figures.

So there’s an interesting global battleground setting up: both between Facebook, Tencent and WhatsApp in global social media and messaging, and Amazon, eBay and Alibaba in global e-commerce. LinkedIn is currently the leading professional social network and doesn't have a recognised global direct competitor: it will be interesting to see if one emerges from China or elsewhere.

I’m confident that Tencent will overtake Facebook, although partly because China’s population is bigger and partly because it has an unfair advantage over Western competitors blocked out of the Chinese market. This needs to change.

My overall prediction for the next few years is that Tencent will build a significant global business of great value: with products and brands we’ll increasingly come to know, interact with – and maybe even love.

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