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The Last Social Network
How Facebook's IPO was the beginning of the rot in social media
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When I first started using the internet, it felt both very large and very, very small.
The groups I joined — web forums, personal blogs, and teams in online games — were never more than hundred people, and usually less than 20. These communities were based around a single thing, and that thing was a game, or a hobby, or even just “we are at the same school and, for whatever reason, we are sharing our thoughts.”
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The internet was a place to explore and learn, but not somewhere you’d go for anything approaching a real time snapshot of the world or the people in it. Communities didn’t exist on a distributed level, but were small and siloed, and with an explicit raison d’être.
In fact, we had very few expectations of social media at all. The notions of clout, influence, or followers didn’t really exist in any meaningful sense. We went to forums to talk to a person or group of people about a thing. We joined mIRC rooms to talk about those things in real time. We read LiveJournals to get a filtered snapshot of what someone was thinking. While we might have wanted to be popular on a very small part of the internet, it was a niche kind of popularity, and most people understood that.
These were places almost entirely divorced from our real lives, with the occasional (and highly-controlled) glimpse into who we were or who somebody else was. These were not broadcast platforms — we were not doing this with any consideration of an audience or influence, nor were the platforms built with the expectation or intention we would use them in that way.
It was inherently social networking. Distilled. Pure, even. You were meeting people online and networking with them. While there were exceptions (SomethingAwful achieved massive scale unlike anything else I can remember before 2008), I don’t think anybody thought about whether they got enough engagement on posts, their personal brand, or really anything — you were just dicking about online in vague or specific ways, with little consideration of whether the rest of the world could see it (or whether you’d want them to).
It was this world that Facebook and Twitter were born into.
Zuckerberg referred to the original Facebook in 2004 as a place to “find some interesting information about people.” Twitter was created as a side project to a podcasting service called Odeo, and was mostly for sharing little updates with a small group, with the novel concept that you could “follow” these updates without the person in question having to approve. In 2012, the New York Times recalled the creation of Instagram, and how Kevin Systrom had wanted to “build a service to let people share their location with some photo tools attached to it.”
What was missing were the concepts of followings, influence, engagement, branding and any consideration of the ramifications of actually being digitally conspicuous — whether personal, professional, or societal.
To be clear, I’m not saying that online celebrities are a byproduct of the Facebook era. The Web 1.0 world created no shortage of high-profile (relatively speaking) names, but these were a substantially different beast. Nobody really aspired to online fame, and online fame was seldom a route to financial success. Like the forums and mIRC chats I grew up in, these personas were fragmented and siloed. It was hard to see how the Internet — and, indeed, its inherently social aspects — could impact society, or whether these concepts could be used to monetize, manipulate or, indeed, influence people.
Social networking has always been a case of building the airplane as it flies, never really considering anything other than how to get as many people on the platform as possible. Users did not have many expectations, and were mainly excited by the proximity — imagined or otherwise — to people they knew and people they admired. Founders were encouraged to scale, scale and scale some more, profits be damned, as everybody chased the Facebook model of massive growth (somehow missing that Facebook turned profitable in 2009), assuming that lots of people would translate into lots of revenue.
Facebook — despite being arguably the only financially successful social network (outside of Instagram) — was “never meant to be a company” but to “accomplish a social mission,” according to Zuckerberg’s 2012 letter to shareholders. The same letter also said that “more and more people want to use services from companies that believe in something beyond simply maximizing profits.”
These words were published roughly a decade before Zuckerberg would lay off 11,000 people, followed a few months later by $40 billion of stock buybacks. While it’s easy — and justifiable — to slam Zuckerberg and the rest of Facebook’s leadership as dishonest, hypocritical ghouls, the reality is a little more complicated. The problems really began when Facebook became a public company in 2012.
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While it’s hard to imagine the platform as anything other than a money-making monster, Facebook puttered along as a profitable company for years before its IPO. Reporting from the time shows that Zuckerberg was reluctant to take the company public over fears it may influence both the company’s direction and motivations. Per the Wall Street Journal in 2011:
People familiar with Mr. Zuckerberg's thinking say he worried about the damage an IPO could do to the company's culture and wants employees focused on making great products, not the stock price, they say. And if it were up to Mr. Zuckerberg, Facebook would remain private. But a federal rule which forces financial disclosure once a company has more than 500 shareholders ultimately convinced him it was the right step.
