Facebook isn’t what it used to be. It’s shedding staff, dismantling efforts to create the metaverse, losing ground to TikTok in short-form video, bleeding ad revenue thanks to Apple’s privacy changes, and generally following rather than leading tech industry trends.
But it still has a massive number of users and some of the biggest apps on the planet.
What can Facebook do to regain its mojo? And … honestly … can Facebook regain its mojo?
In this TechFirst I chat with Brian Bowman, an entrepreneur and investor. He’s focused on generative AI right now, but he’s been in the ad space and multiple other spaces. He’s a former Yahoo Executive, former CEO of Consumer Acquisition, and multiple other tech companies.
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And, an AI-generated transcript: where does Mark Zuckerberg go from here?
What does the future hold for Facebook? Hello, and welcome to Tech First. My name is John Koetsier. It’s pretty clear these days that Facebook isn’t what it was. It suffered huge losses as a result of Apple’s privacy moves, can’t make as much on advertising anymore. It suffered maybe just as big losses thanks to Zuckerberg’s M project, the metaverse, that he changed the whole company name for and is now kind of reversing to some extent. during COVID, they fired some after that. Now they’re going through another round of, I think, 12,000 layoffs and not at one fell swoop in a long drawn out process, which is the worst way to let go of people. Everybody’s thinking, do I still have a job? What is going on? To chat, we’ve got Brian Bowman. He’s an investor. He’s focused on generative AI right now, but he’s been in the user acquisition ad space and multiple other spaces. He’s a serial entrepreneur, former Yahoo acquisition and doing whatever comes natural to him now, which is fun investing and growing stuff. Welcome Brian.
Nice to speak with you and just to be clear, I am not talking on behalf of Brain Labs or my prior company. Consumer acquisition just need to make that part legally clever.
This notice was brought to you by Brian Bowman’s legal team.
Excellent. No worries. Let’s just put it out there. What’s going on at Facebook?
Yeah, Facebook is an entity I have watched for a very long time. We were a Facebook marketing partner at my prior company. We managed just over about $3 billion in paid social spend across Facebook, Google, and TikTok just to put it in a bit of context. So we had a pretty good view into the dynamic advertising marketplaces there. And it’s just something that I personally watched for over a decade, cutting your teeth on a brand new ecosystem, like what’s going on in generative AI, excuse me, all the way to what ended up being a mature marketplace where they had a good toehold. And if I looked backwards in time, you know, mobile caught most businesses off guard, they weren’t prepared for that shift. And Facebook did a very interesting pivot to make their entire company mobile first.
Doing that, they kind of surrendered the ability to launch a Facebook phone, which I think if Mark could go back in time, you would probably do that differently and really push to own a phone. That one lack of accomplishment really made his distribution subservient to Apple and Google. And as a byproduct of that, he lost the ability to control the marketplaces, and really it governed his growth. And obviously that all culminated in the removal of IDFA a couple of years ago and the corresponding kind of cratering both of post COVID more likely IDFA.
Because if you look broadly across the mobile app ecosystem, whether you’re looking at app loving or Unity or Vongole or Iron Source, right? There’s been a compression across the ecosystem advertisers have been forced to pull back pretty dramatically because their advertising isn’t as effective as it was.
So there’s lots of places to go with that. Let’s pull back and start maybe with what you mentioned almost off the top, which is that Facebook managed the transition to mobile incredibly well. They basically had an all hands on deck. Mobile is it, mobile is the thing, we have to go to mobile.
I mean, if I think about corporate, massive, giant enterprise transformations like that, Microsoft, which wasn’t web focused at all. And all of a sudden the web is a big deal and Bill Gates says, it’s all about the web, right? And internet Explorer comes out and they start, they start actually doing some interesting things there.
You’re right. Facebook didn’t control the means of distribution. And that led to all kinds of problems. They couldn’t release the Facebook gaming app or platform they wanted to, they tried to release that app like five times, but got rejected by Apple. in the Facebook app and of course advertising their lifeblood got cut off later.
I view his transformation to the metaverse or his attempted transformation of the metaverse as sort of staking a claim on the next ground, on the next platform, on the next kind of way that we experience technology, which he assumed would be Visors and may still be, but clearly we’re not there yet. Your thoughts?
Well, I heard you say two different things. Do I believe that that’s what he was trying to do? Yes, he wants to control distribution so that he isn’t beholden to people’s wins, right? Apple is not an advertising company, it’s a hardware company. And I think they’re willing to dismantle the entire mobile app ecosystem in exchange for them becoming privacy first.
