:00:07. > :00:17.If you would tell us your name Mark Zuckerberg. M-A-R-K
:00:17. > :00:21.
:00:21. > :00:31.Would you describe yourself as the has gone from college student to
:00:31. > :00:31.
:00:31. > :01:20.Apology for the loss of subtitles for 48 seconds
:01:20. > :01:27.You are one of the top ten entrepreneurs who has ever existed.
:01:27. > :01:30.But the sign of the Facebook, is it a sign of a dot com bubble. Not
:01:30. > :01:35.everyone sees it as a good investment. Would you advise
:01:35. > :01:39.somebody to put it into shares. The danger is that people get
:01:39. > :01:43.carried away and there will not be another one like it. Plough it and
:01:43. > :01:46.bid up the price to unrealistic levels.
:01:46. > :01:50.Zukhra claim it is is not just about money. He is on a bigger
:01:50. > :01:56.mission. If you go back most people in the
:01:56. > :02:00.world had no voice no or podium to share things. Now everyone does.
:02:00. > :02:03.Zukhra's creation has produced lawsuits, accusations of privacy
:02:03. > :02:10.invasion and even inspired a Hollywood movie.
:02:10. > :02:14.Do you see your code on face bobbing? With exclusive access, we
:02:14. > :02:18.examine why Facebook believe it is is worth billions and ask if
:02:18. > :02:23.investors will bet their money on Mark Zuckerberg's ability to create
:02:23. > :02:27.a massive business out of the massive popularity of Facebook.
:02:27. > :02:31.Sorry, I'm nervous, we have the President of The United States
:02:31. > :02:41.here! APPLAUSE My name is Barack Obama, I'm the guy who got Mark to
:02:41. > :02:47.
:02:47. > :02:52.wear a jacket and tie! I'm very thousands of software developers,
:02:52. > :02:58.The biggest act on the bill is still just 27 years old but no-one doubts he's the boss.
:02:58. > :03:02.CEO Mark Zuckerberg!
:03:02. > :03:06.CHEERING AND APPLAUSE
:03:06. > :03:11.Yeah!
:03:11. > :03:13.Come on!
:03:14. > :03:19.Hey welcome to F8. We're going to change the universe!
:03:19. > :03:24.Zuckerberg himself waits in the wings, enjoying his very own warm-up act.
:03:24. > :03:29.What the hell are you doing? Er...
:03:29. > :03:34.I'm Mark Zuckerberg. No, I'M Mark Zuckerberg.
:03:34. > :03:38.The real Mark Zuckerberg is no longer the new kid on the block.
:03:38. > :03:42.By now, I think that most people see that social networks
:03:42. > :03:45.are going to be a ubiquitous tool used by billions
:03:45. > :03:55.of people around the world to stay connected everyday.
:03:55. > :04:06.
:04:06. > :04:06.There
:04:06. > :04:07.There is
:04:07. > :04:11.There is an
:04:11. > :04:15.There is an interest in the shares that has filtered down to the
:04:15. > :04:20.average man on the streets. As the shares are in short supply, there
:04:20. > :04:22.will be a huge demand. But this may not be a get-rich
:04:22. > :04:27.quick scheme for the small share holder.
:04:27. > :04:31.They call it dumb money in Silicon Valley. Those people who may not
:04:31. > :04:36.know as much about the tech industry, they may want to invest
:04:36. > :04:41.it is like a trophy share to have. Or those who know what it is about,
:04:41. > :04:47.may be wanting to buy it to sell it on to dumb investors.
:04:47. > :04:49.To avoid being a dumb investor, you have to take a close look at the
:04:49. > :04:53.company's product. Facebook's success starts with the ability to
:04:53. > :04:57.suggest to people you may know from what you have told it about
:04:57. > :05:01.yourself. You are then invited to connect to the people, making them
:05:01. > :05:07.your Facebook friends. You may be surprised how many friends you can
:05:07. > :05:13.accumulate, the average user has 14. Many have more.
:05:13. > :05:20.200 or 250. Something around there.About 264.
:05:20. > :05:25.500-odd. Between 600 and 700. Ch Close to
:05:25. > :05:33.1,000. More than in real life.
:05:34. > :05:35.what its users have put on there, on their willingness to keep posting-
:05:35. > :05:37.You want us to share. Mmm. Why?
:05:37. > :05:39.Well, the mission of the company is to make the world
:05:39. > :05:42.more open and connected because we believe that
:05:42. > :05:44.everyone will have a much better experience
:05:44. > :05:46.when they're doing different things with their friends.
:05:46. > :05:48.When there's more information out or you can discover great content through your friends
:05:48. > :05:50.or you can discover new food that you want to eat or places to run or anything like that,
:05:50. > :05:55.your world becomes a lot richer.
:05:55. > :05:58.Zuckerberg practises what he preaches, sharing a lot about his personal life
:05:59. > :06:02.on his own Facebook page, which anyone can see.
:06:02. > :06:05.He shows pictures with his long-term- girlfriend, Priscilla Chan,
:06:05. > :06:08.lists his favourite movies and books
:06:08. > :06:10.and records the life of his dog, Beast.
:06:10. > :06:13.Come on, Beast, you got this, you got this!
:06:13. > :06:14.Can we get some Eye Of The Tiger?
:06:14. > :06:18.LAUGHTER
:06:18. > :06:21.Our development is guided by the idea that every year
:06:21. > :06:30.the amount that people want to add and share and express is increasing.
:06:30. > :06:32.APPLAUSE For many, it's now as much a necessity as a choice.
:06:32. > :06:35.There is social pressure to join it- and if you're not part of it you don't get invited to certain things.
:06:35. > :06:39.I always said I'd never us it but since I've got it, I've ended up using it more and more and more.
:06:39. > :06:43.What makes it so addictive is that you are... It's like living a second life.
:06:43. > :06:48.No-one e-mails any more but everyone's posting on Facebook.
:06:48. > :06:56.Facebook not only attracts massive numbers of users - 800 million at the last count -
:06:56. > :06:58.but more surprisingly, every day half of them log on to the site
:06:58. > :07:00.making it the stickiest on the internet.
:07:00. > :07:02.Now Zuckerberg wants them to get even more attached.
:07:02. > :07:04.We're not trying to make it so that- people spend more time on Facebook,
:07:04. > :07:06.we're trying to make it so that the time that you spend
:07:06. > :07:16.is so valuable that you want to keep on coming back every day.
:07:16. > :07:21.
:07:21. > :07:21.Zuckerberg
:07:21. > :07:21.Zuckerberg plans
:07:21. > :07:26.Zuckerberg plans to
:07:26. > :07:30.Zuckerberg plans to sell off a small propotion of his shares. That
:07:30. > :07:35.is still expected to bring him a billion dollars. Since Facebook is
:07:35. > :07:40.his baby, what users think of him is critical to their willingness to
:07:40. > :07:44.trust him with personal information. As an investment adviser, Josh
:07:44. > :07:48.Brown has been studying Facebook since the early days.
:07:48. > :07:53.The bonfire of Mark Zuckerberg's coolness has been lit. Nobody looks
:07:53. > :07:58.at Zuckerberg as a paragon of cool, he is looked at as what he is,
:07:58. > :08:02.which is a tech Titan. He is looked more along the lines of Bill Gates
:08:03. > :08:12.than a rock star. The rock star phase ended when we started talking
:08:13. > :08:27.
:08:27. > :08:34.about 50 billion, 100 billion. Now Zuckerberg's journey began eight
:08:35. > :08:39.years ago. He studied at Harvard University.
:08:39. > :08:45.I remember hanging out with my friends, going to the local pizza
:08:45. > :08:49.place, talking about in the future, you being able to sure share the
:08:49. > :08:54.stuff you want and have access to all of the things you are doing and
:08:54. > :08:59.sharing experiences, but figured that someone else would do it.