Mr. Zuckerberg says he can head off the ill effects of an IPO by assembling a management team tough enough to resist shareholders' short-term desires. "People always talk about the downsides of these things," Mr. Zuckerberg said, referring to IPOs, "and I do think they're real, but the management of the company fundamentally has control over the decisions it makes."
The general consensus was that taking Facebook public would misalign the incentives of building a great social network, or at the very least the company that Mark Zuckerberg wanted Facebook to be. Felix Salmon wrote in 2012 that Zuckerberg wanted to keep Facebook private “likely to be able to follow its own path much more easily, without having enormous pressure to justify its $50 billion valuation with massive growth in revenues and profits.”
The reality may be somewhat more depressing: according to Salmon, Zuckerberg was pressured to take the company public because venture capital firms like Accel and DST had been selling down their stakes (and Facebook had offered stock grants to employees), taking Facebook over the 500 shareholder threshold to publicly disclose financial statements. However, Adam Lashinsky argued at Fortune that Facebook could have stayed private, but had promised employees they’d be able to sell shares in a public offering in the future — and, indeed, was too greedy to buy back the stock rather than open the company to the public markets.
And now Facebook, over a decade after being exposed to said markets, barely resembles a social network, earning over a hundred billion dollars a year in advertising revenue (making good on its pre-IPO pitch to Wall Street) alone.
Accessing a chronological feed on either Facebook or Instagram is deliberately difficult and continually interrupted with advertising that takes up half of your screen. The core product that people originally joined Facebook to use — seeing content from their friends and groups and interests — has been drowned in a sea of noxious “content,” oscillating between showing you 5-second long previews of videos engineered to get clicks, targeted advertisements, and posts from friends or groups from a few hours to a few days ago.
That last bit is perhaps the most noxious element of today’s Facebook. While Facebook’s propensity for recommending content from third parties is bad enough, it has the audacity to pick which of your friends’ posts you should be allowed to see. It’s a weird — and, when you think about it, deeply sinister — overreach, and one that we wouldn’t tolerate in any other kind of service. Imagine if your messaging app did the same thing. You’d rightfully be outraged.
Zuckerberg’s original mission — that Facebook would not “build services to make money…but make money to build better services” (which Business Insider’s Henry Blodget said would “make America and Americans better off if companies were run this way”) — is dead. Facebook was successful, profitable, had happy employees, and remained a useful social network until the rot economy and public markets called for it to enter its eternal growth phase.
May 2012’s Facebook IPO was considered “a disaster,” with share prices dropping 15% over concerns about a lack of meaningful revenue in mobile. While Erin Griffith said in 2015 that Facebook “overcame” its “disastrous” IPO by juicing its mobile revenue, I’d argue that the problem was that Facebook was now tasked with “overcoming an IPO” rather than “building a good company.”
In March 2013, it became obvious that Facebook was beginning to interfere with the core news feed product, with then-New York Times columnist Nick Bilton remarking upon how little engagement he saw from his 25,000 subscribers until he paid $70 to Facebook’s sponsored advertising tool. He also cited an author with a terrifyingly prescient quote:
“Certainly Facebook has changed its policies and adjusted its products in order to squeeze as much revenue out of all of the openings of the business model in a way that they didn’t have to do before they went public,” said James McQuivey, an analyst at Forrester Research and author of the book “Digital Disruption.” “It’s very possible there’s now a giant pendulum swinging within Facebook, where every division is under pressure to find revenue and advertising solutions.”
In a now-deleted “fact check” from Facebook, the company claimed both that it had not suppressed organic distribution of posts in favor of paid posts in order to increase revenue — something that it was absolutely doing and admitted to nine months later in a deck to advertising partners. Facebook’s Q4 2013 revenues would healthily beat expectations, with 53% of its revenue coming from mobile.
With Facebook, Zuckerberg both proved a social network could be a business and killed any chance of a “new” social network coming out of the venture-backed tech industry. It wasn’t so much as “too big to fail,” but rather “too big to replace.” Facebook became a gratuitous public display of profit through social engineering — of manipulating users into seeing things that Facebook was paid to show them — and how big the multipliers could be if you took another network public, even if said network was never really built to have the eternal growth that the markets required.
Twitter remained profitable for large chunks of 2018 and 2019, but faltered in 2020 and never quite found a way back to profitability. Snapchat has never found profits outside of extremely wonky accounting. Pinterest has reached profitability once (and it was in 2021, a year when money didn’t exist), and otherwise has found it a constant struggle to strive for the kind of growth that the markets demand of a company.
