Once upon a time there was Google. When it first started indexing the web, its meteoric rise wasn’t inevitable, coming as it did against predecessors like hotbot and excite, but there was enough to suggest it was the future. That future dawned six years later in August 2004 when the company listed on Nasdaq, raising $1.68 billion.
Around this time the young Mark Zuckerberg had started writing the code for Facebook. After being restricted for usage to various universities, Facebook was opened on 26 September 2006 to everyone with a valid e-mail address and above the age of 13. The Facebook wave swept all before it and in May this year the company raised $16 billion through its initial public offering.
The accelerated pace of change in technology, thanks to the Internet, has ensured a new winner every five-six years. The companies that populated Web 1.0 (Netscape, Yahoo, AOL, Google, Amazon and eBay) were followed by the social-themed ones post 2002. There was LinkedIn, and Groupon, but the runaway leader has been Facebook.
But now it seems this phase of the Web may well be over, too. It certainly looks like Facebook can only go one way and that is down. Following its dismal quarterly results, its stock price seems to be in free fall. The company has lost more than 40% of its value since its initial public offering (IPO). Bloomberg data shows that no other company among the largest IPOs on record has lost so much value so quickly.
What’s worse, users have started questioning the veracity of some of the company’s numbers. Limited Run, a website which develops software that allows bands and musicians to sell their own products, announced that it was deleting its Facebook page, saying “while testing their ad system, we noticed some very strange things. Facebook was charging us for clicks, yet we could only verify about 20% of them actually showing up on our site.” This would imply that the other 80% of its ad-clicks on Facebook came from “bots” or automated accounts. It was a finding that validated the experience of Rory Cellan-Jones, a BBC technology correspondent, who created a dummy company called VirtualBagel, for which he set up some ads on FB. At the end of 24 hours, the dummy company had earned more than 1,600 likes. By the end of the first week the number had doubled to nearly 3,000 people.
Coincidence perhaps. Except that Cellan-Jones noticed that most of these likes came from suspicious-looking profiles from 13-17 year old Egyptians , some with similar profile information and unlikely names like Ahmed Ronaldo from Cairo, who worked at Real Madrid, and had a profile consisting of nothing but pictures of Christiano Ronaldo. Equally interesting was what else he liked besides VirtualBagel—more than 3,000 pages, ranging from a retailer called Titchy Kitch London to Mr H Menswear to Pets World. (Full disclosure: LiveMint probably has its own share of similar ‘likers’.)
Such issues are raising questions about the efficacy of advertising on Facebook. Despite its vast numbers, there is a growing view that Facebook is a post office. So even if everyone in town comes there at some point, the post office itself may have very few revenue models. Perhaps Facebook became a cultural icon long before it became a company.
Time then for a new star?
There’s a glowing list of potential candidates, companies such as Twitter, Quora, Yelp, Foursquare, Dropbox, Spotify, etc. The most promising appears to be Pinterest which after its $100 million in funding from Japanese e-commerce giant Rakuten, is fast becoming one of the hottest startups to work for in Silicon Valley.
But none of these start-ups have the air of a big winner. As ever, the winner in the next phase will be in an area none of us can envisage at this point. Which is why I am willing to put my money on Google or rather Google 2.
Google isn’t an idea any more. It is a lab and a foundry rolled into one. Crucially, along with its various successes the company has had several products and services that have failed to take off. Google X, Google Catalog, the downloadable Web Accelerator, Video Player, Google Answers, Google Wave, Google Audio Ads, Dodgeball, Google Buzz, all products the company withdrew after a short or long run, point to a well-oiled pipeline. For all its failures, it has also had products that have changed the way we work and imbibe information. Google Docs, Maps, StreetView, YouTube are all successful products in Google’s stable. With an earned war-chest it has the freedom to keep on trying till it comes up with the next AdWords.
That could be self-driving cars which hardly seem as outrageous an idea today as it did five years ago when Google first started chasing it. It could be its recently-launched tablet Nexus 7, demand for which is huge. The Google caravan keeps rolling. Last week the company announced Google Fiber, its new ultra-fast internet service which will soon become available to residents in Kansas City and provide them with either regular-speed Internet at no monthly cost or paid 1 Gigabit/second Internet, which will come with 1 TB (1024 Gigabytes) of Google Cloud storage. With its future based around the cloud, many of the company’s products will perforce focus on improving people’s Internet connectivity.
Recently Google also gave a glimpse of its vision of the future of computers, demonstrating in public Project Glass, its so-called Google Glasses, for the first time. The glasses project digital information right in front of your eyes.
Google’s transformation from a nerdy start up to a well-run corporate entity which rewards all stake holders equally is at the heart of its success. Powered by research and not gut feel alone, it is constantly pushing the boundaries of technology to address real needs whether it is in search or in transportation. It’s also the reason why it may be the winner circa Web 3.0.