SXSW Mark Zuckerberg Keynote

Greetings all from SXSW! It’s been an incredibly busy and physically taxing few days (with little hotel internet and no real opportunities to sit down and edit posts), so you’re seeing yesterday’s keynote today (and numerous other posts to be put on this blog in the upcoming days). Here we go with the highly-talked-about keynote presentation at South by Southwest…

Just like an Apple keynote, they tried to build up some serious momentum for this event. In fact, before Mark Zuckerberg of Facebook came out into the open, they dimmed the lights, pumped up the volume, and introduced Mark with some catchy Daft Punk tunes.

This keynote has been heavily discussed, mostly criticizing BusinessWeek editor and interviewer Sarah Lacy’s approach toward the interview. Personally, having sat next to Daniel Terdiman of CNet, I heard (and understand) both perspectives after having liveblogged the entire event. Particularly, for me, Mark Zuckerberg’s responses were lacking of any substance and felt too “corporate.”? Brian Solis has written a very good piece on Sarah after spending hours speaking with her about the backlash.

(Photo credit: Brian Solis)

Here’s the edited version of the interview from a neutral perspective.

Sarah Lacy: Facebook is playing a strong role throughout the world. Tell us about how it has evolved.
Mark Zuckerberg: It’s a great first place to start. A lot of the focus as of late is how we as a company has grown. Facebook helps people connect and communicate more efficiently. For individuals, Facebook helps to build more trusting and empathetic relationships and builds upon their lives. One example of this is that we just launched internationally: Facebook was always available for people to use but only in English. On February 11, we launched in Spanish. (Sarah Lacy interjects: Let’s hear it for Spain!) One of the countries that has benefited from this is Colombia. When we launched in February 11th, a lot of people signed up to use it to revolt against the guerrilla army in Colombia.

Lacy: Let’s talk about that: the original vision and original mission of the site. Did you ever expect them to revolt against the government of Colombia?
Zuckerberg: Well…no. If we can help people communicate efficiently, that will have profound effects. That’s a really important thing as the world becomes an increasingly complex place. As you add all those connections, you can make a profound impact on the world.

Lacy: What is it about Facebook though? The Internet as a whole enables communication, so why Facebook?
Zuckerberg: The internet is a great platform for overall communication, but there need to be specific tools. We’re not the only ones [enabling such communication] but a lot of people are using our tools, especially in places like Colombia. We’re not trying to build new communities; we’re allowing people to communicate with people they already know.

Lacy: You were telling me a story about Facebook and terrorism. Can you talk about how efficient the platform is for this? It’s surreal to think about these stories.
Zuckerberg: A few months ago, I heard this story that’s unbelievable. Facebook has a large population in Lebanon. At this point, people who have studied terrorism enough know it’s not out of a deep hatred of anyone; it comes from a lack of connectedness, a lack of communication, a lack of empathy, and a lack of understanding. There were youths in Lebanon who have spent a lot of time with their local religious leaders because their leaders educate them and provide the youths with free services such as food and shelter. They are also like regular youths: they do things on Friday night like we do in the western world, such as going out for food and meeting girls. Because of Facebook, these people were able to maintain connections with their friends who have gone to Europe and other places, which enabled them to broaden their horizons and increase the options [and choices] that they had. It gave them a broader perspective of what is happening in the world. These people are currently at a crossroads in their lives and are deciding what they want to do with themselves, and Facebook is helping them choose. We’re not the only ones who do this but we’re definitely helping them communicate.

Lacy: Beyond just enabling it, are there things you are doing to proactively do things in the world? As a company?
Zuckerberg: As a mission, it is a very important thing for us: to help people communicate efficiently.

Sarah tells the story about how Mark Zuckerberg was on 60 minutes and how Mark hasn’t been giving great answers. Eventually, she asked, “tell us in two words what you feel about this interview.” Zuckerberg answered, “that’s really hard.” And the response? “Okay, three words.”