:08:59. > :09:02.Who were we. We really wanted this to exist. So we focused on it
:09:02. > :09:12.probably more than anyone else. We are one of the companies that is
:09:12. > :09:14.
:09:14. > :09:17.computer science. Decades earlier, The thing I would say about
:09:17. > :09:19.he was very eager to learn and very sceptical
:09:19. > :09:21.about whether anything we were teaching him was actually
:09:21. > :09:25.the right things for him to learn.
:09:25. > :09:29.I think Bill Gates had exactly the same feeling.
:09:29. > :09:30.It was not disrespect for what was being taught
:09:30. > :09:33.but maybe not exactly what he was interested in and so on.
:09:33. > :09:37.So he was absorbing everything and not paying any attention to it at the same time.
:09:37. > :09:41.Zuckerberg's invention of Facebook began with a false start.
:09:41. > :09:45.At the time a Facebook was just thename of this kind of printed album of students photos and details.
:09:45. > :09:48.Zuckerberg used his fellow students' Facebook pictures
:09:48. > :09:52.to make a mischievous website, to rate their looks.
:09:52. > :09:55.Kind of as a prank my roommates and I came up with this idea that
:09:55. > :10:01.we'd go through and take all the pictures off of all the Facebooks and make a site that
:10:01. > :10:07.juxtaposed two of the same gender and let users click on the one that- they thought was more attractive.
:10:07. > :10:10.He called it Facemash.
:10:10. > :10:14.Within hours of going online, there were complaints to the university authorities.
:10:14. > :10:17.So you have a website that kisses off the administration.
:10:17. > :10:19.I almost got kicked out of school for that.
:10:19. > :10:22.HE LAUGHS
:10:22. > :10:24.Yeah, that was a little chequered point in our history.
:10:24. > :10:27.Joe Green was Zuckerberg's collaborator and roommate.
:10:27. > :10:34.You can see Mark's mind at work, figuring out these social dynamics.
:10:34. > :10:35.The Facemash was literally up for four or five hours and was like
:10:35. > :10:39.the most used site on campus on a Sunday afternoon.
:10:39. > :10:42.Harvard had been planning to put its facebooks online but shelved
:10:42. > :10:48.the idea because of privacy issues highlighted by Facemash.
:10:48. > :10:52.Harvard issued a statement that because of privacy concerns that I'd raised from this prank,
:10:52. > :10:56.their online facebook would be delayed indefinitely.
:10:56. > :10:59.So I was like well you know that's a bit like ridiculous like
:10:59. > :11:02.these websites aren't that hard to make so I'll just kind of throw one together
:11:02. > :11:06.in a week or a week and a half and we'll have our online Facebook.
:11:06. > :11:09.So I did and that was "Thefacebook."
:11:09. > :11:12.Thefacebook, as it was called, got round the privacy problem by inviting
:11:12. > :11:17.people to post their own information which they were eager to do.
:11:17. > :11:21.Within a few days thousands of people were, were on it at Harvard and I remember in
:11:21. > :11:25.the first week alone I'd come home from classes and see that
:11:25. > :11:30.10% of students at Harvard were logged on at any one point in time.- Then that was just really cool.
:11:30. > :11:33.So then by the second week we'd all these people
:11:33. > :11:36.from other colleges around us like MIT and other colleges
:11:37. > :11:43.in the neighbourhood were e-mailing- in asking if we could release Facebook at their schools too.
:11:43. > :11:46.Zuckerberg wasn't your typical geek. He was as interested in
:11:46. > :11:51.how people were using Facebook as in its computer code.
:11:51. > :11:57.Is it the human side that drives you on this rather than thetechnological, the computing side?
:11:57. > :12:02.It's really both. I took a lot of computer science classes and I was formerly a psychology major
:12:02. > :12:08.and I think that those two things together really represent the DNA of what Facebook is.
:12:08. > :12:12.We're a technology company and we design social products and there are a lot of
:12:12. > :12:15.technology companies and a lot of people who think about social issues
:12:15. > :12:18.but there aren't a lot of people doing both.
:12:18. > :12:22.The genius is when you get a really creative person who can take different disciplines,
:12:22. > :12:27.different subject matters and find where the opportunities are and spend lots of time being
:12:27. > :12:33.creative with them and, and that certainly something that Zuckerberg- took advantage of while he was here.
:12:33. > :12:36.There aren't many 20-something's whose lives have been turned into
:12:36. > :12:39.a Hollywood movie but Zuckerberg's has.
:12:39. > :12:42.This site's life.
:12:42. > :12:45.You know what? Let's go get a drink and celebrate.
:12:45. > :12:50.The truth about Facebook's origins will always be compared to the story told in The Social Network.
:12:50. > :12:57.This movie is, like it or not, the de facto myth to how Facebook was created.
:12:57. > :12:59.I've covered this story for years
:12:59. > :13:04.and I still have to think, "Now is this how it happened?
:13:04. > :13:06."Or is this how the movie said it happened?"
:13:06. > :13:08.And that likely will always be true.
:13:08. > :13:10."As of yesterday evening," Zuckerberg said,
:13:11. > :13:13."over 650 students had registered to use thefacebook.com."
:13:13. > :13:18.The movie centres on Zuckerberg's legal battle with his two fellow students, the Winklevoss twins.
:13:18. > :13:22.If I was a drug dealer I couldn't give free drugs to 650 people in one day.
:13:22. > :13:25.This guy doesn't have three friends to rub together.
:13:25. > :13:28.In highlighting the Winklevoss case,
:13:28. > :13:33.the movie underplays the existence at the time of other social networks.
:13:33. > :13:36.Even before he went to Harvard,Zuckerberg had worked on a website
:13:36. > :13:40.at his school, which included an online student facebook.
:13:40. > :13:45.And millions were already signed up to the social networks Friendster and MySpace.
:13:45. > :13:53.In Britain, Friends Reunited had16 million users - social networkswere a feature of university life.
:13:53. > :13:57.At campuses across the country tons of students were thinking up Facebook.
:13:57. > :14:02.Maybe they didn't call it Facebook but at Brown University there was a- site at Columbia University
:14:02. > :14:07.there was a site, at the University of Texas there was a site and on and on and on and on.
:14:07. > :14:12.The Winklevoss twins really did dispute ownership of Facebook and have done for years.
:14:12. > :14:13.Our idea was stolen
:14:13. > :14:17.by Mark Zuckerberg and we're basically trying to retrieve that back.
:14:17. > :14:20.Can I get a large coffee, please?
:14:20. > :14:23.Four years later Facebook settled with the Winklevoss'
:14:23. > :14:29.for $65 million while still denying their claims.
:14:29. > :14:34.Zuckerberg's former roommate Joe Green now runs his own online business but at college he
:14:34. > :14:37.turned down an offer from Zuckerberg probably the best business offer ever
:14:37. > :14:42.made to anyone this century on parental advice.
:14:42. > :14:45.There was a moment when no-one knew what we'd be seeing
:14:45. > :14:49.seven years down the line and youwere invited to become part of it?
:14:49. > :14:55.Yeah, I was asked to be a sort of part of it, cofounder
:14:55. > :14:59.and I ended up... Zuck likes to jokingly call the billion dollar mistake but I,
:14:59. > :15:03.combination of, erm... We got into a bit of trouble for Facemash
:15:03. > :15:07.and my father's a professor and wasn't super-thrilled about that.
:15:07. > :15:09.What was the conversation you had with your dad?
:15:09. > :15:13.You know he was just, "You shouldn't be doing any more of- these Zuckerberg projects."
:15:13. > :15:18.But it's all good now.