If they become privacy first, they unlock credit cards, they unlock health data, dollar infrastructures that enable them to grow, it’s okay if it hurts the mobile app advertisers because clearly that’s the approach they’re taking. It’s not important to them or they would have taken an industry-first approach and invited people. So I think Facebook realized that they needed to figure out what ecosystem they could control. I just think, you know, VR, AR, and then whatever the metaverse means is forever away. By forever, I mean plus 10 years.
And if you just look at generative AI as a baby step in that direction, because there’s so much base technology coming out of that, and you look at NVIDIA and what they’re doing with graphic cards, which obviously they’re leading and they’re doing their industry talk in a next week, It’s free, so if people haven’t signed up for it, they should.
And the point is, they have these hardware cards that are about $1,500 bucks that plug into a PC, and those things are the state of the art by far. And they’re very far away from being put into a visor. They’re very far away from being shrunken into glasses for augmented reality. I mean, we’re talking a decade or more before getting an avatar-based immersive virtual world. A, I think some people will want to do it, but most people aren’t going to want to walk around, you know, in Snow Crash and use that as their primary mechanism.
And even if it were to happen, things don’t transition that quickly. I mean, if you look at AOL still exists, Webcrawler, to the ecosystems, but people still use them for email. And so things transition and change online very, very slowly.
Going all in on the metaverse to me, other than controlling distribution, seems like a whipsaw reaction to what was happening with IDFA.
And I would assume, because they’re very quick to follow, right? They replicate businesses like TikTok or Snapchat. Oddly, what I don’t see them doing is focusing on what they’re really good at. They’re the world’s profile. Why aren’t they owning profiles in every form? A dating profile, a professional profile, a personal profile, a job searching profile, on and on and on and on and on, and ingest those things into many views of me as the individual, doing it in a web-three way where they can own some of the data, the individual can own some of the data. 3 billion people on their platform, I mean, they are the profile. Oh, and that, right? You just can’t dislodge them because people inherently are lazy. And whether you look at someone who’s under the age of 27 and does Instagram and Snapchat and TikTok, they all end up on Facebook at one point or another. It’s really interesting
Super interesting to hear you say that because kind of my thesis around Facebook and that profile – more on the friend graph side – is that they own the friend graph and that by competing with TikTok on tiktok’s level with reels they don’t use what is their unique proposition.
There’s good parts of that obviously there’s more for them. There’s more time on platform, that means more time for ads, that means more time to get to know users and perhaps better tailoring of those ads and other things like that, but when you compete on your enemies turf, you’re ignoring your strongest suits.
Yeah, I agree with that.
Yes, I agree with that in principle. And ironically, what we’re talking about really is America’s funniest home videos. TikTok doesn’t own funny videos, right? That thing’s been on TV for a couple of decades. They just webified it, initially through musical.ly and then over time through TikTok.
And the reason kids glommed onto it was because it allowed them to be funny and playful on them that is required by Instagram and it’s very different than Snapchat which is their primary way of talking and they don’t call each other they snap each other it’s just I have a 17 year old and 15 year old and they would I ask them like well why don’t you call them dad we’d never call we would snap it’s just so it’s the antithesis of everything that they do and ironically Facebook has.
They just have to snap it together in ways that make sense. I understand their edge rank algorithm is built for doing display of that type of content. But I think you could have a multimodal approach where if I’m doing LinkedIn style business networking on the Facebook clone of a professional service, it would be a different algorithm than if I were doing dating and a different algorithm if I were doing something that’s America’s funniest home video style. from the base of what the profile and the user is looking for, no one is going to come in and disintermediate them because you would have to replicate all of those friend and connections that are decades in the making. It’s just very difficult to do.
The other thing that comes to mind when you bring up that topic is the age-old question, do you put individual things in individual apps? Or do you put it all together?
Because, if you scroll TikTok, it’s incredibly simple. The main mechanic, user mechanic is a thumb scroll. That’s pretty much it. You can do that. And maybe a double tap here or there, whatever, you know, and, and, And you can do that on Instagram as well, right?
But if you look at the main Facebook app, it’s unbelievably complicated. I actually calculated one point, I think about half a year ago, how many different things you could do from the main screen of the Facebook app. And I was up to 25 or something like that. And there’s literally, you get old people who Facebook is supposed to be for on there. And they don’t know what to do. And they click around and they get lost and they’re wondering what’s going on. this, but they need to separate it.
