Does Facebook Can't Be Failed?

With more than 1 billion users, Facebook is the world’s largest social network. Founder Mark Zuckerberg started Facebook in 2004 while he was an undergraduate computer science student at Harvard University.After Facebook launched at Harvard on Feb. 4, 2004 the social network began expanding to other

college campuses. The Harvard Crimson, Harvard's paper of record and the first publication to write about Facebook, raised some doubts in its coverage of these early expansion efforts.

"Peter M. Strait, a first-year at Columbia, said he was skeptical about the site’s future success," The Crimson reported on March 1, 2004. "Columbia already has a similar webpage, the Columbia University (CU) Community, which has features unavailable on thefacebook.com, such as an online journal."

In the decade since, Facebook conquered campuses and then countries, but that didn't stop skeptics from questioning how much the social network can grow and whether other businesses will one day make it irrelevant.

In 2012, Eric Jackson, founder of Ironfire Capital, predicted Facebook would "disappear" in five to eight years "in the way Yahoo disappeared," because of the difficulty of adapting to mobile. In early 2013, a writer for The Guardian claimed

Facebook "will become a footnote in the history of the Internet," because of its "intrusive" monetization efforts.

Even after Facebook proved its mobile and monetization strategies were working and its stock started to rebound, one analyst still reassured Facebook was not in danger of going the way of MySpace and Friendster.

"Fretting about Facebook as the next MySpace will probably go the way of MySpace," Brian Wieser, a senior research analyst with Pivotal Research, wrote in a note to investors in July. "Facebook is fundamentally different."

Facebook is celebrating its 10th anniversary this week, a milestone many Internet companies never reach. The social network has 1.2 billion monthly active users, more than LinkedIn, Twitter and Google+ combined. It is quickly approaching one billion monthly active users on mobile. And its market cap recently hit $150 billionless than two years after going public, the fastest a company has ever reached that milestone.

So should Facebook finally be considered too big to fail? As always, it depends who you ask.

"Nothing is forever, especially in tech!

The bigger companies get, the easier it is to find a foothold," Max Salzberg, cofounder of Diaspora, wrote in an email. Diaspora was one of the more notable startups that attempted to take on Facebook. It had ahugely successful Kickstarter campaign in 2010, fueled by privacy complaints about Facebook, which generated tons of press, but ultimately struggled to get off the ground. The founders eventually focused on other projects.


Diaspora's inability to kill Facebook puts it in good company. College Tonight, a competitor that launched a year after Facebook and targeted the students that made up its core demographic at the time, quietly disappeared. Anybeat, founded by MySpace's former CTO, tried to take on Facebook by allowing the use of pseudonyms, shut down quickly; its founder went on to work on another Facebook competitor, Google+.

Google's social network has signed up hundreds of millions of users, but it remains small compared to Facebook and reports suggest engagement is low.

"Lots of people might fail," Salzberg wrote, "but eventually something is bound to stick, it is only a matter of time."

The biggest threat to Facebook today, at least based on press coverage, is something similar to what Jackson from Ironfire suggested in 2012: that Facebook would struggle to compete against mobile-first startups in the social space. You could argue Instagram was one such startup, but Facebook managed to acquire it. Now there's Snapchat and Line and Whisper and WeChat and WhatsApp and so many more. Facebook reportedly tried to acquire Snapchat for $3 billion, but even if that had worked out, it would still have to contend with the others.

Jeremy Liew, a partner at Lightspeed Venture Partners and an early investor in Snapchat and Whisper, told me in a previous interview that he believes these startups have the potential to reach "web scale," meaning more than 100 million users, but not necessarily to overtake Facebook.

"The mobile native social networks, like Snapchat, Instagram, Tinder and Whisper, are all more 'single purpose'," Liew wrote in an email at the time. "So I don't think that Whisper supplants Facebook, but I think it is going to be a web scale media property for sure."

Facebook, for its part, is clearly intent on minimizing the threat posed by these services, if not through acquisitions then through new products. Mark Zuckerberg, the company's cofounder and CEO, recently confirmed plans to release more standalone apps to target different use cases. The next day, Facebook unveiled a social news reader app called Paper.

"Being successful on mobile is different than being successful on desktop," says Shyam Patil, an analyst with Wedbush. Moving beyond the main Facebook app may make the social network more nimble at adapting to changes in the mobile space over the next decade. "You have to have these separate experiences where it makes sense."

Patil, like others we spoke with, doesn't put too much stock into the possibility of Facebook becoming irrelevant.

"They've become a part of the daily life for a lot of their users. It's hard to see them getting displaced by some upstart," he says. "Facebook has a good motor on its business, given its size and the network effects associated with the business.

"But never say 'never.'"

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