:15:18. > :15:22.With its Harvard origins, simple design and Zuckerberg's determination
:15:22. > :15:27.never to let it crash,Facebook became the student network.
:15:27. > :15:31.Zuckerberg began to wonder if it could be a real business
:15:31. > :15:35.and whether he should drop out of college to find out.
:15:35. > :15:38.I don't think Mark's family was hugely resistant to him
:15:38. > :15:40.dropping out and trying this idea.
:15:41. > :15:44.Of course any parent wants their kid to get a college degree
:15:44. > :15:47.even if they've become a billionaire
:15:47. > :15:50.probably you know many parents would say, "It'd be good for you."
:15:50. > :16:00.But I think that does begin to wane after the second or third billion, perhaps.
:16:00. > :16:01.
:16:01. > :16:06.As the summer vacation arrived, Zuckerberg moved from east coast
:16:06. > :16:14.to west swapping university lifefor a new one in California at the heart of the technology business.
:16:14. > :16:20.There's only so long that you can build a high-tech company in
:16:20. > :16:24.This is where Zuckerberg ended up, a small house in Silicon Valley 30 miles south of San Francisco.
:16:24. > :16:27.He was joined by his Harvardfriends. The students were pleased
:16:27. > :16:33.to find that this being California, the new home included a pool.
:16:33. > :16:39.Go! Go! Ahhhh!
:16:39. > :16:41.I didn't die. I know.
:16:41. > :16:44.The Social Network movie shows how they used it.
:16:44. > :16:46.OK. Ready...
:16:46. > :16:49.Zuckerberg was starting to make media contacts.
:16:49. > :16:51.So I took a phone call with this young guy
:16:52. > :16:53.and there was all this noise
:16:53. > :16:57.in the background and he told me it- was because he was living in a house in Palo Alto with his friends
:16:57. > :16:59.and they were all in the backyard
:17:00. > :17:03.and he had all kinds of things, stretched out in the backyard.
:17:03. > :17:09.He had a zip line across the backyard and they were all hanging out.
:17:09. > :17:17.Those who studied Facebook's history-say this was only part of the story.
:17:17. > :17:19.Zuckerberg was serious about Facebook
:17:19. > :17:22.but the tales of poolside parties weren't pure Hollywood mythology.
:17:22. > :17:27.The owner's inventory when thestudents left lists barbeque ashes dumped in a flowerpot,
:17:27. > :17:34.a pool filter shattered by broken glass, damage to a chimney from a zip wire.
:17:34. > :17:38.I think it's probably fair to saythere wasn't all work that summer.
:17:38. > :17:42.# Disco sounds, it's all on the west coast... #
:17:42. > :17:46.By the autumn, Facebook had reached 200,000 users.
:17:46. > :17:48.Every day it needed to rent
:17:48. > :17:52.more computing power and that meantlooking for some serious investment.
:17:52. > :17:55.Facebook had reached a critical juncture.
:17:55. > :17:57.How big did Zuckerberg want it to be?
:17:57. > :18:03.He started making contact with Silicon Valley's venture capitalists.
:18:03. > :18:08.He was in shorts and flip-flops, I mean there wasn't anything formal about it.
:18:08. > :18:11.He got a meeting with veteran investor, Ron Conway.
:18:11. > :18:14.I asked him how big can this company get?
:18:14. > :18:22.He said, with a 100% conviction, "We can get to 300 million users."
:18:22. > :18:26.Zuckerberg landed a first investment of $500,000.
:18:26. > :18:30.He hired an office above a Chinese restaurant.
:18:31. > :18:35.Within a few months Facebook reached its first million users.
:18:35. > :18:38.18 months after the founding of Facebook a light bulb went on
:18:38. > :18:45.in Zuck's mind and said, "Wow! This thing's growing at thousands of percent a month.
:18:45. > :18:52."This is a real company." Partying wasn't interesting any more.
:18:52. > :18:57.In 2005, the year after it was launched, Facebook hit five million users.
:18:57. > :19:05.The big investment companies in Silicon Valley's Sand Hill Road started paying serious attention.
:19:05. > :19:07.Are you getting courted by
:19:07. > :19:09.big companies that what to buy this?
:19:09. > :19:12.Yeah, a few but it's a lot of work
:19:12. > :19:20.to maintain it and to grow and add new stuff so there's not a lot of time to talk to people.
:19:20. > :19:23.Soon the very biggest players in technology didn't just want to invest
:19:23. > :19:29.in Facebook, they wanted to buy the entire business.
:19:29. > :19:36.In 2006, Zuckerberg refused an offer from Yahoo for $1 billion.
:19:36. > :19:40.Everyone around the company, a lot of the investors and the executives- were you know, it was like,
:19:40. > :19:43."You could sell this for $1 billion?
:19:43. > :19:44."What the hell's wrong with you?"
:19:44. > :19:49.It takes an almost sort of insane degree of vision
:19:49. > :19:52.and self-confidence to be able to sort of weather through that storm.
:19:52. > :19:57.The next year Zuckerberg took a big gamble, freeing Facebook from the
:19:57. > :20:02.world of universities by opening itup to anyone with an e-mail address.
:20:02. > :20:10.Suddenly 50,000 new users a day were- joining. Dude, what's up? Dude, you're on TV?
:20:10. > :20:15.Facebook was courted by Microsoft with an offer that made a billion look like an insult.
:20:15. > :20:22.When Microsoft in 2007 offered $15 billion for it, he wasn't interested in taking that either.
:20:22. > :20:26.That to me is the most amazing story
:20:26. > :20:29.because when he was 23 years old he could have made over $4 billion
:20:29. > :20:31.personally, by selling it.
:20:31. > :20:35.He didn't even consider accepting it. I think that shows what kind of a guy he is.
:20:35. > :20:38.The kind of offers that were coming in to you were like
:20:38. > :20:43.15 billion from Microsoft, how does a 23-year-old manage to say no to that?
:20:43. > :20:48.Well, the hardest one was when Yahoo offered us a billion dollars
:20:48. > :20:54.because that was the first really big offer and at the time I knew nothing about business.
:20:54. > :20:57.So I knew nothing about what a company would be worth and I had to
:20:57. > :21:00.make this argument to people that somehow this was going to be the
:21:00. > :21:05.right decision and from the people who weren't in it for the long-term I think a lot of them left.
:21:05. > :21:07.And then we got a new wave of people who were really committed,
:21:07. > :21:11.so that by the time that Microsoft and others tried to buy the company, we'd already made those decisions.
:21:11. > :21:16.We knew we weren't going to sell the company and that we were going to build it.
:21:16. > :21:26.It's one thing to run an insanely successful start-up.
:21:26. > :21:26.
:21:26. > :21:26.Six
:21:26. > :21:27.Six years
:21:27. > :21:30.Six years ago
:21:30. > :21:35.Six years ago Facebook could have been sold for billions. By holding
:21:35. > :21:40.his nerve, Zuckerberg made sure that the company stayed with staff
:21:40. > :21:43.members and early investors. They can cash their shares at a high
:21:43. > :21:49.price, late in the company's development.
:21:49. > :21:54.In another error, Facebook would have come public early in the'S
:21:54. > :21:59.development, probably in a billion or $2 billion evaluation. Then it
:21:59. > :22:03.would have spent the next few years enriching public investors, instead
:22:03. > :22:09.a lot of the products and the growth will have been harvested.
:22:09. > :22:13.Bad news for outside investors if the company growth slows, but great
:22:13. > :22:16.news for the original venture capitalists and staff members with
:22:16. > :22:21.shares. To find out how Zuckerberg runs
:22:21. > :22:31.Facebook as a big business, I asked senior manager, Dan Rose to give me
:22:31. > :22:32.
:22:32. > :22:34.This open kind lends itself to collaboration.