Tumblr — the weird outcast of the social networking world acquired by Yahoo! in 2013 for $1.1bn and sold to Wordpress developer Automattic in 2019 for $3m — is in even worse financial straits, losing $30m (or 1000% of its purchase price) each year. In a surprisingly-candid AMA, CEO Matt Mullenweg suggested the platform may have to start including Wikipedia-style donation banners in order to keep the lights on.
For longtime Tumblr observers, this admission wasn’t a surprise. Tumblr is an example of an “eternal rot” company. A flawed, it wasn’t a particularly good blogging platform, nor was it well-suited for the kind of life-sharing that people do on Facebook and Instagram. It has a dedicated (and incredibly active) community, but no sustainable business model.
Social media companies have been trying to recreate the magic of Facebook’s endless revenues without realizing that the only way to create the rotten economics of Meta’s stock is to abuse the user into submission. Elon Musk can never hope to compete with Zuckerberg’s dictatorship, because Zuckerberg’s approach was like boiling a frog, slowly increasing the amount of pain caused to users so that it wasn’t obvious what he was planning.
Certainly, I’m aware that Twitter is now a privately-owned company. But it’s also somewhat of an outlier. The Twitter acquisition was a heavily-leveraged affair, with much of the debt burden placed on the company’s shoulders. Faced with steep quarterly payments and an eviscerated advertising revenue stream, Musk has resorted to degrading the user experience as aggressively as possible, hoping to annoy people into paying for Twitter Blue.
It is, in many respects, an outlier. A case-study in dysfunction caused not by the public markets, but the impulsivity of a narcissist. The problem is that Musk lacks the subtlety of Zuckerberg. Whereas Facebook’s decline was a slow and — at least, initially — imperceptible process, Musk has ostensibly chosen to break the site in order to save it, in part by raising Twitter’s API fees by astronomical levels and degrading the core user experience to a point that a Twitter Blue subscription becomes (at least, in theory) an attractive proposition.
As I’ve written before, the advertising-centric business model for social media is hard to make work and may be dying, and it’s made increasingly harder by the fact that each of these experiences started as giving a user something for free and then slowly taking it away. And just like search engines — as Larry Page and Sergey Brin warned in their 1999 Stanford paper about Google — the goals of the advertising business model do not correspond to providing a quality social networking experience.
This is why Meta’s Threads, despite having 100 million users, will likely never capture the magic or feel of any social network it tries to copy. Facebook and Twitter both grew organically through word of mouth, and feeds became magical — and yes, there was a time when Facebook was actually good, albeit over a decade ago — because you were seeing updates from exactly who you wanted to see.
Threads, on the other hand, has already decided what it wants you to see, when it wants you to see it, and how often you’ll be allowed to. It scaled based on a huge brand name and a massive amount of cross-platform marketing with the Instagram app, along with an outright onslaught of influencers pushed onto the platform. Threads never got to have “early days” because every user knew what a social network was, and Meta built Threads to resemble a place where the culture had already formed, where the famous were already famous, and where the voices on the network were already firmly entrenched.
It’s the first social network built for the ego-driven social media user concerned with their appearance or engagement. It’s an attempt by Meta to build a text-based entertainment network — one not built for discussing news or politics, and not driven by any users’ content other than those that Meta algorithmically deems to be worthy. It currently has no advertising, and undoubtedly costs a great deal of money to maintain and scale, meaning that there is a significantly worse version of Threads to come.
Fundamentally, it isn’t a social network. You can’t search for content. You can’t see a feed of just the people you’re following, and I’d be surprised if any usable chronological feed ever arrives. Images are too big, dominating your screen just like Instagram, and replies — the lifeblood of any actual social networking — feel so subordinate to the thing they’re replying to that they may as well not exist.
The problem is that most social networks started with one purpose and grew one over time. Twitter was meant to have silly little updates (“Just updating my Twitter on the shitter!”), and grew into a real time feed of the world’s thoughts. Facebook was meant to be a place to connect with those you knew and those you’re interested in. Instagram was a place to share photos with friends and family. And as every one of these networks became more engorged on venture capital, or more beholden to the public markets, they slowly began to find as many ways to interrupt and obfuscate what you’re looking for.
Threads feels like the death of social networking — a vast void where some try and recreate the magic of Twitter and others try and recreate the magic of Instagram, ending up with an unsatisfying and languid experience. It is not a place you go to see stuff you want to. It’s a place you go to have Meta show you things based on what you have asked — whether explicitly or implicitly — to see.
One has to wonder whether the world would’ve been a better place without a publicly traded Facebook.
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