Meta and Mark Zuckerberg face a six-letter problem. Spell it out with me: T-i-k-T-o-k.
Yeah, TikTok, the short-form video app that has hoovered up a billion-plus users and become a Hot Thing in Tech, means trouble for Zuckerberg and his social networks. He admitted as much several times in a call with Wall Street analysts earlier this week about quarterly earnings, a briefing in which he sought to explain his apps’ plateauing growth—and an actual decline in Facebook’s daily users, the first such drop in the company’s 18-year history.
Zuckerberg has insisted a major part of his TikTok defense strategy is Reels, the TikTok clone—ahem, short-form video format—introduced on Instagram and Facebook and launched in August 2020.
If Zuckerberg believed in Reels’ long-term viability, he would take a real run at TikTok by pouring money into Reels and its creators. Lots and lots of money. Something approaching the kind spent by YouTube, which remains the most lucrative income source for social media celebrities. (Those creators produce content to draw in engaged users. The platforms sell ads to appear with the content—more creators, more content, more users, more potential ad revenue. It’s a virtous cycle.)
Now, here’s as good a time as any for a crash course in creator economics. For this, there’s no better guide than Hank Green, whose YouTube video on the subject recently went viral. His fame is most rooted there on YouTube, where he has nine channels run from his Montana home. His most popular channel is Crash Course (13.1 million subscribers—an enviable YouTube base), to which he posts education videos for kids about subjects like Black Americans in World War II and the Israeli-Palestinian conflict.
Like the savviest social media publishers, Green fully understands that YouTube offers the best avenue for making money. It shares 55% of all ad revenue earned on a video with its creator. “YouTube is good at selling advertisements: It’s been around a long time, and it’s getting better every year,” Green says. On YouTube, he earns around $2 per thousand views. (In all, YouTube distributed nearly $16 billion to creators last year.)
Green sports an expansive mindset, though, and he has accounts on TikTok, Instagram and Facebook, too. TikTok doesn’t come close to paying as well as YouTube: On TikTok, Green earns pennies per every thousand views.
Meta is already beginning to offer some payouts for Reels. Over the last month, Reels has finally amassed enough of an audience for Green’s videos to accumulate 16 million views and earn around 60 cents per thousand views. Many times over TikTok’s but still not enough to get Green to divert any substantial his focus to Reels, which has never managed to replicate TikTok’s zeitgeisty place in pop culture. (Tiktok “has deeper content, something fascinating and weird,” explains Green. Reels, however, is “very surface level. None of it is deeper,” he says.) Another factor weighing on Reels: Meta’s bad reputation. “Facebook has traditionally been the company that has been kind of worst at being a good partner to creators,” he says, citing in particular Facebook’s earlier pivot to long-form video that led to the demise of several promising media startups, like Mic and Mashable.
This is where Zuckerberg could use Meta’s thick profit margin (36%, better even than Alphabet’s) and fat cash pile ($48 billion) to shell out YouTube-style cash to users posting Reels, creating an obvious enticement to prioritize Reels over TikTok. Maybe even Reels over YouTube, which has launched its own TikTok competitor, Shorts.
Now, imagine how someone like Green might get more motivated to think about Meta if Reels’ number crept up to 80 cents or a dollar per thousand views. Or $1.50. Or a YouTube-worthy $2. Or higher still: YouTube earnings can climb over $5, double even for the most popular creators.
Meta has earmarked up to a $1 billion for these checks to creators, which sounds big until you remember the amount of capital Meta has available to it. (And think about the sum YouTube disburses.) Moreover, Meta has set a timeframe for dispensing those funds, saying last July it would continue through December 2022. Setting a timetable indicates that Meta could (will likely?) turn off the financing come next Christmas.
Zuckerberg has demonstrated a willingness to plunk down Everest-size mountains of money over many years for projects he does fully believe in. The most obvious example is the metaverse, the latest Zuckerberg pivot. Meta ran up a $10.1 billion bill on it last year to develop new augmented and virtual reality software and headsets and binge hire engineers. Costs are expected to grow in 2022. And unlike Reels, metaverse spending has no semblance of a time schedule; Wall Street has been told the splurge will continue for the foreseeable future. Overall, Meta’s view on the metaverse seems to be, We’ll spend as much as possible—for as long as it takes—for this to happen.
