Facebook Has an Innovation Problem, Even @Work
Mark Zuckerberg has a knack for identifying threats to Facebook and warding them off with a strategic acquisition. He snapped up the photo-sharing service Instagram and the developing world’s most popular messaging app, WhatsApp, for huge sums to keep those popular, mobile-first products from hurting the mammoth social network he founded.
But he’s been less adept at developing his own killer products that take advantage of hot new trends. When he couldn’t buy Snapchat for billions of dollars, his internal teams came up with a rival disappearing-message app called Slingshot. The service is similar, save for the fact that you can’t open a message until you send one back. The premise was overly complicated and the app basically fizzled when people decided that they didn’t always want to have to send an inane message just to get a bit of ephemera. Facebook’s efforts to work with mobile developers also floundered until the company acquired a startup called Parse. Paper, the company’s Flipboard-like product, has gotten some traction but still isn't an important Facebook asset.
That’s why I’m curious to see what happens with Facebook@Work, the company’s attempt to make a tool for messaging and collaboration. The Financial Times broke the news Sunday that it’s still testing the product, but it’s clearly a response to hot startups like Slack, as well as widely used corporate collaboration and messaging tools like Microsoft’s Yammer, HipChat and Cisco Jabber. It could also compete with Google Docs, while the ability to curate groups of business contacts, separate from “friends,” could make it a LinkedIn competitor too.
There’s no way to say whether a not-yet-launched product will succeed, but there’s no mystery as to why Facebook is targeting the enterprise. Facebook, for all of its reach, hasn’t found a way to reliably monetize Internet traffic beyond its own core products.
Google, on the other hand, is (for now) the indispensible tool that people use to search the Web. Its share of the online ad market reflects its pole position. The Google office suite gives it entree to enterprise users, who tend to be very sticky because they build corporate processes on top of that software and they don't like to regularly switch vendors. That’s one of the reasons why Slack just raised more money at a billion-dollar-plus valuation and why Microsoft felt that it had to own the corporate collaboration tool Yammer.
Guess which social network is harvesting the most value per user? LinkedIn. Its average revenue per user is $3.33, while Facebook’s is just $1.13, according to the Wall Street Journal. LinkedIn may not have the broad appeal of a Google, but its niche network provides is home to a lot of white-collar users who in and of themselves are valuable -- so much so that people will even pay to be a part of it. That valuable, difficult-to-reproduce community is one of the reasons that LinkedIn has made headway in China, a place where a social network like Facebook is easy to copy, but LinkedIn’s web of professional connections can’t be replicated.
Facebook@Work seems like a much harder product to get right than, say, a Snapchat copycat or the Paper app. “To fully compete in the enterprise requires deep and complex capabilities that aren't required in a consumer offering," Forrester analyst Rob Koplowitz said in an e-mail blast to reporters about the Facebook@Work announcement. "It can also be a tough, low margin business where cost of sales can be high.”
Whatever the fate of Facebook@Work, it shows how anxious Facebook is to monetize or control parts of the Internet where it currently lags, and how difficult that challenge is likely to be.
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