In a typical Silicon Valley speed, Facebook coverage moved from being all glamorous to more realistic coverage that focuses on the challenges ahead. It looks as if the company has matured in a matter of weeks and now needs to deal with the real world problems and not only with the hype.Seth Godin compared Facebook with good old Hotmail. He foresees similar monetization challenges for Facebook, since they never developed a permission asset and a real relationship with their customers. (It is amazing to see that the question of how to monetize a free service is still open, more than 10 years after Hotmail was launched.)
Alas, I am not going to discuss monetization today. I think Facebook has another big challenge for long-term sustainability (and they have $15B to sustain…): it does not solve any real problem for its customer base.Hotmail was the first web based mail application that offered people with private mail, not monitored by their employers, and transferable when moving from jobs or Internet providers. Others enjoyed the anonymity of the service, and travelers liked the access from anywhere. Simply put, Hotmail founders, Jack Smith and Sabeer Bhatia, discovered a problem and knew how to solve it. This is how almost any successful product was born. It is true that they didn’t come with a clear monetization strategy for the service, but let’s give them a break: they were first in the free web based services industry.
Facebook, on the other hand, is not really solving any major problem: it is nice to have. It is a lot of fun, but you cannot define its service in terms of pain and a solution to it, which is the base for long-term success. I am not trying to argue with the social network cult—I have a Facebook profile, but if it’s taken away from me, nothing will happen. Fewer people will poke me or send cows at my direction (my dear friends, if you think of me, call me or send me an email. I really don’t know what to do with the pokes…). Take LinkedIn from me and I will be devastated. I really use it to solve the problem of managing current contacts and creating new ones with people I want to meet.
Some lucky people are successful with products that are just fun and sexy and don’t necessarily solve any major customer problem. These people are called Steve Jobs and they make iPhones. Unfortunately, the rest of us need to think hard about which market segment we are targeting and what is the pain this target is facing. If you can figure out a real pain, you are half-way to a winning product.
Update 11/8/07: Was flipping through Forbes and found this great quote from Daniel Lyons: “Facebook is a corporate version of Paris Hilton- a company that’s famous for being famous…”
Part 2: Facebook, Market Segmentation And a Discussion Mark Zuckerberg Never Had
The answer: The problem that Facebook does solve
Gadi Shamia
Gadi Shamia 
Businesses don’t *just* exist to solve problems – they exist to either solve problems or make people feel good. Facebook makes people feel good. That’s why it’s popular.
very true indeed… It is just much easier to sustain a success if you have a problem to solve. Fads can change. Pains are more stable…
“Take LinkedIn from me and I will be devastated. I really use it to solve the problem of managing current contacts and creating new ones with people I want to meet.”
Uh … as a user and a fan of both … perhaps you are too far removed … or maybe we are both too old 😉 … I see Facebook now starting to do the same …
The problem is that people are lonely and Facebook helps solve that, with potential dates, connecting to friends, and being distracted by updates about people. Loneliness is a huge problem that they’re helping solve.
I can relate to loneliness as a problem. Makes much sense. I guess I do belong to the generation that solved loneliness by meeting people and not by sending a super poke…
Facebooks first investor was a front company for the Central Intelligence Agency. Imagine how the 50,000,000+ users will feel when they start to realize all of their relationships are known and monitored by the CIA. One of the primary investors of facebook has ties to the CIA. Google searching the references will give you multiple verifiable sources for the information. Oops, too late. They have all your contacts. 😀
Very probably “if you are figuring out a real pain” before launching a product, you are going to launch a painful product too, it seems obvious to me. Anyway i also enjoy facebook with friends and i dont care about the time it is going to last 🙂
I enjoy facebook not because of loneliness, i already did this experiment to test myself and i am able not to login for some days without feeling lonely. Feeling not alone canno be related to the computer if you know how to enjou your self also without other people, just sucking satisfaction from the resources you have inside. this is teh only long term relationship i can be sure of 🙂
Finally I am happy someone admits Facebook has a Problem 🙂
http://www.recruitingwire.com
Facebook is a social utility. People use Facebook to keep up with friends. And THAT’S the real problem they are solving, and yes, it’s worth $15 billion any day of the week.
Gadi and I are good friends, and I really like his company. Yet, the last time we talked was 2 months ago. The pain point here is the effort it takes to keep in touch. Unless I pro-actively call Gadi to have a cup of coffee, or he e-mails me photographs from his latest trip or whatever, we will not be in touch. But if I see that Gadi just watched this film I also love, or he’s now in Paris where I’ll be in two days, etc. when I look at the social stream of activities of my friends (i.e. NewsFeed) in Facebook, that creates engagement. And that’s a very powerful construct.
Facebook has a brilliant model of the social graph that already exists. It is famous for being famous, but there is a reason why it’s famous to begin with. And it’s here to stay.
I sure need to write more on Facebook. So many opinions… I am writing a new post about using all the wisdom I gained from your comments. Stay tuned…
[…] I actually didn’t plan to write about Facebook any more. In my recent post I claimed that Facebook is not solving any real problem. My readers were kind enough to prove me wrong… Jason thought we were just too old, and Jose […]
I agree with the Pain vs. Fad point of view, and I think both type of business can succeed.
I do think that the chances of succeeding is higher in the pain solving business – because solving pain is the common denominator. Look at it from the Maslow’s Hierarchy of Needs perspective – you’ve got to feed yourself and put a roof over your head first before you can even think about “connecting” to other people.
So – the segmentation of Pain vs. Fad can actually be based on the hierarchy of needs. As in any strategy – one have to make a choice of the target segment – and do the best to address the needs.
[…] actually didn’t plan to write about Facebook any more. In my recent post I claimed that Facebook is not solving any real problem. My readers were kind enough to prove me wrong … Jason thought we were just too old, and Jose […]
[…] Which Problem Is Facebook Solving? made it to the third place, but won the comment war with 14 comments posted. […]
Businesses exist to make money. That’s the answer.
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[…] segmentation, social graph, social networks | More than a year ago I spent time thinking about Facebook and the problem it solves. Back then, Facebook was growing in a staggering speed, adding 1 million users every week. This […]
On the surface it may not seem like Facebook is solving a major problem. But if you take a step back and look at modern society at a whole, Facebook is actually “solving” a humongous problem.
We’re a discontent society, and most of us are not fulfilled in our lives, relationships, jobs, etc. We live in huge cities and isolation is a huge issue. A lot of us don’t feel in control of our lives: our jobs, our financial situation, our relationships, our bodies, our goals. What to do?
Some turn to alcohol (a lot actually). Some turn to drugs. Other turn to video games, and entertainment. This is where Facebook fits in. It’s actually a very weak “solution”, but it’s a drug for modern society. To satisfy their discontent and lack of fulfillment. To give them a false sense of community and social binding. If Facebook didn’t exist, more people would go to bars instead. We turn to Facebook to address these psychological urges. We want to feel special and feel like we’re a part of something bigger than ourselves. When we see others posting status messages, it satisfies that part of ourselves. When someone comments on our updates, it satisfies the need to feel special. When we play a Facebook game, it satisfies the need for fulfillment and accomplishment.
It’s not a typical problem like “doing taxes”, or “losing weight”, but it’s a chronic problem in modern society.
facebook is biggest address book in the world.