The same freewheeled mindset doesn’t seem to appply to Reels. But Zuckerberg knows he can’t let TikTok take over the short-form video space unopposed. Meta needs to hang onto the advertising revenue generated by Instagram and Facebook until it can make the metaverse materialize. (Instagram and Facebook, for perspective, generated 98% of Meta’s $118 billion revenue last year; sales of Meta’s VR headset, the Quest 2, accounted for the remaining 2%.) And advertising dollars will increasingly move to short-form video, following users’ increased demand for this type of content over the last several years.
Reality is, Zuckerberg has already admitted he doesn’t see Reels as a long-term solution to his T-i-k-T-o-k problem. If he did, he’d spend more on it and creators like Green than what the metaverse costs him over six weeks.
NewView Capital founder Ravi Viswanathan has worked with startups as a venture capitalist for more than two decades. He’s never seen the game change more than in its most recent stretch.
He rattles off some highlights (and some low ones): the sudden lockdown of early 2020; the host of new players who split off from known firms or launched first-time funds; the increased startup interest from hedge funds and public market specialists; the record dollars flowing in and the more recent pullback. “The last two or three years have been the most extraordinary,” Viswanathan says.
In the thick of it all, Viswanathan’s firm is hoping to profit through a less-common approach. Founded in 2018, the firm looks to build positions in startups by buying out other VC firms—either a portfolio of their equity holdings, or taking some or all of an investment à la carte. And Viswanathan has two new funds, worth a combined $544 million, in new capital to do it.
NewView’s pitch is simple: With startups taking longer to go public or exit, firms with strong paper returns face pressure to return some immediate cash to their own backers. And as investors switch firms, set up their own shingle or retire, some companies find themselves orphans, part-owned by firms where their lead supporter is long gone. “The first reaction is, ‘What is this?’” Viswanathan says. “Then as you go through it, they start embracing that it’s a way to reset the clock.”
Secondary transactions—the purchase of equity shares already issued to insiders or investors—are nothing new to Silicon Valley. Taking basket positions of a bunch of a firm’s companies, however, without simply buying the entire fund, is more of a twist. Viswanathan’s proof of concept came when the longtime partner at many-billions-in-assets firm NEA splintered off with a billion dollars’ worth of its holdings across 31 companies three-plus years ago, the lion’s share of a $1.35 billion fund that also made half a dozen direct investments in startups. NewView’s holdings now include unicorns such as Forter, MessageBird and Plaid, as well as 23andMe and Duolingo, which went public in 2021, and Segment, which was acquired in 2020 for $3.2 billion.
Unlike a traditional venture firm, which operates under the assumption that it won’t return capital from positions for seven or even ten years, NewView’s appearance partway anticipates time horizons of five or six years for its investments to exit. Its primary fund represents $244 million of the new capital, intended for primary startup investments, with a $300 million opportunities fund to make follow-on investments and build positions pieced together from multiple sellers. As a registered investment advisor, NewView has no caps on how it chooses to balance its portfolio. The firm will look to invest in about eight to ten deals per year.
The challenge, of course, is to find deals that provide Viswanathan and company with a venture-like upside—but that other firms are simultaneously willing to sell. Viswanathan says he has met with about 40 other firms in the past several years. “After one conversation, we can very quickly get a sense if this is more ‘I win, you lose,’ or if it’s really a win-win,” he says.
At 137 Ventures, a growth-stage venture firm that provides founders with loans in exchange for the option to convert their debt into equity, among other tactics, founder Justin Fishner-Wolfson says that the relationship-driven nature of venture capital provides impetus for such transactions to remain aboveboard. “Smart, good investors are going to want to make sure that everyone is happy with the outcome, because that matters in terms of their ability to operate in the future,” he says.
Both lawyers and investors close to the secondary market agree with Viswanathan that the structural pressures pushing a demand for such vehicles are real. Investors now raising funds more frequently, as fast as annually, might be multimillionaires on paper, but not yet have received any profits themselves, notes Ed Zimmerman, chair of the tech group at Lowenstein Sandler and an investor in underrepresented fund managers through First Close Partners. “There’s no better time to ask your LPs to re-up than once you’ve handed them a check.”
The pace of funds raising can also strain institutional investors who face allocating more capital than anticipated to venture funds, while their public equity positions take a haircut in the recently unforgiving market for tech stocks. At Industry Ventures, founder and longtime secondaries expert Hans Swildens says he’s only recently heard of limited partners asking funds to take some profits off the table, especially as the drumbeat of IPOs of 2021 appears to have slowed so far this year.
