Facebook has nothing to fear, except itself

Every startup wants to be the next Facebook, every founder, the next Zuckerberg and every angel investor, the next Peter Thiel. It’s easy to see why. Facebook has more than 800 million users, nearly a decade of amazing growth and it just filed the biggest Valley IPO in a decade.

Facebook is selling investors on the dream that the company is just getting started — not only with selling ad space on its current product, but in creating nearly an entirely new Internet, one where Facebook doesn’t simply create connections between sites and people but creates many different social products too.

This ambitious goal creates an interesting dichotomy. Although every hot startup wants to be the next Facebook, Facebook needs to be every hot startup as well. To execute its vision of total web dominance, Facebook is recreating and competing with nearly every significant Internet product of the last few years. It’s an unprecedented pivot that threatens Facebook’s core products and may eventually benefit the very same startups Facebook is trying to crush.

Back in the Day

For the first five years or so, Facebook helped users do three simple things: share photographs, status updates and links with friends. But somewhere along the line Facebook recognized two important facts:

1. If it was going to be worth tens of billions of dollars, it needed to attract hundreds of millions of eyes to the site every day. To do this, it needed to be a portal for every type of content, or better yet, the shell for all consumption of that content. In other words, they needed to become the entire Web.

2. New companies, like Twitter and Instagram, were creating compelling social products that not only challenged Facebook’s dominance but threatened to steal users’ time away from Facebook.

If Facebook was going to be more than a destination for sharing updates with friends and family, it had to move fast. And it did.

Unparalleled Ambition

It’s hard not to respect Facebook for its relentless innovation and lightening fast product updates, as well as its fearlessness in pushing the limits of privacy, user experience and integration with the web as a whole to achieve its vision.

However, if you look at Facebook’s list of 22 (and growing) products– not to mention the thousands of third-party apps — you begin to wonder if Facebook is overreaching and confusing its members.

Over the last couple of years, consumers have been trending towards products with the opposite approach. Simple, stark, and direct sites and apps that do one thing very, very well. We open Instagram because we want to do one easy thing — share a great picture or see our friends pictures. It’s fun. It’s lightweight. It scratches an itch.

What itch is Facebook scratching? Most people I know can’t clearly articulate why they use Facebook. Now that we’ve reassembled our high school physics class, shared every song we listen to, and uploaded every cat video out there, our feeds (we now have two feeds!) have become cluttered news tickers without any focus or context.

Facebook’s expansions of services and connections don’t come with a backup plan. After Facebook realized that we don’t want to connect with close friends and casual acquaintances in the same way, what did the site do? They added yet another new feature so that we could segment the giant list of friends that they pushed us to assemble in the first place. Meanwhile, the easier option is to just declare Facebook bankruptcy and start over on another social network like Path.

That’s the real irony of Facebook’s recent moves. By copying the startups that threaten them, Facebook actually muddles members’ experience so much that it enhances the need for its competitors.

Here’s an incomplete list of companies Facebook is actively competing with:

Flickr/Picasa/Instagram (pictures)
YouTube/Vimeo (video)
~~Beluga/GroupMe (group messenger apps)~~
Foursquare (location sharing)
Twitter (activity feed)
Turntable.fm (shared listening)
vBulletin (groups)
News.me/Flipboard (frictionless social news/reading)
Tumblr/Pinterest/etc (share other people’s pictures)
AIM/GChat (chat)
Gmail, Yahoo Mail, Hotmail (Facebook Messenger)
About.me/Flavors.me (Timeline)
Google+, Path (create rings of friends/acquaintances)
Plancast (events)
Craigslist (classified listings)

Many of the hottest startups have easy to use, beautiful and elegant sites built around small but significant problems. Several, including Foursquare, Tumblr, Living Social and Groupon, have had astounding results even in the face of Facebook’s attempts to move into their spaces.

Does Facebook really believe it can implement every solution better than its competitors? Does it think its social graph is so much of an advantage that it can sustain a confused and complicated product?

A lot of VCs ask startups what they’ll do when Facebook copies their features. But come IPO time, maybe Facebook’s shareholders should start asking what happens when Facebook tries to do too much.

Edward Aten is the founder of Swift.fm, a social distribution service for musicians. He’s an active startup advisor, blogger and marathoner in San Francisco. Follow him on Twitter @edwardaten. The views expressed here are personal and do not necessarily reflect those of any Company with which he is or has been affiliated.

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