:22:34. > :22:37.Well, Mark actually sits at a desk right over here just like everyone else. What, this is him?
:22:37. > :22:39.This is him here, yeah.
:22:39. > :22:41.With the famous hoodie? Yeah, There's his hoodie and a Mark Zuckerberg doll on his desk.
:22:41. > :22:42.So he wants to sit out here, no office.
:22:42. > :22:48.Yeah and he collaborates with everyone just like the rest of the company.
:22:48. > :22:54.As Facebook has grown, Zuckerberg's tried to hang on to the energy and flexibility of a start-up.
:22:54. > :22:56."Move fast and break things"
:22:56. > :22:58.is its unofficial motto.
:22:58. > :23:01.Zuckerberg's still closely involved in the details.
:23:01. > :23:04.He spends an enormous amount of time in the office.
:23:04. > :23:07.One of the ways that he really operates is to engage with
:23:07. > :23:10.our engineers and our product leaders
:23:10. > :23:13.around the design of the new products that we're building.
:23:13. > :23:16.But when he's not in the office, he's usually at home on Facebook
:23:16. > :23:20.talking to all of our employees about different things that we're working on.
:23:20. > :23:24.Andrew Bosworth is Facebook's chief engineer.
:23:24. > :23:27.Before anything gets launched, he has to run it past the boss.
:23:27. > :23:30.He's less concerned with the code He lets us deal with that.
:23:30. > :23:32.But in terms of the look and feel and certainly
:23:32. > :23:34.all the integration of the products
:23:34. > :23:36.he's a strong voice and when
:23:36. > :23:40.you're launching a product at Facebook, the Zucker view is kind of those things that
:23:40. > :23:43.you really work towards and your product is really buttoned up and,
:23:43. > :23:47.he uses all the products while you're being developed and gives notes like very kind of like
:23:47. > :23:51.lengthy notes over the weekend so writing four or five paragraphs of things we need to do differently.
:23:51. > :23:54.And tries to provide the high-level- direction so we understand
:23:54. > :24:04.why he's doing things the way he's doing them.
:24:04. > :24:08.
:24:08. > :24:08.The
:24:08. > :24:08.The shares
:24:08. > :24:11.The shares will
:24:11. > :24:14.The shares will hit the stock market soon, that could change
:24:14. > :24:18.their motivation. Do you think that they will say,
:24:18. > :24:23.now is the time to start being the entrepreneur myself? When it comes
:24:23. > :24:29.to the time, the thing is, it is not necessarily a bad thing if they
:24:29. > :24:32.go off. We have seen with the likes of Microsoft, Google, Apple, the
:24:32. > :24:36.comparatives to Facebook, that you had that. That the company did not
:24:36. > :24:40.suffer as a result. If people are concerned about doing other things
:24:40. > :24:45.and don't have their focus on the game, you don't want them in the
:24:46. > :24:51.company. So that is not an ongoing threat to the company if they lose
:24:51. > :24:56.the odd billionaire secretary. Facebook has the classic Silicon
:24:56. > :25:02.Valley office style. The food is free... You can get your washing
:25:02. > :25:12.done... There are games to give your brain a rest from programming.
:25:12. > :25:13.
:25:13. > :25:23.Or you can RipStik and work on a the early hours, you don't have to
:25:23. > :25:38.
:25:39. > :25:45.At first, the growth had investors being a loud to beg for this
:25:45. > :25:49.company to float. They were think being making serious money, but
:25:49. > :25:54.how? There was a company legendary for building an audience before
:25:55. > :25:57.finding a way of making money on a grand scale, Google. Zuckerberg
:25:57. > :26:07.approached one of its star executives. Poaching Sheryl
:26:07. > :26:12.Sandberg is seen as one of his at this little restaurant
:26:12. > :26:13.at my house and Mark would say sometimes you know,
:26:13. > :26:15."I'm so sorry I can't invite you over for dinner."
:26:15. > :26:16.But at the time he only had
:26:17. > :26:18.I think a one... Not even a one bedroom, like a one-room apartment.
:26:18. > :26:20.He didn't have any furniture, like he had a futon.
:26:20. > :26:22.He thought that would be awkward, which it would have been.
:26:22. > :26:24.We spent hours, dozens and dozens of hours on,
:26:24. > :26:26.over weeks, just making sure that this was the right fit because it...
:26:26. > :26:28.That's what's important, right?
:26:28. > :26:32.There was no question about, "Is she good enough?
:26:32. > :26:36."Or is the company good enough?" It was all like just, "Are we trying to do the same thing?"
:26:36. > :26:40.Eventually there was agreement and Sandberg switched from Google to Facebook.
:26:40. > :26:43.Enter Sheryl Sandberg. Sheryl was necessary at that company
:26:43. > :26:49.because she knew exactly how to build a company from start-up phase- to grown-up phase.
:26:49. > :26:55.She'd done that very effectively at Google and most important, Sheryl had chemistry with Mark.
:26:55. > :27:00.Sandberg knew exactly how Googlehad made a fortune from advertising.
:27:00. > :27:06.On the very day Facebook was launched at Harvard, Sandberg was explaining to
:27:06. > :27:10.BBC viewers why Google's advertising system works so well.
:27:10. > :27:13.With Google you on the web searching for information
:27:13. > :27:16.and we give you an ad as part of that search.
:27:16. > :27:18.So it's integral to what you're already looking for.
:27:18. > :27:23.Google offers advertisers the chance to put their message
:27:23. > :27:26.Sandberg's challenge was to come up with Facebook's version of the Google money machine.
:27:26. > :27:29.We don't compete in the search market, we're not competing for the Google ad dollars
:27:29. > :27:31.in search marketing in the sense that when you are looking
:27:31. > :27:36.for a product, you don't actually come to Facebook, you go to Google.
:27:36. > :27:39.According to Sandberg,Facebook ads like TV or magazine ads
:27:39. > :27:43.are there to tempt you with new products and ideas.
:27:43. > :27:46.Where we are is actually in demand-generation.
:27:46. > :27:50.So when you think about your TV TV ads that are shown to you,
:27:50. > :27:54.other ads that are shown to you, you're not in active searching mode for something to buy.
:27:54. > :27:57.You're not fulfilling demand - you're actually generating demand,
:27:57. > :27:59.something you didn't know you wanted.
:27:59. > :28:03.And when you think about what people are doing on Facebook, they're much more in discovery mode.
:28:03. > :28:09.So could the fact that Facebook users aren't searching for products
:28:09. > :28:11.or services be an advertising advantage
:28:11. > :28:13.Some outsiders are sceptical.
:28:13. > :28:16.Professor Ben Edelman studies online businesses.
:28:16. > :28:19.They're hoping that advertisers will bet on the future value of a customer
:28:19. > :28:21.even if in the short run
:28:21. > :28:24.the customer actually doesn't buy much of anything at all.
:28:24. > :28:32.If one accepts ephemeral value, value that's hard to measure, possible future value as reasons
:28:32. > :28:36.to conduct the advertising, then it- certainly is possible to justify.
:28:36. > :28:38.Of course that could justify just about anything.
:28:38. > :28:42.Advertise on the far side of the moon and when the aliens finally get to you,
:28:42. > :28:44.they'll know what they need to buy.
:28:44. > :28:53.In comparison with Google, Facebook undeniably holds one trump card,which is already proving profitable.
:28:53. > :28:55.Facebook is probably the most valuable
:28:55. > :28:57.marketing research tool that's ever existed.
:28:57. > :29:02.In a way, it's the most valuable research tool for anything about people that has ever existed.
:29:02. > :29:08.Facebook lets advertisers reach large numbers of just the kind of people they want
:29:08. > :29:09.by tapping into the information they've revealed about themselves whilst they're using the site.
