Mobile Is the Main Question

By Chris Preimesberger  |  Posted 2012-09-12

Zuckerberg Admits Facebook Mistakes, Promises They Will Be Fixed

SAN FRANCISCO -- Facebook co-founder and CEO Mark Zuckerberg on Sept. 11 made his first public appearance since May 19, the day his company went public in New York City and a couple days before he got married. The venue he chose was a one-on-one with TechCrunch blog founder Michael Arrington at the TechCrunch Disrupt 2012 conference here at the Concourse at San Francisco Design Center.

Arrington, who left TechCrunch as a full-time staffer after the company was acquired last year but still writes and stays involved in special events, led a wide-ranging discussion with Zuckerberg in which the billionaire entrepreneur showed a more contrite, human side of his personality that had not been previously displayed.

The main points:

  • Zuckerberg acknowledged that he's "disappointed" in the performance of the company's stock in its first four months of public sale, something he probably should have mentioned months ago, in order to identify with the pain of stockholders, who saw the stock drop from $38 to $19 in four months;
  • Facebook knows mobile is its ticket to future growth and has plans to solve its current problems in that sector; and
  • do not expect a Facebook phone anytime soon, possibly ever.

Model of Optimistic Consistency

None of those items is headline news, of course, but hearing them come from Zuckerberg--who's been a model of optimistic consistency ever since he rose to IT and consumer fame a half-dozen years ago--is unusual.

"There are times when everyone in the world thinks what we're doing is awesome, and there are times when people are super-pessimistic," Zuckerberg said. "I personally would rather be in the cycle when people underestimate us. I think it gives us latitude to go out and take some big bets and do some things that excite and amaze people."

A Facebook phone is not a bet the company is willing to take, Zuckerberg said.

"I mean, we could sell 10 million, 20 million phones, and that would not even move the needle," Zuckerberg, 28, told a crammed room of fellow 20-somethings at Disrupt. "That's just not something we intend to do. Others are doing fine in that market.

"We want to build a system that's deeply integrated into every platform people use."

Mobile Is the Main Question


Mobile Is the Main Question

What shareholders and nonshareholders alike wanted to find out directly from the CEO's lips is exactly how Facebook intends to extend its business fishing nets by moving more effectively into the mobile space. Zuckerberg and his generation do everything on their phones--he admitted as much during his discussion--and it's a painful fact that Facebook on phones hasn't worked very well. After all, it was designed expressly for large screens.

"Over the next three to five years, the biggest question that's on everyone's mind, and that's really going to determine how we do, is really going to be how well we do with mobile," Zuckerberg said. "We think we're going to make more money on mobile ads. We've had right-side column ads, and it's been a multibillion-dollar business for us. But we can't do that on mobile devices. It's clearly going to have to be different."

Zuckerberg said Facebook product teams are developing new features with advertising fundamentally integrated into every part of the site. "I think we know that we're going to do well on that," he said. "The question is getting there."

Until only last spring, Facebook ran exactly no ads on its mobile applications. The company has a lot of catching up to do, Zuckerberg admitted.

Biggest Strategic Error: HTML5

Responding to a question by Arrington, Zuckerberg revealed that the company's biggest strategic mistake thus far was focusing too much on the development of HTML5 Web applications instead of native apps for devices.

Many people in IT already knew that HTML5 is a mere stop-gap between HTML4 and HTML6--and that's part of what was surprising about Facebook's strategy. It's no secret that HTML5 performance is sluggish when stacked up against native apps; that is pretty much standard across mobile IT.

Zuckerberg said he heard loud and clear from Facebook users as they became more and more frustrated--especially with the agonizingly slow (at times) iOS Facebook app.

"We burned through two years on that," Zuckerberg said. "It probably was the biggest strategic mistake we made."

In light of this, Facebook updated its iOS application last month, and it is generally regarded as being much faster. Zuckerberg said that more than twice as many stories are being consumed in the mobile Newsfeed since the update. He also said that more improvements would soon be coming into the app.

Zuckerberg didn't give a time frame about its soon-to-be-upgraded Android app. "It'll be ready when it's ready," he said.

Better Search on the Agenda

Finally, Zuckerberg said that Facebook is redeveloping its search capability into a more useful tool, and thus, a more effective advertising product. Shareholders were undoubtedly encouraged by that news. Facebook's current search feature, which offers up only a few choices and doesn't handle photos and video, is not a go-to feature on the site, to say the least.

Immediately after his appearance at Disrupt, Facebook's stock took a modest but nonetheless impressive jump. The stock was selling at $20.58 Sept. 12, up about 6 percent from the previous day. Considering it had done nothing but fall throughout the summer, this was an accomplishment.

Disrupt is a high-energy, new-generation conference staged Sept. 8 through 12 that includes features such as a "hackathon." It played host to about 350 new and/or startup companies you've never heard of in sectors all over the board, ranging from health care to social applications, from gaming to location-based commerce, and from home services to education.

Chris Preimesberger is Editor of Features and Analysis at eWEEK. Twitter: @editingwhiz

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