Zuckerberg: So what was the question again?
Lacy repeats her question and Mark continues: There are a lot of really big issues in the world that need to be solved. We’re trying to build an infrastructure to solve these problems.

He talks of a group on Facebook that has a goal to build an organization that has enough political clout to achieve ends to end poverty. He heard a story where there was a bill that was being voted on. There were people protesting everywhere. Within a week, the senator behind the bill realized that he got it wrong. With all the protests, the senator realized that the people behind the different organizational efforts really were against the bill. The thing that was most striking to Mark about this is that he realized that Facebook can help out. He asks, “why does there need to be a big organization that channels people’s voices? We’re at a day and age where people should be able to communicate without millions of dollars. The world is increasingly complex. There are a ton of issues out there and the US is not necessarily in the same position it was before where they can tell other people what they should be doing, so there needs to be a solid base for people to communicate. We need to have a base that works from bottom up” with people who build applications. I think that’s a really important trend in the world. We’re not running around with a ton of money but we’re trying to build the infrastructure where people can communicate and do these things.

Lacy: When you compare Web 1.0 and Web 2.0, I think that fewer companies are as successful in the Web 2.0 world, but those who are have a tremendous impact. I think that’s why people are addicted to the site.

Lacy: Well, you’ve touched on international — I heard you were launching France tonight —
Mark: Yeah! Way to get that news before me! [Audience reaction: mixed reviews] Yes, we’re launching in French tonight. [And now everyone cheers]

Lacy: A lot of web companies have a hard time scaling internationally. You guys seem to have navigated it better than others. Why do you think that is?
Zuckerberg: We’re tapping into a universal need. Even from the beginning when I launched Facebook in Harvard, a lot of people thought it was a college thing, but we’re always helping people connect. I think that this or something like it — perhaps Facebook, perhaps not — will connect every single person in this way.

Lacy: You’ve created a great innovation. What about the ad deal you currently have with Microsoft? Google and Microsoft are going after social networks and some people feel aren’t monetizable. Do they feel they’re getting their money’s worth (especially because sites like Digg and MySpace may not be)?
Zuckerberg: Let’s talk about what we do at the company. Our mission is connecting people. In terms of the Microsoft relationship, we want the way people make money to be in line with the way people use the site. People always list their favorite music, favorite movies, and things they’re into, and a lot of that is very commercial. That’s fine; people are expressing their identities. If we give people enough information, that’s a significant overlap with the way we think we’re going to make money on the site.

Someone from the audience yells out “Beacon sucks.” (“We’ll get to that,” Sarah says.)
Lacy: There’s a sense that you have this immediate revenue from Microsoft but people think that’s not sustainable and it’s not profitable.
Zuckerberg: I’m sure Microsoft is pretty happy with it. We’re a private company so we’re not sharing but it’s going well for both of us.
Lacy: The world of advertising is changing.
Zuckerberg: It’s part of a larger trend. It’s basically people endorsing things.

Lacy: Have you figured out how this endorsing thing works?
Zuckerberg: We probably got a little ahead of ourselves and thought we understood more about it than we actually did, but I think in general, the theme holds. We think that the way that people share things is the way we want to build upon.

Lacy: You view this as a social graph and you see this as a multi-decade process.
Zuckerberg: Correct. We see this as a long term process. A lot of people are playing an instrumental role here and it takes time.

Lacy: Let’s talk about Beacon. WTF?
Zuckerberg: …
Lacy: Tell us about it. Let’s all have an open mind and listen.
Zuckerberg: In our company, Beacon isn’t part of the ad team. It’s part of our platform team. There’s a trend that these social networks or social services have moved from monolithic sites to a collection of social services. Some are ones we’ve developed, such as the News Feed, Profiles and Inbox, but a lot of services are things that we’re not developing. We know our DNA isn’t set to develop everything and a lot of people out there are more talented. An increasing number of social sites like Facebook are building platforms that allow other people to build services upon them. Similarly, a lot of people are building things outside Facebook.com. We can push information to our friends and that’s an increasing part of the ecosystem. Beacon is the first step in letting people take action in other parts of the web and sharing them back with their friends on Facebook. Our ad system was intended to fit very organically with things on the site. It’s trusted and you care about it because your friends are endorsing it. If your friends communicate it, you trust it. The first iteration of Beacon was intended to do that outside Facebook. We made a lot of mistakes when we did that and we’re trying to fix that. We’re learning as a company.

