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Entrepreneurs Can Learn From Facebook’s Mistakes

May 1, 2018 No Comments

Mark Zuckerburg’s Congressional hearings, the power of Facebook as an advertising vehicle, the affect Facebook had on national elections…there is so much to digest when it comes to the news about Facebook. It’s only a matter of time before business schools write “mandatory reading” case studies, and Aaron Sorkin produces the sequel to The Social Network.

The Workville team is paying close attention to it all. We decided to break down Facebook’s rise and mistakes from our own angle. What are the key lessons entrepreneurs should learn from Facebook’s mistakes? 

Aaron Sorkin The Social Network movie poster image about Facebook

Founded in 2004, Facebook’s mission statement was to make the world more open and connected. Facebook now has more than 2 billion active users internationally. Mark Zuckerburg pioneered the social media industry and with it, the advent of targeted advertising algorithms. Facebook has since skyrocketed from a social network to internet dominance. Meanwhile, Facebook made the same mistakes repeatedly but never implemented a system of checks and balances. Repeated mistakes become monumental errors, which they are now facing in court. Here is a timeline of their biggest mistakes, and how it all adds up:

2004: Facebook establishes the mission statement “Facebook’s mission is to give people the power to share and make the world more open and connected.”

The Problem: As summarized by Tech Crunch, this mission statement  “had one fundamental flaw: it didn’t push for any specific positive outcome from more connection. Technically, it could encompass digital voyeurism via the News Feed, trading in-person friendship for online acquaintanceship or the filter bubbles and echospheres that have further polarized the United States.”

2007: Facebook introduced the tracking program Beacon, an innovative way to use their technology across websites. This enabled fifty Million Facebook users’ activities to be tracked on other websites (Travelocity, Fandango, The Knot, Overstock.com, and so on). Users purchasing behavior was then posted on their Facebook newsfeed.

The Problem: Beacon tracked behavior without clearly asking for user approval This violated Facebook’s terms and conditions, and basic consumer privacy. So much for that surprise vacation booked on Travelocity or that surprise birthday gift purchased from Overstock.com…

Facebook apologized for the release and recalled Beacon.

2008: OpenID is introduced, enabling users to sign into other sites with Facebook credentials. OpenID is so user-friendly that it became hugely popular, helping skyrocket Facebook’s internet dominance.

With the success of OpenID, Facebook decided to also make the “like” button available on other sites. The “like” button is twofold, it’s fun and it tracks individual browsing history across these sites. Even for non-Facebook users.

Next, a year after OpenID’s successfully launch, Facebook added another update in which users profiles were public by default, and could be searched by anyone.

The Problem: Behavior tracking and making private profiles public violates privacy. In 2012 Facebook settled with the FTC, implementing a privacy policy which a) asks users permission before broadly sharing their information and b)enforces third-party privacy audits for a duration of 20-years. The regular audits were put into effect to prevent Facebook’s habit of “share first, ask later”.

2013: 6 million Facebook users had their contact information, including phone numbers and emails, inadvertently exposed. Even non-Facebook users had their contact information exposed if it had been listed in their friends’ contact information.

Facebook issued an explanation; they experienced a bug that led to the data breach. Here is a snippet of their response: “It’s likely that anyone who saw this is not a stranger to you.”

The Problem: Users did not know that Facebook inadvertently stored contact information they shared with other websites. More importantly though, once the mistake happened, the response was remarkably pragmatic and unapologetic.

To take a page from Elon Musk’s recent tweet about Tesla errors. “Yes, excessive automation at Tesla was a mistake. To be precise, my mistake. Humans are underrated.” Or in the case of Facebook, excessive innovation without consideration is a mistake. Empathy is underrated.

2016: Facebook miscalculated performance metrics of the videos published on their platform, inflating the average amount of time videos were viewed.

Facebook Advertising dollar graph

https://techcrunch.com/2018/04/25/facebook-q1-2018-earnings/

The Problem: In 2015, Facebook announced that they made-up 19% of the $70 billion mobile advertising spend worldwide. This means 19% of the market reviewed inflated metrics, resulting in skewed analytics, decision-making, and ad-spends.