:29:09. > :29:12.When you place an ad on Facebook, which anyone can do from a normal laptop,
:29:12. > :29:13.you get the chance to narrow downthe whole of the Facebook population
:29:13. > :29:16.and target just the people you think- will be interested in your product.
:29:17. > :29:22.So supposing you run a beauty salon and you've got a special offer for brides.
:29:22. > :29:27.Facebook offers you access in the UK to 30 million people.
:29:27. > :29:31.Now we're going to narrow it downand say, we're looking for the women.
:29:31. > :29:35.Estimated reach is now telling meit's 15 million, about half of that.
:29:36. > :29:39.So then we're trying to find the word that will target the right people,
:29:39. > :29:44.so we're going to type in, in interests, the word 'beauty.'
:29:44. > :29:48.And that's now brought the numberdown to just under half a million.
:29:48. > :29:52.And now, because I'm targetingbrides, I can be even more specific,
:29:53. > :29:56.I can go down to the relationship status box
:29:56. > :30:01.and here I target those women who are 'engaged.'
:30:01. > :30:05.And suddenly we've brought that number right down to 27,000 people.
:30:06. > :30:12.And that is the way that the adverts- can be targeted precisely to the core demographic you want to reach.
:30:12. > :30:16.The advertisers don't know who you are, doesn't know what your name is
:30:16. > :30:19.or where you live, but it knows you as a number
:30:19. > :30:23.and it can use that number.
:30:23. > :30:27.Although anyone at home can place an ad on Facebook,
:30:27. > :30:32.there's a new kind of agency turning out Facebook ads on an industrial scale.
:30:32. > :30:36.TBG is a London company specialising in Facebook ads.
:30:36. > :30:37.Its boss, Simon Mansell,
:30:37. > :30:42.believes he's part of a big change in advertising.
:30:42. > :30:46.It's turned much more from an art form to more of a science
:30:46. > :30:50.and that's sometimes where some big- traditional companies have struggled
:30:50. > :30:53.because they were artists and now they have to try and be scientists.
:30:53. > :30:58.TBG doesn't rely on creatives toguess what people will respond to,
:30:58. > :31:03.instead its software runs mass experiments on many possible versions of a Facebook ad.
:31:03. > :31:05.Even though the ads are small,
:31:05. > :31:07.there's three different parts of the ad -
:31:07. > :31:11.the headline, the image and the little piece of copy for most Facebook ads
:31:11. > :31:13.and there's 12 different targeting criteria.
:31:13. > :31:17.Age, gender, relationship status, that kind of thing.
:31:17. > :31:21.So once you've multiplied those up,- there's thousands of different permutations.
:31:21. > :31:27.TBG typically tries 27,000 variants on an ad.
:31:27. > :31:30.So it might be that a 25-year-old in New York City who likes cats
:31:30. > :31:40.responds differently to a 33-year-old male in London who likes dogs.
:31:40. > :31:51.
:31:51. > :31:51.If
:31:51. > :31:52.If it
:31:52. > :31:56.If it sounds
:31:56. > :32:03.If it sounds creepy, this is where it is heading. It is big data. This
:32:03. > :32:07.is going to be a big user of advertising, Facebook will be
:32:07. > :32:11.helpful. People know what people are doing, where people's heads are
:32:11. > :32:15.at and the advertisers can take this data and tweak the marketing
:32:15. > :32:22.message and this is worth more than you can possibly imagine.
:32:22. > :32:27.With a massive network of personal information as its key business
:32:27. > :32:31.assets, Facebook embarks on the stock market flotation earlier this
:32:31. > :32:37.year. Facebook, expected to go to market
:32:37. > :32:44.at a value of about �60 billion. In order to sell shares on the
:32:44. > :32:50.stock market. Facebook had to summit -- subbit previously private
:32:50. > :32:53.details to the financial regulator. There is much to boast about, the
:32:53. > :32:59.extraordinary growth in users, the multi-billion dollar advertising
:32:59. > :33:02.revenue, but for all that, some are sceptical about the company's real
:33:02. > :33:07.potential. I have done calculations about the
:33:07. > :33:12.growth that Facebook would have to achieve it would have to be about
:33:12. > :33:17.8% revenue year on year. They managed that last year and Google
:33:17. > :33:22.manages 80% revenue growth. So you are looking at them hitting a lot
:33:22. > :33:25.of things, getting it right. Only then would the current price fairly
:33:25. > :33:29.value them. But some analysts have more of a
:33:29. > :33:33.gut reaction to Facebook's commercial potential.
:33:33. > :33:39.The biggest worry is not the mathematics, but the worry is that
:33:39. > :33:44.I have never met someone who has clicked on a Facebook advert.
:33:44. > :33:48.Facebook has produced a video, if you think nobody has clicked on
:33:48. > :33:53.adds, Sheryl Sandberg will set you rite.
:33:53. > :33:56.The advertising revenue has gone from 200 million, to 3 .2 billion
:33:56. > :34:00.last year. We have made progress, but we have just begin.
:34:00. > :34:05.If there is a weakness in the advertising pitch, it is on mobile
:34:05. > :34:11.phone devices where almost half a billion people use it. There is not
:34:11. > :34:15.much room for adds on the screens, as the company admitted, they said
:34:15. > :34:22.that on mobile, the ability is unproven it could affect revenue
:34:22. > :34:30.and financial results. Facebook's concern about mobile was probably
:34:30. > :34:37.behind the recent spending of $1 billion on Instagram.
:34:37. > :34:43.They have paid a lot for an app that does not appear generate money.
:34:43. > :34:46.Facebook says it kill still appear in its counterform. Some are
:34:46. > :34:51.wondering if this is a technology bobble.
:34:51. > :34:55.Ififies Facebook can make adds work on mobile, there is a wider
:34:55. > :34:59.dedebate about Facebook and advertising. Started last year by
:35:00. > :35:05.Sir Martin Sorrell. There is a primary social reaction,
:35:05. > :35:10.not a commercial network. Therefore, I think that you use it at your
:35:10. > :35:17.peril. The potential for Facebook is more in my mind as a public
:35:18. > :35:22.relations medium than in your face Elliot Schrage deals with
:35:22. > :35:24.that people come to Facebook for social and not commercial messages.
:35:24. > :35:27.I think we're well on our way to finding a very protective balance
:35:27. > :35:29.of providing people with information they want to receive from friends,
:35:29. > :35:31.recognising that most people, when they're in their course of the Facebook experience,
:35:32. > :35:35.are not focused on purely commercial activities.
:35:35. > :35:39.Indeed, if you compare us to any online service, any newspaper,
:35:39. > :35:43.I think the percentage of space devoted to commercially related
:35:43. > :35:49.or commercially orientated messages- is tiny.
:35:49. > :35:54.Now, if the first part of Facebook's strategy is to sell ads using its targeting ability,
:35:54. > :35:58.the second it to invitebusinesses themselves on to Facebook
:35:58. > :36:01.and they can set up their own pages.
:36:01. > :36:05.Pages act pretty much like people on Facebook,
:36:05. > :36:12.but instead of being friends with abusiness you can choose to 'like' it.
:36:12. > :36:18.When you say you 'like' it, you're allowing it to send you messages, as you would a friend.
:36:19. > :36:23.And if it strikes you as an odd thing to do, well, have a look at this.
:36:23. > :36:32.Nearly 35 million people have pressed the 'like' button for Coca-Cola.
:36:32. > :36:36.Rather than being the passive recipients of ads,
:36:36. > :36:42.when people connect to Facebook pages, they're choosing to linkthemselves to brands and products.
:36:42. > :36:46.Managing those relationships is a new kind of marketing.
:36:46. > :36:53.Here in New York, Buddy Media helpsbig businesses talk to millions of people who 'like' them on Facebook.
