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The Dangers of Relying on Facebook

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Re: The Dangers of Relying on Facebook

#41
post #29

As a business, it will always be a bad idea to completely rely on another entity outside your control, whose interests are very likely to be misaligned to yours. By all means leverage, Facebook (and Twitter and others) sign on and APIs, but if you are building a business on a single one of those, you are completely at the mercy of their whims, any incompetency, and changes in business practices.

There are always risks in business. Are all the people who have built successful companies that rely on facebook, apple, twitter, google, or other platforms wrong? The important thing is to understand the risks and account for them. Don't overreact just because having your app suddenly pulled seems more traumatic or less under your control than other failure modes.

A business built on a platform involves risks.

And a game of three-card-Monte involves risks(http://en.wikipedia.org/wiki/Three-card_Monte).

How do you distinguish the risks involved in one from the risks involved in the other? I'd say one important question is whether the "house" has more incentive to take your stuff or more incentive to benefit along with your success. Considering that Facebook's business model is essentially still up in the air, the question of what Facebook in particular cares most about is also up in the air.

Re: The Dangers of Relying on Facebook

#42

Earlier quoted context omitted.

This seems like a really valid and important point. Yet companies who do build their entire business on other companies' info / APIS (Think Greplin, Trendrr, Tweetdeck, etc.) still get tons of interest from investors. While it is easy to realize the importance of developing an independent business when commenting on HN, I think the startup community as a whole needs to start displaying this in its actions. Once more…

Greplin et al always have the exit scenario where their product is so much better than whatever (say) Facebook has in-house that Facebook buys them as a social-search talent-acquisition play. This sort of scenario might be easier to identify and invest in than "the next Facebook".

Wouldn't it be a bit worrisome for a company to bargain to be purchased by Facebook when that company is in the position that Facebook could put them out of business at any point by cloning their stuff?

Creating an app as a "talent-acquisition play" seems reasonable but wouldn't you want to position yourself for multiple offers? If Facebook buying for talent, it doesn't have to restrict itself to the creators of Facebook apps.

Re: The Dangers of Relying on Facebook

#43

Earlier quoted context omitted.

The Facebook app and Windows app scenarios are not comparable. Microsoft knows that the only reason Windows has succeeded as much as it has is because of its vast and deep pool of applications. As such, there is an incentive for Microsoft to allow a relative amount of freedom when developing Windows applications. Indeed, a bare operating system is quite useless without applications to run on it. Facebook, on the othe…

Facebook became popular without apps, true, but they have yet to prove how successful they are. Zynga is more profitable than facebook itself, that must mean something. It's just speculation, but i believe things will change as growth starts to plateau and everyone has caught up with their old schoolmates. As for microsoft, well, remember netscape.

Zynga is more profitable than Facebook itself, that must mean something.

Yes, it means something. The question is what.

It might mean that Facebook has strong incentive to steal Zynga's business.

Considering there are rumblings that Zynga is casting about for other platforms, Zynga might think so.

If Facebook could be the home of many profitable apps that it had fair and transparent way of taking a cut from, then you could feel like Facebook was likely to keep its ecosystem working. Until then, it seems like anyone building on Facebook is subject to continuous risk of, as you imply, a sea-change in Facebook's operations.

Re: The Dangers of Relying on Facebook

#44

Earlier quoted context omitted.

Facebook became popular without apps, true, but they have yet to prove how successful they are. Zynga is more profitable than facebook itself, that must mean something. It's just speculation, but i believe things will change as growth starts to plateau and everyone has caught up with their old schoolmates. As for microsoft, well, remember netscape.

Zynga is more profitable than Facebook itself, that must mean something. Yes, it means something. The question is what. It might mean that Facebook has strong incentive to steal Zynga's business. Considering there are rumblings that Zynga is casting about for other platforms, Zynga might think so. If Facebook could be the home of many profitable apps that it had fair and transparent way of taking a cut from, then you…

But that s what fb is already doing. They have a long term agreement with zynga to use fb credits exclusively, and they are extending that exclusivity to all developers starting this July
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