Pricing pressures could cut both ways, however. At EquityZen, founder Phil Haslett notes that individual holders in startups are now offering shares at 10% to 30% lower than what they were asking late last year. “VC firms aren’t in a mad rush to print a trade at 30% below where they’ve seen it,” he says.
Fund formation expert John Dado at Cooley is skeptical of the liquidity crunch. He notes that some firms working with his law firm are exploring the opposite: how to build in mechanisms not to need to deliver cash for even longer periods, such as 12 or even 20 years. But Dado does see value in firms finding homes for investments no longer close to their VC firms.
That’s ultimately NewView’s hope: that not only is secondary needed in the startup ecosystem, but that, given its VC credentials, it’ll be a comfortable option. (Others, like Industry Ventures, are still bigger—“This market is so big, you barely bump into people,” Swildens says.) NewView recently brought on another partner, NextWorld Cpaital and Scale Venture Partners veteran Ben Fu, joining Viswanathan and partner David Yoo. NewView has no women partners; two of its three partner-track investment principals, however, are women, according to Viswanathan.
At fraud prevention startup Forter, valued at $3 billion, cofounder Michael Reitblat has worked with Viswanathan, first at NEA and now at NewView. He says he still calls for help on a personal, in-depth level he might not with other investors on his cap table with larger portfolios to handle, such as Bessemer Venture Partners, Sequoia and Tiger Global. He points to NewView’s team of operating experts as another source of strength.
“There’s a lot of secondary funds, but they just buy equity,” Reitblat says. “If you actually want someone with more operating knowledge and experience and time, I think Ravi has that.”
Google took to Twitter this weekend to complain that iMessage is just too darn influential with today’s kids. The company was responding to a Wall Street Journal report detailing the lock-in and social pressure Apple’s walled garden is creating among US teens. iMessage brands texts from iPhone users with a blue background and gives them additional features, while texts from Android phones are shown in green and only have the base SMS feature set. According to the article, „Teens and college students said they dread the ostracism that comes with a green text. The social pressure is palpable, with some reporting being ostracized or singled out after switching away from iPhones.“ Google feels this is a problem.
„iMessage should not benefit from bullying,“ the official Android Twitter account wrote. „Texting should bring us together, and the solution exists. Let’s fix this as one industry.“ Google SVP Hiroshi Lockheimer chimed in, too, saying, „Apple’s iMessage lock-in is a documented strategy. Using peer pressure and bullying as a way to sell products is disingenuous for a company that has humanity and equity as a core part of its marketing. The standards exist today to fix this.“
The „solution“ Google is pushing here is RCS, or Rich Communication Services, a GSMA standard from 2008 that has slowly gained traction as an upgrade to SMS. RCS adds typing indicators, user presence, and better image sharing to carrier messaging. It is a 14-year-old carrier standard, though, so it lacks many of the features you would want from a modern messaging service, like end-to-end encryption and support for non-phone devices. Google tries to band-aid over the aging standard with its „Google Messaging“ client, but the result is a lot of clunky solutions that don’t add up to a good modern messaging service.
Since RCS replaces SMS, Google has been on a campaign to get the industry to make the upgrade. After years of protesting, the US carriers are all onboard, and there is some uptake among the international carriers, too. The biggest holdout is Apple, which only supports SMS through iMessage.
Apple hasn’t ever publicly shot down the idea of adding RCS to iMessage, but thanks to documents revealed in the Epic v. Apple case, we know the company views iMessage lock-in as a valuable weapon. Bringing RCS to iMessage and making communication easier with Android users would only help to weaken Apple’s walled garden, and the company has said it doesn’t want that.
In the US, iPhones are more popular with young adults than ever. As The Wall Street Journal notes, „Among US consumers, 40% use iPhones, but among those aged 18 to 24, more than 70% are iPhone users.“ It credits Apple’s lock-in with apps like iMessage for this success.
Reaping what you sow
Google clearly views iMessage’s popularity as a problem, and the company is hoping this public-shaming campaign will get Apple to change its mind on RCS. But Google giving other companies advice on a messaging strategy is a laughable idea since Google probably has the least credibility of any tech company when it comes to messaging services. If the company really wants to do something about iMessage, it should try competing with it.