:36:54. > :36:57.If you're one of the top advertisers in the world,
:36:57. > :37:00.we work with eight out of the top ten global advertisers.
:37:00. > :37:02.You may have 400 brands
:37:02. > :37:05.and you may do business in every country in every language
:37:05. > :37:10.so what you need is the ability to really manage all this content globally.
:37:10. > :37:15.And you cannot do it without software and then on top of- that we tell them what's working,
:37:15. > :37:18.what's not working. How do you really optimise what's going on?
:37:18. > :37:22.How you get the right content to the right people?
:37:22. > :37:27.Companies try to get chatting to their Facebook fans because when anyone responds,
:37:27. > :37:34.what they've said and the company's name will automatically spread to all their Facebook friends.
:37:34. > :37:37.So now Pretzel Crisps is doing things like
:37:37. > :37:41.posting the recipes of ways to eat pretzels
:37:41. > :37:45.and asking questions and asking people to comment on these recipes.
:37:45. > :37:50.You can see people are starting to engage, in this case 174 people have actually engaged,
:37:50. > :37:52.in this conversation about these recipes.
:37:52. > :37:56.Which you'd never be able to do anywhere else.
:37:56. > :38:00.Marketing people call it 'word of mouth at scale.'
:38:00. > :38:04.Social media for the last million years has been about just word of mouth
:38:04. > :38:08.so even when the wheel was created, people said,
:38:08. > :38:11."Wow, the wheel is here, you've got to check this thing out!"
:38:11. > :38:14.And so that obviously spread like wildfire,
:38:14. > :38:19.but it took time to go, you know, within a community and then to another community.
:38:19. > :38:22.With Facebook, it spreads instantaneously.
:38:22. > :38:29.You don't have to be a multinational- to want to communicate to your customers on Facebook.
:38:29. > :38:33.Representing small enterprises on Facebook has become a new cottage industry.
:38:33. > :38:37.You do guitar lessons? We'll do repairs and obviously sell...
:38:37. > :38:37.You do guitar lessons? We'll do repairs and obviously sell...
:38:37. > :38:40.Beverley Ames-Rookes runsFacebook pages for small businesses.
:38:40. > :38:44.What's really nice with Facebook is you can listen to what people say about your business
:38:44. > :38:47.and then you can interact with them.
:38:47. > :38:50.Today she's trying to sign upnew clients in her Surrey village.
:38:50. > :38:53.I can do it all, your Facebook banner,
:38:53. > :38:57.I create your albums, update your albums for you.
:38:57. > :39:03.Beverley, hi, hello. Emily. How was it? How did it go in there?
:39:03. > :39:08.'Beverley creates a page for each client and then posts news and comments as that business
:39:09. > :39:14.'to Facebook users and on other social networks.'
:39:14. > :39:18.She can find herself communicating as a shop, a pub,
:39:18. > :39:23.or even an exotic holiday resort inAsia, which she has at least visited.
:39:23. > :39:27.I felt the atmosphere, I know when the DJs are playing, I know when there's live music.
:39:27. > :39:34.I know the local beers so I can talk easily on behalf of those venues.
:39:34. > :39:37.In the last couple of days, take usthrough what you've actually said.
:39:38. > :39:40.All right. "Banana Tempura Caramel Toffee Ice Cream!
:39:40. > :39:44."Who's feeling naughty?" As you can see,
:39:44. > :39:48.it pushes for a response and what you're trying to do is to get people to interact with you.
:39:48. > :39:52.OK, so Helga says, "Sounds yummy, hope I can try it in August."
:39:52. > :39:56.Suzee Jones says, "September forme!!" And Kitty White, "Original!!!"
:39:56. > :40:00.With lots of exclamation marks. I don't know what Kitty is making of that one.
:40:00. > :40:05.'Each time someone comments, the resort's mentioned to that person's friends.'
:40:05. > :40:08.That will show up that they've commented on a page
:40:08. > :40:13.so all of a sudden we've got a bit of exposure on somebody's profile.
:40:13. > :40:18.Facebook claims that when a business- is brought to someone's attention by a friend,
:40:18. > :40:22.it's a much more powerful form of recommendation than an ordinary advert. But is it?
:40:22. > :40:27.You're similar to your friends and the ads that your friends respond to, you respond to also, so yes,
:40:27. > :40:29.people come in clusters,
:40:29. > :40:31.yes, what your friends bought, you might buy,
:40:31. > :40:33.but you might have bought it anyway.
:40:33. > :40:38.To what extent can Facebook truly take credit for that?
:40:38. > :40:42.After targeted advertising in Facebook pages,
:40:42. > :40:48.the next part of Facebook's business- armoury is its amazing ability to keep users glued to the site.
:40:48. > :40:54.Facebook sessionstypically last around half an hour and most users come back often.
:40:54. > :40:57.I probably spend about half an hour- a day on Facebook.
:40:57. > :41:02.Everyday, a few times a day. Not more than an hour total a day.
:41:02. > :41:04.I spend two hours on Facebook a day.
:41:04. > :41:08.Probably about three hours a day. About three-and-a-half hours a day.
:41:08. > :41:10.Three, four hours during the day.
:41:10. > :41:16.I don't think I have it that bad, I- know people who go on it every hour.
:41:17. > :41:22.At Facebook, we're pushing to make the world a more open place.
:41:22. > :41:27.Facebook users are kept hooked partlyas a result of a decision Zuckerberg- made four years ago
:41:27. > :41:32.to open the site up to other software developers.
:41:32. > :41:40.This year, there are more people than ever at Facebook's developer conference.
:41:40. > :41:45.Facebook isn't just a website, it's also what's known in techy circles as 'a platform.'
:41:45. > :41:48.This means that software developers from other companies
:41:49. > :41:53.can write programmes which then run on Facebook.
:41:53. > :41:59.Apps, in other words, and the reason- Facebook likes that is because it provides more to do,
:41:59. > :42:04.but also because these apps create a kind of technology eco-system
:42:04. > :42:07.with Facebook right at the core.
:42:07. > :42:12.Now there are more than a million different developers who build things on top of Facebook
:42:12. > :42:16.and are trying to bring these great experiences to people.
:42:16. > :42:21.And, you know, we think to ourselves we're just a small company and we have, I'm sure,
:42:21. > :42:27.all these people who are using our products but we have 500, 600 engineers building all this stuff.
:42:27. > :42:33.Companies like Microsoft or Google have tens of thousands of engineers We're tiny compared to that.
:42:33. > :42:37.So how can we ever possibly build all the stuff that we want to see get out there
:42:37. > :42:41.and the answer is build an eco-system and make it so that
:42:41. > :42:46.all these developers, whether it's a student in a dorm room who hasn't had a job yet
:42:46. > :42:51.or a big company or a company that we've never heard of in some other country can build this stuff.
:42:51. > :42:53.And that's the part that's so cool about it.
:42:53. > :42:56.When Zuckerberg opened Facebook to developers,
:42:57. > :43:02.nobody guessed that the runaway success would be Facebook based games.
:43:02. > :43:07.London is home to the world'ssecond biggest social gaming company.
:43:08. > :43:13.Kristian Sergestrale, the co-founder- of Playfish, employs 350 people
:43:13. > :43:17.to make games for his 100 million regular players.
:43:17. > :43:19.Facebook has created the level of infrastructure
:43:19. > :43:22.which means you can visit your real friends' houses,
:43:22. > :43:24.interact with your real friends' characters,
:43:24. > :43:25.give them gifts and so on.
:43:25. > :43:27.And you can work on things together
:43:27. > :43:31.which simply brings an entirely new dimension to computer games.
:43:31. > :43:34.And in some ways almost takes games back to where they came from.