Lacy: It’s interesting that you compare the News Feed and Beacon. At the time, the News Feed situation threatened the company more than Beacon. There was a lot more uproar over the news feed from more users than there was with Beacon and it was primarily a concern about privacy. Is there something about a bigger vision of where things are going that addresses this concern of privacy?
Zuckerberg: We need to give people complete control over the information that they have. That enables more sharing. Twenty to twenty five percent of people have their cell phone number shared on Facebook at this time. The reason why they do that is because they have opted to share this only with their friends. Granular control over their information allows for this connection to take place. The more control users have, the more information people will prefer to share and the more we’ll be able to achieve our goals. All the times we’ve made mistakes, we haven’t given them control (“or you haven’t communicated it” — Sarah).

Lacy: When you opened the Facebook developer platform, you grew in membership but a lot of people considered all these apps frivolous. What do you think about this? Are we going to see real substance?
Mark: There are pretty big changes underway. We believe that people are fundamentally good and aren’t trying to game the system inherently. The applications you get are inherent of the product system we’ve set up. You can add the box to the profile and choose to distribute it, etc. You as a user have up until a point to utilize this without being spammy. These systems are all about trust. We have made the system work in such a way that when you send requests, the more your friends accept particular requests, the more requests you’re able to send. If people like your feed items, your feed items will appear more frequently on other people’s feeds. Those feed items people like get pushed to other users. It’s a trust based system.

Lacy:Is that a fine line in keeping the system very open?
Zuckerberg: In one way, it means less rules from us directly. The community can determine if something is being too aggressive.

Lacy: Talk about the rumors that you’re launching an iTunes with record labels. What’s going on?
Mark: I don’t know. We talked to a lot of companies all the time. Right now, there are music applications on Facebook, and music has been a vertical that we haven’t gone after at all. Facebook internally has developed photo applications and video applications, but not music applications. Once we opened the developer platform, there were music applications that filled that void, like iLike. At this point, I don’t think we have anything to talk about.

Lacy: Is that something appealing to you though?
Zuckerberg: We’re first and foremost trying to build this base. We want to enable communication so that we can build applications ourselves and then we build a developer platform that enables our users to build other applications for that goal.

At this point, Sarah thought there was time running out (but there really is 30 minutes left)…

Zuckerberg: You mean you’re out of questions?
Lacy: I was at a Hackathon at Facebook and the place was disgusting. There were Wii bongos all over the place and it was like a tornado had come through. Mark was half asleep and I kept him out for 6 hours.
(In other words, she has plenty of questions.)

Lacy: Respond to this: you’re the youngest billionaire according to Forbes.
Zuckerberg: We’re not really thinking about that. We’re not focused on financial information. Internally, the company is all about the themes about communication, our developer platform, and how we can best map out friends. We just want to go and build a business. That lets us attract the people that enables us to reach our goals.

Lacy: Does having a valuation like that bring forth a negative? More people want to work at Facebook and you have to live up to a high bar?
Zuckerberg: It’s tough, but it adds a lot of positive things. The recruiting is important to us though, as we consider people who are aligned with our core mission. Having such a focus on money in the business has been tough because it has self-selected people who care too much about that. We’re not planning on going public anytime soon because we don’t want people to want to make money very quickly. I think we want to do well and build a good business. We value that we are worth to be aligned with the value we provide to our users.

Lacy: That’s what we talked about in the beginning. The core of it is community building and without that, nothing wouldn’t be happening.
Zuckerberg: Right.

