Can Facebook’s New Millionaires Save the World?
From everyone to whom much is given, much shall be required.
Regular readers know that I’m not in the habit of quoting scripture. But this line found in the gospels of Matthew, Mark, and Luke has a bit of new relevance this morning, as Facebook’s initial public offering—valuing the company at $106 billion at the opening bell on the NASDAQ Exchange—begins a process that will turn hundreds of Facebook shareholders, including current and former employees, into millionaires.
The real windfall won’t come until later this year: lock-up rules mean insiders and other major shareholders can’t start selling their shares until three to six months after the IPO. But that’s actually sort of convenient, because it leaves these soon-to-be-tycoons some time to think about what they’ll do with their new resources.
Of course, there will be the inevitable, entirely reasonable burst of materialism. Silicon Valley’s realtors, travel agents, and Tesla dealers will experience a welcome bump in business. A lot of old Ikea furniture and Sony stereo equipment will end up on the curbs of Palo Alto, displaced by Ligne Roset and Bang & Olufsen.
But if Facebookers are anything like their predecessors at PayPal and Google, their new toys won’t distract them for long. They’ll eventually fan out across Silicon Valley and found their own startups, or start investing in their friends’ companies, or both.
“You are going to make hundreds of millionaires and see a lot of new startup activity, because these kids are going to start companies on their own,” says Vivek Wadhwa, a scholar of entrepreneurship with appointments at Stanford, Duke, Emory, and Singularity University. “It’s going to be a big boom for Silicon Valley.”
Now, if you only looked at the record to date, you wouldn’t get the impression that Facebook’s alumni are especially prolific—and you’d be forgiven for wondering if they have any interests outside of social networking, collaboration tools, and Web infrastructure technologies. With help from CB Insights, which has been preparing its own study of the “Facebook Mafia,” I did a search for companies founded by Facebook alumni, and turned up fewer than a dozen examples:
Asana (Web-based task management) – Dustin Moskovitz, Justin Rosenstein
Cloudera (Apache Hadoop distributions) – Jeff Hammerbacher
Cove (collaboration, acquired by Dropbox) – Aditya Agarwal, Ruchi Sanghvi
Daily Strength (online support groups) – Doug Hirsch
Jumo (social networking for non-profits, merged with GOOD) – Chris Hughes
MemSQL (database management software) – Eric Frenkiel
Path (social networking and media sharing) – Dave Morin
Peixe Urbano (Brazilian local commerce site) – Julio Vasconcellos
Quora (question answering) – Adam D’Angelo, Charlie Cheever
Storm8 (mobile games) – Perry Tam, William Siu
Trialpay (targeted advertising) – Eddie Lim
This isn’t a terribly long list, at least compared to the number of companies created by ex-PayPal people or ex-Googlers. But the real Facebook diaspora may only get underway six to 18 months from now, as the lock-up period expires and Facebook employees realize that working for a public company isn’t nearly as fun as working for a startup. An IPO is “like getting married,” Wadhwa points out. “The engagement is fun but after that you have all these responsibilities. Every quarter you are accountable to the public markets, and if anything goes the slightest bit wrong things get very nasty. The Silicon Valley kids won’t like it.”
So let’s say it’s early 2013 and antsy young engineers and product managers are leaving Facebook in droves and setting up their own companies. What big problems should they tackle? Or, as venture capitalist Michael Greeley put it yesterday, “What is to become of all this liquidity?”
It would be understandable, but disappointing, if ex-Facebookers only pursued the things we already know they’re good at. It’s clear that when you gather a team of star Stanford- and MIT-trained engineers, lock them in a room with a case of Red Bull, and give them some big-data problem—say, how to store and retrieve camera-phone photos from 800 million people—they can devise diabolically efficient algorithms to solve it. But how many more mobile social apps, enterprise collaboration tools, and infinitely scalable databases does the world really need?
The sad truth is that today’s startup founders swarm around a small thicket of opportunities in the cloud, mobile, and Web spaces. Even one of the valley’s leading iconoclasts, Y Combinator founder Paul Graham, occasionally seems to have trouble thinking outside the Internet box. As a sort of dare to rising entrepreneurs, Graham recently published a list of “frighteningly ambitious” startup ideas. But at least three of the ideas on the seven-item list—a new search engine, a replacement for e-mail, and a better delivery mechanism for digital entertainment—are just more of the same.
To make the most of their skills—and the long careers they have ahead of them—the coming crowd of Facebook alumni would do well to look outside Silicon Valley for problems to solve. Here are just a few of the ways they could profitably direct their brainpower:
Build untraceable communications tools for activists and dissidents. Twitter, Facebook, and text messaging worked great for organizers of the Arab Spring uprisings—until their governments caught on and started using the same tools to hunt them down. The assignment here: build a system that protects the user’s identity absolutely. Of course, any tool that helps dissidents could also be used by terrorists. Or could it? Figuring out how to favor the white hats over the black would be part of the challenge here.
Create a truly great, cross-platform customer service and support system. Part of being civilized means dealing with the bureaucracies in our lives, whether they’re our governments, our employers, our healthcare providers, or our ISPs. We need technologies that … Next Page »