I’ll let you comment on, I love to hear you comment on that, but I also want to just inject one thing, which I just heard today, which the rumor is that the Biden administration is telling ByteDance, sell TikTok to an American company or we’re going to ban it. And that’s from Reuters that’s in the Wall Street Journal. So it’s pretty highly sourced, seems fairly reliable, still rumor stage, but fairly reliable.
So two fairly different things there. Let me try and play with them a little bit. By old, let’s call people over the age of 30.
So what happens, I think, because I used to run product strategy at Match. It’s a very similar thing. Young people don’t need a dating site because they’re active and they’re out and they’re meeting people all the time. By the time you graduate college and you give yourself two or three years, let’s say you’re about 27, friends start getting married, they start getting engaged, and that’s when your head kind of turns you’re like, huh, maybe I should get serious. That’s when people start using dating services. It’s around the age of 27, 28, and then it takes off from there.
And it’s very similar to social networking, which is for all reasons, right? You don’t want your kids heavily using Facebook because then they see all your stuff. So that the world’s being a part is actually a good thing. get engaged and start having kids and you want people to see your baby photos, your aunts and uncles and grandparents are not gonna run onto another social network. So you gotta go where that lift is and that’s all Facebook. So like it is the social glue of the internet and I just don’t see that changing unless it collapses, which again, I don’t see that happening either. structure for it to ever go away.
And it’s very different than what I think MySpace built because Facebook was real identity and MySpace was fake. So just fundamentally in the user experience, it’s unique. On the TikTok side, I looked it up. I think it’s something like Google, Amazon, TikTok, TikTok, Snap, Facebook, all of these things are banned in China.
Why do we allow any Chinese apps in America?
If we don’t have a level playing field competitively in the Chinese market, why are we allowing them to have a toehold in our market when they just put up a huge wall and say, sorry, you can’t use it at all? So that’s question number one, like just competitively, it makes no sense that we would allow that.
Secondarily, the user experience of a kid under the age of 18 on TikTok and it’s not social networking based. They realize the damage that social networking can do to a young person, which is why they protect them from that. I mean there’s all kinds of research that shows how negatively young people perceive themselves when they use Instagram a lot or when they use Snapchat a lot and that it should be restricted until they’re 18 and they’re older. And I’ve seen that in the kids who I interact with, the friends of my daughters from high school. It really is a level of scrutiny that, thankfully, we never had as kids because it’s pretty tough. So, competitively, I don’t understand why we allow it socially. The Chinese may be on to something and trying to protect their children and we’re not doing the same thing.
Yeah. I have a bit of a different take on TikTok, not on the competitive side. I 100% agree. Hey, if China is a closed market and they don’t let others in, why are we letting their apps in? I saw the other day and my numbers might be a little off, but directionally, I’m there. Four of the top 10 global publishers now are based in China. And we’re talking games at this point. Four of the top 10 mobile games publishers are based in China. They’re bringing in billions from outside markets into China. Well, great for them, but the Chinese market is closed except to a few games, a handful, a year, and maybe 15 movies a year, 30 movies a year that they allow in and stuff like that.
So it’s not a level playing field.
And from that point alone, from a fairness point alone, you could totally say, hey, screw it, you’re done, out of here, not happening. of China, the TikTok app already. So unless you’re going to ask Apple and Google to remove it, which is a crazy, crazy, just imagine what could it go on with that kind of power that a government has, you know, it’s going to be big for quite some time. So that’s interesting.
But where I differ a little bit is I don’t see TikTok as social. I see it as entertainment, short video. You don’t really have a follow graph the way young people use Instagram, although they do connect their friends there. So that’s a little difference there. But fundamentally, I agree with you on the big issue of competition.
I want to get back to Facebook. And I wonder what’s next for Facebook. And I wonder what’s next for Mark Zuckerberg. I mean, just imagine Mark Zuckerberg at 18. And what he wanted to do. And what he wanted to spend his life on. Do you think that he’s happy spending his life in regulatory hell, being the big boss of a giant enterprise, it seems like an awful existence for somebody who probably just wanted to create cool stuff. But he’s got to take it somewhere. You said you think generative AI is kind of the next major platform evolution. Do you think there’s something in that for Facebook?