Lacy: For such a long time until the Microsoft deal, IPO was a topic of conversation. Maybe you want a valuation because it kind of closes the door on that speculation. Is that a side benefit?
Zuckerberg: We’re not making a lot of decisions based on [financial decisions].
Lacy: But it throws it down the gauntlet.
Zuckerberg: It’s really not about the value. It’s not that we don’t want to do IPO; we’re just not focused on it. Some companies have that as a goal, but for us, that’s not what we’re trying to go for. There was a similar thing in 2006 when Yahoo was going to buy the company. They were offering $1 billion, which is a lot. We were thinking that perhaps the company can grow to be worth more than that. We used that opportunity to really give people the opportunity to connect. How many times do people have the chance to do that? Zero or one. That’s how we’re thinking about it.

Lacy: Jim Breyer, who is on the Facebook board of directors, realized you were an entrepreneur who ran your business with your gut feeling, your heart, and with sheer analytical thinking, and when you weighed on the IPO from both perspectives, you said it was a bad deal.
Zuckerberg: Okay.
Lacy: Well what do you think about that statement?
Zuckerberg: A lot of people didn’t want to [go ahead with IPO].
Lacy: Really?
Zuckerberg: Yeah.
Lacy: That’s not he word on the street.
Zuckerberg: Yeah, we made some management changes. [The audience murmurs at this response.] Lacy: You know what you’re good. If you don’t like people, they don’t stick around.
Zuckerberg: We really rely on the people on our team. There are expectations from us and from our staff in terms of what people want to get out of it. With the Yahoo thing, there were a lot of people who joined who wanted to have the company bought for $1 billion, because they would have made a lot of money right then and there. There were others who didn’t care for that.
Lacy: I think it’s good that you remove people who don’t see in line with your vision.

Lacy: Let’s talk about Sheryl Sandberg, the person that you just hired from Google. What do you think about bringing a grown up into the mix?
Zuckerberg: It was a group decision, really. We were looking for someone to scale our operations, as we now have over 500 employees. The company is growing really quickly. It’s incredibly important for us.

Lacy: What do you think about having a woman in this environment? After all, this is a male dominated field.
Zuckerberg: I think she has a good track record. I don’t think that will be an issue.

Lacy: You also recently put Matt Cohler in charge of Product Development. Can you elaborate?
Zuckerberg: He’s been here for nearly 4 years and he’s been in charge of a lot of operations in the company, including sales. This is a big step for us. We want to scale the company in an effective way. We have over 200,000 developers, so this step was necessary.
Lacy: It gives you more time to be CEO.
Zuckerberg: Cohler is going to bring more scale and organization to the business. It’s an interesting time for us.

Lacy: What about you staying CEO? Why do you want to be CEO? A lot of founders don’t want to be CEOs. Kevin Rose, for example, is not CEO of Digg. Do you feel that you want that level of control over what you build or is [being a CEO] something that you love?
Zuckerberg: I think the CEO sets the goal of the organization. For me, being in that role is a good way for me to make sure that the organization focuses on these goals in its product development, its communication and narrative, its privacy policies, its development platform, the advertiser system, and the operations — and that’s a really important thing. As the organization grows, we need people to keep their eyes on what’s important and that’s what I do.

Lacy: Everyone wants to write about Web 2.0 and they all use Facebook as an example. I think you’re distinct from the rest of the web 2.0 world. One way this is is that you consider yourself a tech company, not a media company, and you don’t leverage yourself as using one community.
Zuckerberg: Being a technology company is important for the culture of the company. We try to hire a leadership team that is largely technical. Our marketing director has a tech background. Our CFO has a technical background. It lets us be pervasive in our culture. We really believe that to reach our goals, we need to let other people build companies that can help them communicate. In terms of community, we think about it as a personal thing. The site is really serving as a utility to maintain relationships.