:43:34. > :43:38.So it's as much about interaction as it is about what's going on in the screen.
:43:38. > :43:43.In the company's San Francisco office, two of its customers
:43:43. > :43:46.have come in to show how they play a couple of the most popular games.
:43:46. > :43:53.Michelle Maruyama is a violinistand has been playing Restaurant City- for two years.
:43:53. > :43:56.I sometimes really enjoy playing right after I come home from work,
:43:56. > :43:58.if there's a conductor I don't like or something.
:43:58. > :44:01.But if I'm just home all day practising,
:44:01. > :44:05.you can just stop once an hour and check on your restaurant.
:44:06. > :44:13.The games are designed to keep you hooked with timed penalties if you don't keep checking in.
:44:13. > :44:17.It's definitely a chore and it definitely cuts into your spare time.
:44:17. > :44:22.I know that I used to read the New Yorker pretty much cover to cover every single week
:44:22. > :44:25.and I know that I absolutely do not do that any more.
:44:25. > :44:30.John House plays Pet Society, which has attracted up to 21 million users a month.
:44:30. > :44:33.You have a virtual home
:44:33. > :44:35.and you have your one virtual pet
:44:35. > :44:44.and you have a bunch of friends that you can visit.
:44:44. > :44:51.They poop, and they poop different types of poop so there is the carrot cake poo.
:44:51. > :44:53.There's the creme egg poo.
:44:53. > :44:57.There is the snake poo from the wizards' school.
:44:57. > :45:01.These kinds of special items are the key to a new revenue stream for Facebook
:45:01. > :45:06.because game players can pay real money for virtual goods.
:45:06. > :45:10.They pay by sending money to Facebook to buy credits.
:45:10. > :45:17.It's already a business worth hundreds of millions of dollars.
:45:17. > :45:19.John was so pleased with his special duck poo
:45:19. > :45:22.that he paid a poundfor a virtual case to display it in.
:45:22. > :45:24.And Facebook takes a third of that, but John has no complaints.
:45:24. > :45:34.You know what? For that giant duck poo, it's worth it.
:45:34. > :45:41.Facebook's strategy, including games- and Facebook pages, has attracted ever-growing numbers to the site,
:45:41. > :45:46.but the company has an even bigger ambition on the wider web.
:45:46. > :45:49.Today, millions of websites have links to Facebook on them
:45:49. > :45:53.and if you use these links with your Facebook identity,
:45:53. > :45:59.you can communicate with yourfriends on Facebook even if you're on an entirely different site.
:45:59. > :46:03.For Mark Zuckerberg, it's the fulfilment of a grand ambition
:46:03. > :46:09.to provide the pipes through which the world's social connections can start to flow
:46:09. > :46:14.and in the process, Facebook's beginning to colonise the whole of the web.
:46:14. > :46:18.Zuckerberg's dorm project has come a long way in seven years,
:46:18. > :46:24.not just as a piece of technology, but as a change to the way many people relate to each other.
:46:24. > :46:27.It's easier to communicate with people,
:46:27. > :46:30.but it also makes communicating less personal.
:46:30. > :46:40.Let's say I was with my boyfriend, instead of paying attention to him,- I'm on my Facebook.
:46:40. > :46:42.
:46:42. > :46:44.It's an idyllic representation
:46:44. > :46:46.of who you are which I think can get misinterpreted by yourself even.
:46:47. > :46:50.Probably 80% is the real me on there, the rest of it's just what I want people to see.
:46:50. > :46:55.My dad posts on my wall sometimes. I have to delete that. He will just post "I love you sweetie!"
:46:55. > :47:05.I'm like "Dad!" But that's sweet. It's nice but it's a little too much.
:47:05. > :47:15.
:47:15. > :47:16.One
:47:16. > :47:16.One thing
:47:16. > :47:19.One thing that
:47:19. > :47:23.One thing that there's never been is a map of everybody in the world
:47:23. > :47:28.and their relationships with each other. By giving each person the
:47:28. > :47:34.responsibility for their own story, the point in that graph, together
:47:34. > :47:39.you have this amazing map of people. Is this a solid asset or could
:47:39. > :47:43.Facebook fade away when the next online craze comes along?
:47:43. > :47:47.Facebook's scale is unprecedented. It is bigger than anything we have
:47:47. > :47:51.seen before. I think that there is something powerful about the
:47:51. > :47:57.network effect that it then has, all my friends are on it, therefore
:47:57. > :48:01.I must be on it. That makes it difficult for another competitor to
:48:01. > :48:06.replace it. It is difficult to say that Facebook has a strangle hold
:48:06. > :48:10.and that it cannot be replaced is not the case when Myspace had the
:48:10. > :48:15.same early connection, but the people have disappeared overnight
:48:15. > :48:25.it does not take Mitch once an exoddus starts. Facebook wants its
:48:25. > :48:27.
:48:27. > :48:34.Facebook says that just makes it commercial messages a part of life
:48:34. > :48:36.is one where we're better if we My life is improved
:48:36. > :48:39.if I care what you're doing and if I've chosen to connect to a Starbucks,
:48:39. > :48:43.I want their announcements, just like I friend someone, I've chosen this.
:48:43. > :48:48.We have social ads and we have non-social ads, right,
:48:48. > :48:51.and so you can either for example see an ad from Coca-Cola
:48:51. > :48:53.that is just Coca-Cola saying drink Coca-Cola.
:48:53. > :48:56.Or you can see an ad where your friend who likes Coca-Cola,
:48:56. > :48:59.the ad is just this person likes Coca-Cola
:48:59. > :49:03.and which one do you think people who use Facebook prefer?
:49:03. > :49:08.They want to see something about their friends, they want to learn about what their friends are doing.
:49:08. > :49:14.But when Facebook has tried to mixsocial messages with advertising in the past, it's run into trouble.
:49:14. > :49:18.We've built a little product called- 'Beacon' that's going to allow you to do this from your own website.
:49:18. > :49:22.Beacon told people's friends what they were buying.
:49:22. > :49:26.There were furious complaints and Zuckerberg withdrew it with apologies.
:49:26. > :49:28.After a series of such controversies, a pattern has emerged.
:49:28. > :49:38.Facebook tends to do a three steps forward, one step back launch approach.
:49:38. > :49:43.It often launches products that really push us, tests the water,
:49:43. > :49:53.so to speak, and then Facebook pulls back and begins to roll it out again more slowly.
:49:53. > :49:54.
:49:54. > :49:54.Now
:49:55. > :49:55.Now there
:49:55. > :49:59.Now there is
:49:59. > :50:02.Now there is another idea that users may be uncomfortable with. If
:50:02. > :50:07.you click a 'like' button on a business page, that business can
:50:07. > :50:12.pay for a box on your friend's pages with your picture and logo
:50:12. > :50:17.saying you liked it. Facebook call it is a sponsored story. You cannot
:50:17. > :50:21.opt out. The only add that Facebook shows on mobile devices. If you
:50:21. > :50:27.found your name and face in a sponsored story, would you say it
:50:27. > :50:37.is harmless? Or would you feel you had been used in an add without
:50:37. > :50:40.on a brand, that could pop up I certainly wouldn't necessarily
:50:40. > :50:42.But when you press a like button on a brand or on an ad
:50:42. > :50:44.or on a page, you're saying "I like this".
:50:44. > :50:46.I'm not saying I advertise this.
:50:46. > :50:49.Well, I suppose when you... So let's pause.
:50:49. > :50:59.It's an interesting...
:50:59. > :51:01.
:51:01. > :51:05.I mean, you're asking a profound question - what's advertising?
:51:05. > :51:11.When I press a like button on an ad, I'm trying,
:51:11. > :51:17.on the Facebook system, I'm affirmatively communicating that I'm associating myself
:51:17. > :51:22.with whatever I'm liking and what that does is it creates a story.
