How Facebook’s Oracular Algorithm Determines the Fates of Startups
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Re: How Facebook’s Oracular Algorithm Determines the Fates of Startups
#2I think most people overlook the intelligence value that GAFAM + Tencent have over nearly every other company on the planet. I don't know of any company out there that doesn't use one or more services from these companies which means you're giving them business intelligence about your activities even if you never talk with one of their BD/CD people.
And make no mistake that business intelligence is absolutely one of the most important things a big company (or nation) can have from a defensibly perspective.
Speaking as a former spy it's a spy agency's dream to have the kind of data on possible competitors and collaborators that these groups have. Individually they can see every threat coming a mile away and then decide to ignore, buy, invest.
This is why I think "this time is different" from a disruption cycle perspective. Never in history have companies had so much intelligence on their competitors and collaborators and actively used it to disrupt themselves - multiple times. Don't get me wrong, companies have always done this, but never at this level of granularity and specificity so quickly.
Re: How Facebook’s Oracular Algorithm Determines the Fates of Startups
#3I think most people overlook the intelligence value that GAFAM + Tencent have over nearly every other company on the planet. I don't know of any company out there that doesn't use one or more services from these companies which means you're giving them business intelligence about your activities even if you never talk with one of their BD/CD people. And make no mistake that business intelligence is absolutely one of…
>>"...and then decide to ignore, buy, invest."
...and then decide to ignore, buy, invest or copy.
Re: How Facebook’s Oracular Algorithm Determines the Fates of Startups
#4One day there will be a cottage industry focused specifically on exploiting the edge-case behaviour of these algorithms. It doesn't matter that the specifics of the algorithms are secret, there are always ways of reverse engineering them. That's the whole point of statistical inference.
Re: How Facebook’s Oracular Algorithm Determines the Fates of Startups
#5I think most people overlook the intelligence value that GAFAM + Tencent have over nearly every other company on the planet. I don't know of any company out there that doesn't use one or more services from these companies which means you're giving them business intelligence about your activities even if you never talk with one of their BD/CD people. And make no mistake that business intelligence is absolutely one of…
>>"...and then decide to ignore, buy, invest." ...and then decide to ignore, buy, invest or copy.
True, though history seems to show that copy only happens after they aren't able to buy or invest. It's much riskier from a business perspective to copy than to buy usually.
Re: How Facebook’s Oracular Algorithm Determines the Fates of Startups
#6Earlier quoted context omitted.
>>"...and then decide to ignore, buy, invest." ...and then decide to ignore, buy, invest or copy.
True, though history seems to show that copy only happens after they aren't able to buy or invest. It's much riskier from a business perspective to copy than to buy usually.
Very good point! Thank you for the greater sense of context, as I wasn't trying to imply that Facebook was a bad actor for copying.
Re: How Facebook’s Oracular Algorithm Determines the Fates of Startups
#7Earlier quoted context omitted.
>>"...and then decide to ignore, buy, invest." ...and then decide to ignore, buy, invest or copy.
True, though history seems to show that copy only happens after they aren't able to buy or invest. It's much riskier from a business perspective to copy than to buy usually.
Only for really big things like Instagram that have a network effect helping them, and as such threaten the incumbent.
For smaller features / ideas, it's much less risky to copy than to buy a company (for, say, 10-100M) and hope the acquisition goes well. Most acquisitions don't go all that well.
Re: How Facebook’s Oracular Algorithm Determines the Fates of Startups
#8How Facebook determines ad placement in news feeds:
> Millions of auctions take place every minute as users across Facebook load their feeds. ... The algorithm is constantly learning, using past results to inform how it weighs bids in the next auction. The intent, Facebook says, is to maximize value for everybody: to pair the advertiser with its likeliest customers, and to show ads that users want to see. And, of course, to make money for Facebook. [emphasis mine]
So FB wants:
1. advertisers to be successful so that they come back and attract others;
2. users to remain sticky and not be turned off or too distracted by an ad; and
3. sell each ad space at the highest price, so long as 1 and 2 remain true.
Interesting business they're in and an incredibly challenging (and fun/rewarding) algorithm to code.
Re: How Facebook’s Oracular Algorithm Determines the Fates of Startups
#9I'm surprised the author didn't mention that Facebook has a history of screwing small business owners.
A few years ago I spent more than $4000 on Facebook to build up about 4000 fans for a karaoke venue I ran at the time. I'd put some news out, and reach most of the fans. Then Facebook told me that to reach all of my fans I would now have to "boost" my posts, while the company simultaneously cut the organic reach to the fans I had paid them for.
They used the excuse that "people have to much stuff on their feed" but we all know that is BS. If I had known they would have done that I would never have bothered in the first place. Why help a company build its audience for you to be treated poorly? I suspect many many small business people feel that same way, and will abandon Facebook as soon as a less greedy alternative comes along.
Re: How Facebook’s Oracular Algorithm Determines the Fates of Startups
#10tldr; Outsource your relationship with your customers / audience at your own peril.