2017: Facebook discovered tens of thousands of fake accounts created on their platform. Facebook introduced a news feed for publishers, but through this feed viral fake news spread faster than real news. Facebook sold users data, without consent, to the political data firm Cambridge Analytica, which was then used to create targeted political ads.

Whoa. 2017 is one big problem year.

Problem #1: Fake People. Facebook deletes tens of thousands fake accounts that were inflating the number of “likes” on news outlets. This was determined during the run-up national elections in France and Germany.

Similarly, in the US, Facebook nixes millions of fake “likes” and followers that targeted news outlets. USA Today alone lost nearly six million overnight. The FBI is now involved in identifying the source of fake accounts, and the spam purpose behind these accounts.

Problem #2: Fake News. Facebook rolls out a new feature; publishing news stories. The sources though are not vetted – fake election news stories outperformed real ones. Many of the viral fake election stories were run out of Russia.

Facebook revealed that during the U.S. presidential campaign, it unwittingly sold about $100,000 of ads to fake accounts linked to Russia. The ads were estimated to have reached as many as 126 million people. In response, Facebook rolled out a tool to allow users to check who’s behind the ads.

Facebook fake news line graph

Problem #3: Cambridge Analytica acquired data on 50 million Facebook members. The data was subsequently used to develop “psychographic” profiles, and create targeted political campaigns, which were used in the U.S. presidential campaign.

In the acquisition of detailed data by Cambridge Analytica, privacy policies are once again violated.  Facebook did not properly vet the data deal and the integrity of their new partner company.

In sum, the leadership and technology mistakes made by a young company were never corrected, and so, the molehill grew into the mountain. Now, Facebook is on trial for what can be summed as astronomical negligence at the cost of users privacy, advertisers dollars, and national elections.

Taking the entrepreneurial perspective – course correcting internal processes while simultaneously scaling new technology from startup to unicorn, well, that is a hefty challenge. Therefore, the biggest takeaway for entrepreneurs is simple: do not wait until unicorn status; learn and improve as you go so that challenges and changes are surmountable. Build your company with the most important foundation of all, integrity.

For Facebook, this means the lessons they should have learned are to invite users to have a say in major upgrades/platform changes, create internal checks and balances, vet partner companies, and act with integrity. 

Here’s the Workville commitment to our coworking members:

  1. Major updates and upgrades are member-approved. We run big decisions by our members first.

In the example of Facebook, surely someone would have said “bad idea” if they had run Beacon tracking by anyone outside of their internal team.

  1. Integrity is more important than the rush to market.

Facebook was a young company when they introduced Beacon technology. Rather than learning from the mistake though, they did it again. Introducing the “like” button across sites was a similar violation of member privacy. This rush to market, aka do first and ask later,  exploits implicit trust between customers and company.

3. Act with empathy. This is a big one for Workville.

We add improvements to the member experience by first asking what they want, and then backing into the “how can we make this happen”.

Data guides decisions, but we also take the time to listen. Too much data creates a disconnect between what the member is actually feeling and why. Data can also be skewed by unreliable sources (or in the extreme version of Facebook – skewed, unqualified, and even fake sources.)

With the launch of OpenId Facebook had the capability to make private profiles public, but that doesn’t mean anyone liked it or wanted it.

Mistakes happen, but what happens next is character defining. For us, it’s important to acknowledge, apologize, and course correct.

In Facebook’s case in which 60 million phone numbers being inadvertently revealed, a proper apology is due. Saks Fifth Avenue exemplifies how to act on a proper apology when a mistake does happen.

4. Commitment to the member experience.

This means we vet every partner company to ensure they align with the Workville mission.

Every decision remains steadfastly centered around our goal of creating a happy, productive, workspace for New York City’s thought leaders.

Email info@workvillenyc.com to learn more about Workville’s commitment to their members.

Workville NYC Coworking Space entpreneurs

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