:51:22. > :51:25.But you can call it a story, many people would call it an advertisement
:51:25. > :51:28.and Facebook is getting paid for those by the companies.
:51:28. > :51:31.I think... I...I...I...
:51:31. > :51:37.It's a ranking mechanism, I don't know if I would call it an advertisement.
:51:37. > :51:42.Sponsored stories highlight the critical dilemma for Facebook.
:51:42. > :51:48.How far can it go in using personal information without its users feeling exploited?
:51:48. > :51:58.It says it gives users full control over their privacy,
:51:58. > :52:00.
:52:00. > :52:00.Permission? Facebook
:52:01. > :52:01.Permission? Facebook has
:52:01. > :52:04.Permission? Facebook has to
:52:04. > :52:07.Permission? Facebook has to be careful about the data is used. If
:52:07. > :52:12.people are freaked out too much, they will leave the platform, but
:52:12. > :52:17.we have seen a number of different privacy scares in the past, it has
:52:17. > :52:21.not held it back so far. Do you believe that people will
:52:21. > :52:30.gradually become more open, that they will regard privacy with less
:52:30. > :52:33.that people won't care fundamental thing and I think
:52:34. > :52:36.I think the big cultural change is that now more and more people are finding that
:52:36. > :52:39.they can build a reputation, they can help discover stuff, get credit for that,
:52:39. > :52:42.they can be part of discovering other people's stuff.
:52:42. > :52:45.And I just think that people are seeing every day that that's awesome.
:52:45. > :52:47.And that's why I think the world is moving in that direction.
:52:47. > :52:49.But people every day also wake up and I think are like,
:52:49. > :52:53."What stuff do I want to have out there and what don't I?" I don't think that will change.
:52:53. > :52:58.But how much do Facebook's business needs create a tension between privacy and sharing?
:52:58. > :53:02.They've chosen terminology and at least as important,
:53:02. > :53:05.they've chosen a user interface design that encourages sharing.
:53:05. > :53:09.They've set their defaults in a way- that makes it seem like this is
:53:09. > :53:12.the right and normal and natural thing to do.
:53:12. > :53:15.I'm not so sure it really is, I'm not so sure that it's been
:53:15. > :53:17.the way of things or needs to be the way of things
:53:18. > :53:21.for every picture you take to be
:53:21. > :53:23.distributed to hundreds or thousands or tens of thousands of people.
:53:23. > :53:28.And yet they've tried to convince us that's the new normal and that's the way it should be.
:53:28. > :53:34.They've always said, "Facebook's about helping you share, with the people around you".
:53:34. > :53:36.Facebook insists its advertising model
:53:36. > :53:38.does not depend on its users agreeing to be less private.
:53:38. > :53:42.Our goal is to make it so that people share what they want to.
:53:42. > :53:49.And we believe that over time, people are going to want to share more things.
:53:49. > :53:51.That's a big trend that we see happening in the world,
:53:51. > :53:53.but we don't benefit from being ahead of it.
:53:53. > :53:56.If we have people share things that they don't want to,
:53:56. > :54:04.they'll stop using our service and not like us.
:54:04. > :54:05.This
:54:05. > :54:05.This year
:54:05. > :54:09.This year we
:54:09. > :54:13.This year we are taking the next step. We are making it so you can
:54:13. > :54:17.connect to anything you want in anywhere in the world.
:54:17. > :54:21.Well, the $100 billion question for investors is how successfully
:54:21. > :54:24.Facebook will be able to turn all of the activity and all of the
:54:24. > :54:28.information it has, into a massive income.
:54:29. > :54:32.This is a very young company. It's just starting to figure out
:54:32. > :54:37.strategies for making money. I think advertising is one component
:54:37. > :54:46.of that. So if this company were to truly want to start mon advertising,
:54:46. > :54:53.I think that $100 billion may start may depend on
:54:53. > :55:01.and whether they feel comfortable networks, networks that are more
:55:01. > :55:06.that are more restricted And that's where Zuckerberg himself
:55:06. > :55:09.but as long as most users believe in his sincerity,
:55:09. > :55:13.they'll probably accept whatever changes Facebook throws at them
:55:13. > :55:16.because by all accounts he hasn't changed much.
:55:16. > :55:18.Mark drives the same four-year-old Acura
:55:18. > :55:22.that I recommended that he get a few years ago.
:55:22. > :55:25.Like, you know, and still lives, you know...
:55:25. > :55:28.He's finally bought a house, but it's not like he bought some crazy mansion.
:55:28. > :55:30.He bought a house in Palo Alto.
:55:30. > :55:35.But, you know, really being, you know, one of Mark's stated interests on Facebook is minimalism.
:55:35. > :55:38.He doesn't care for material possessions at all.
:55:38. > :55:44.He actually wears the same jeans and the same t-shirt and jacket everyday.
:55:44. > :55:47.In fact, one of the things I first did when I came to the company
:55:47. > :55:53.is told a lot of people, "He has a lot of those jackets, don't worry, he's not wearing the same jacket
:55:53. > :55:56."every single day, it's just many versions of the same jacket.
:55:56. > :56:05.Zuckerberg just wants to keep a low profile
:56:05. > :56:06.In
:56:06. > :56:06.In a
:56:06. > :56:11.In a matter
:56:11. > :56:14.In a matter of days, the world will be able to buy Facebook shares. If
:56:14. > :56:20.they go up, Zuckerberg's student project will be worth the $100
:56:20. > :56:23.billion or so, that is bandied about. If they don't, there will be
:56:23. > :56:28.talk of another tech market crash and the bubble that burst.
:56:28. > :56:34.I don't think we are in the same position we were with the.com crash.
:56:34. > :56:37.The web was in its early stages then. Businesss were capital
:56:37. > :56:42.intensive to set up a business. We have had ten years to learn from
:56:42. > :56:47.the mistakes that were made then. So yes, this is a huge valuation
:56:47. > :56:52.for Facebook, but I'm not sure it means that we are in a general tech
:56:52. > :56:58.bubble. I think that the prospects are good. The company has 900
:56:58. > :57:03.million subscribers, they have a trov of data, encompassing what
:57:03. > :57:08.users do online, what they ignore. The limitations are that there is a
:57:08. > :57:13.new generation of social media users to come online and skip
:57:13. > :57:17.Facebook entirely. They will start with Twitter or Tumbler are or
:57:17. > :57:23.something we cannot imagine yet. As for Zuckerberg, the company's
:57:23. > :57:29.been structured to give him the power to outvote dis gruntled share
:57:29. > :57:34.holders, but does it work in practise? Sooner or later the share
:57:34. > :57:39.holders and the board can gang up. Especially if it is not performing.
:57:39. > :57:43.As soon as you start to lose it does not take more than a couple of
:57:43. > :57:48.games, or a couple of quarters of losses and people start to look
:57:48. > :57:53.around for somebody to take over. That sounds unlikely, whether today,
:57:53. > :57:58.Zuckerberg is such a superstar of business and technology, but, of
:57:58. > :58:03.course, he's used to dramatic changes, in this, his first job.
:58:03. > :58:10.There is a great line in the film The Social Network where
:58:10. > :58:16.Zuckerberg's friend, encourages him to think big and says, "A million
:58:16. > :58:21.dollars is not cool, you know what is? A billion dollars." So, Mark
:58:21. > :58:24.Zuckerberg may say how cool is $100 billion? But that is the Hollywood
:58:24. > :58:29.Zuckerberg, but even the real one admits it has been a ride.
:58:29. > :58:34.We're on this journey, I just want to say it is really an honour to be
:58:34. > :58:38.on it with all of you guys. Because, looking back seven years, who would