Lacy: Can I tell the people about the books?
Zuckerberg: Go for it.
Lacy: One thing a lot of people don’t know about Mark is that he has a lot of bound books that he uses to painstakingly write out his ideas for the site. You can actually see everything in these books about how the website is played out. [To Mark:] I find that fascinating that you’re a computer guy and you write this on paper and you’ve been working on this vision in this way all along. Right?
Zuckerberg: Sure.
Lacy: Well?
Zuckerberg: You have to ask questions.
Everyone starts applauding at this! (Here’s where it gets interesting.)
Lacy: Just to warn you, when I interviewed Michael Arrington once, I spilled a cup of cold water on him. At this, Zuckerberg takes away her cup of water and moves it to his side of the table.
Lacy: How much of that has been your original vision that you’ve seen in your books and how much has changed?
Zuckerberg: A lot of what I’ve written in those books have been broad ideas. The News Feed is a pretty good idea in theory, but for a lot of stuff that gets built, there are a lot of details. People look at the News Feed and think that it may have been good or bad. The same goes for the platform development. People chock most of it up to the original idea but the vast majority of what is currently on the site didn’t come from me writing in a book. It came from the team at Facebook who has been working for weeks and months. My job is to communicate and help people focus but I don’t want to downplay the fact that other people are doing all this work.
Lacy: You didn’t mention that you destroy the books.
Zuckerberg: Yes, I didn’t.
Lacy: He burns the books.
Zuckerberg: No I don’t! You made that up.
[An audience member shouts: Talk about something interesting!] Lacy: You have to realize that my job is a lot harder than you think!

Then the audience shouts “Q&A” and Sarah gives into mob rule and lets them ask questions.

Question: There’s a fundamental problem with the site right now. You have the information, but you can’t hold onto it.
Zuckerberg: We are aiming to give more people control. If we don’t succeed at control, it’s going to be an issue for us.

Question: You can’t even search within your messages and you can’t hold onto a post and tag it.
Zuckerberg: We’re working on these things, and they’re clearly very important to us. Facebook is relatively constrained as a company. Things take time for development. We’re working on it. We need to get there, so thank you for bringing it up.

Question: Do you think there are too many applications right now, like MySpace, and that you’ll have to block them?
Zuckerberg: I think the ideal format is one that lets people use the applications that they want to and not use the ones they don’t want.

Question: Other than really rough interviews, what do you think is the single biggest obstacle that Facebook faces?
Lacy: Has this been a really rough interview?
Questioner: I’m not asking you. I’m asking Mark!
Lacy: Someone send me a message about why it is that I suck so badly.
Zuckerberg: I think a lot of it is around building these systems and giving people control while also building an easy product that honors users’ privacy. We want the framework that enables people to share the info that they want. That’s a huge thing for us within the next year.
Follow-up question: Is this a concern related to security or reputation?
Zuckerberg: It’s really about privacy and trust. The most important thing is to give people control and build a framework for application sharing. If we can extend that to the application platform, it can be a really valuable thing.

Question: Is Google pissed that you are trapping so much information within Facebook?
ZuckerbergL I’m not trapping information. [pause] No, those guys are nice. In general, search is an important thing if you want to make information available to the whole world. With Facebook, your information is not completely private and it’s not completely public. You can give information to your friends or not. We think that it’s a different realm. Search and sharing semi-private information is a big trend and will play a big part in the next few years, but [us sharing information with search engines] is really not us.

Question: One of my frustrations with MySpace is that they like shoving TV shows and ads in front of me. You’ve talked a lot of about efficiency, but I can’t sort messages or save them. I can only keep them or delete them. In reality, email is a better option. When do you plan to fix this and why hasn’t it been prioritized?
Zuckerberg: We didn’t plan on being an email competitor. Messaging was initially set up to be a simple thing but people started using it more often than we expected and for other things. We didn’t focus on it because messaging was set up for that purpose initially. It’s something we want to fix in the future.

Lacy: Anything else you wanted to add?
Zuckerberg: I didn’t think [that the interview] was that painful. I think these are interesting trends to watch, and I’m glad that we got to talk about this stuff. We often find ourselves talking about this corporate stuff and the valuation of Facebook as a company and not stuff we care about. But we should understand the trends in the world and this is a conference to do that at because the attendees are engineers, artists, designers, and developers.

So, what are your thoughts?