That’s a good question. Anyone that has software that will be web enabled, like Microsoft’s investment in open AI is completely on track, right?
All of their operating system, their browser, their web, sorry, Word, Excel, PowerPoint, it’s accretive to all of those user experiences, especially when you’re talking about search. marriage. Facebook I you know tried search back in the day didn’t get very far with it. I think there’s a lot it can do. It doesn’t feel like it is core to the user experience. It’s interesting right if I wanted to make my avatar prettier or I wanted to come up with filters that were smart but it doesn’t feel square in I understand it to be used. Could it be used to generate more video content? Absolutely. Could it be used to generate more articles? Sure, but it’s not like a Salesforce, right? It isn’t creative to a B2B enterprise part. It isn’t helping the user generate more content quicker or streamline the workflow for people. So unless it were to go down the path or something that required another level of content, I don’t understand what the use case would be.
I agree with you. I think the generative AI thing for Facebook would be in the age of the metaverse, when we can sort of auto generate, auto create whole worlds, rooms, planets, universes in which we live and interact with others and play and work, frankly. And like you, I think that’s a significant point in the future. that comes to mind when you think, when you’re saying, Hey, I think that’s at least 10 years away.
Apple appears to be rushing its device to the market. You know, could this be the first big flop of the new era of Apple, which has been success after success after success after success. I don’t know. VR and AR is a is, it’s a hill a lot of companies have died on. And we’ll see about that. But that is another topic for another day. So we’ll leave that alone.
Closing thoughts on Facebook. It’s still a giant enterprise. It still prints money. They’re getting rid of more people. It must suck to work there right now because you’re wondering … is my division gonna get cut and I gonna get …
You know what’s gonna happen? What do you see for the next couple years there?
Well, I actually like what he’s doing, which is streamlining the operations and trying to get them profitable and back on track. I think everyone got myopic about the COVID tailwinds. Right. The businesses were just on fire. Right. Everyone was focused on their computers because you couldn’t do anything. You couldn’t go anywhere. So they were just consuming like they never had before. to move it forward and I’m glad that they and other companies are rightsizing the business for where they are.
I think we’re in a transition. To me, watching generative AI, and by the way, one thing that may be interesting for Facebook is if they allow smarter, easier ads to be generated, so the creative becomes much easier for a company because it’s generated by AI than having to go out and hire marketing people. would be a big win for them.
Again, what I would love to see them do is profiles, profile, profile, profile. I mean, if you think about owning LinkedIn, why doesn’t anyone compete with them?
If you think about the entire dating infrastructure, Facebook did kind of a half-assed dating solution. They literally know the entire planet. And who is, because that’s like their first feature. Are you single, married, divorced? Like what is your relationship status? launch a very robust dating service. To your earlier point that I don’t think I answered, I would be thoughtful in terms of, I obviously would not mix dating and professional or dating and personal. It should be a separate infrastructure, but you should be able to, with a flick of a button, look over the fence if I allow you to, to say, who do we know personally in common? So that I can call someone and say, is this person a weirdo? Or should I go out on a date with them?
Should I pick them up the way I’ve used LinkedIn have like 12,000 connections or something I’m connected to a ton of people that I don’t know but I used it for big B2B marketing purposes Which I know a lot of people do so the vitality of that graph became more and more polluted with my desire to kind of reach out and you know build more business allow that graph to become the foundation of web3. It’s a beachhead for them. I just, I can’t even think of an idea of who would compete with that. Maybe Apple and Google, if they really flexed hard over a period of 10 years and tried to build
You can’t be in my family, you’re Android.
Right, it’s hard, and that’s the point. So if the profiles are hard and it’s unique for them, I really don’t get not tripling down on that and using it as a way to say, I’m now gonna enter job searching, I am now gonna enter these other verticals, but I’m gonna do it profile first. Does it become more cumbersome as you kind of click through? Like I don’t like the disintermediation of Facebook Messenger from Facebook, million user, whatever, 100 million user app, it obviously was not the best user experience. So I think you have to be thoughtful about it, but I don’t know who can compete with them if you look across the ecosystem today.
I think that’s fairly accurate. And I think Facebook has an idea already and examples of federating or putting firewalls between products. If you look at Facebook Marketplace, you can choose to show this on my profile or not, right? And you can have similar things in other places. There’s a lot there. It’s hard to change big ships. It’s hard to turn them around, so we’ll see what happens. But thank you for spending this time.
You bet, appreciate the opportunity.
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