As we recently detailed in a 25,000-word article, Google’s messaging history is one of constant product startups and shutdowns. Thanks to a lack of product focus or any kind of top-down mandate from Google’s CEO, no division is really „in charge“ of messaging. As a consequence, the company has released 13 half-hearted messaging products since iMessage launched in 2011. If Google wants to look to someone to blame for iMessage’s dominance, it should start with itself, since it has continually sabotaged and abandoned its own plans to make an iMessage competitor.
Messaging is important, and even if it isn’t directly monetizable, a dominant messaging app has real, tangible benefits for an ecosystem. The rest of the industry understood this years ago. Facebook paid $22 billion to buy WhatsApp in 2014 and took the app from 450 million users to 2 billion users. Along with Facebook Messenger, Facebook has two dominant messaging platforms today, especially internationally. Salesforce paid $27 billion for Slack in 2020, and Tencent’s WeChat, a Chinese messaging app, is pulling in 1.2 billion users and yearly revenues of $5.5 billion. Snapchat is up to a $67 billion market cap, and Telegram is getting $40 billion valuations from investors. Google keeps trying ideas in this market, but it never makes an investment that is anywhere close to the competition.
Google once had a functional competitor to iMessage called Google Hangouts. Circa 2015, Hangouts was a messaging powerhouse; in addition to the native Hangouts messaging, it also supported SMS and Google Voice messages. Hangouts did group video calls five years before Zoom blew up, and it had clients on Android, iOS, the web, Gmail, and every desktop OS via a Chrome extension.
As usual, though, Google lacked any kind of long-term plan or ability to commit to a single messaging strategy, and Hangouts only survived as the „everything“ messenger for a single year. By 2016, Google moved on to the next shiny messaging app and left Hangouts to rot.
Even if Google could magically roll out RCS everywhere, it’s a poor standard to build a messaging platform on because it is dependent on a carrier phone bill. It’s anti-Internet and can’t natively work on webpages, PCs, smartwatches, and tablets, because those things don’t have SIM cards. The carriers designed RCS, so RCS puts your carrier bill at the center of your online identity, even when free identification methods like email exist and work on more devices. Google is just promoting carrier lock-in as a solution to Apple lock-in.
Despite Google’s complaining about iMessage, the company seems to have learned nothing from its years of messaging failure. Today, Google messaging is the worst and most fragmented it has ever been. As of press time, the company runs eight separate messaging platforms, none of which talk to each other: there is Google Messages/RCS, which is being promoted today, but there’s also Google Chat/Hangouts, Google Voice, Google Photos Messages, Google Pay Messages, Google Maps Business Messages, Google Stadia Messages, and Google Assistant Messaging. Those last couple of apps aren’t primarily messaging apps but have all ended up rolling their own siloed messaging platform because no dominant Google system exists for them to plug into.
The situation is an incredible mess, and no single Google product is as good as Hangouts was in 2015. So while Google goes backward, it has resorted to asking other tech companies to please play nice with it while it continues to fumble through an incoherent messaging strategy.
Soon after 19-year-old Adele Lowitz gave up her AppleAAPL 0.51% iPhone 11 for an experimental go with an Android smartphone, a friend in her long-running texting group chimed in: “Who’s green?”
The reference to the color of group text messages—Android users turn Apple Inc.’s iMessage into green bubbles instead of blue—highlighted one of the challenges of her experiment. No longer did her group chats work seamlessly with other peers, almost all of whom used iPhones. FaceTime calls became more complicated and the University of Michigan sophomore’s phone didn’t show up in an app she used to find friends.
That pressure to be a part of the blue text group is the product of decisions by Apple executives starting years ago that have, with little fanfare, built iMessage into one of the world’s most widely used social networks and helped to cement the iPhone’s dominance among young smartphone users in the U.S.
How that happened came to light last year during Apple’s courtroom fight against “Fortnite” maker Epic Games Inc., which claimed the tech giant held an improper monopoly over distribution of apps onto the iPhone. As part of the battle, thousands of pages of internal records were made public. Some revealed a long-running debate about whether to offer iMessage on phones that run with Google’s Android operating system. Apple made a critical decision: Keep iMessage for Apple users only.
“In the absence of a strategy to become the primary messaging service for [the] bulk of cell phone users, I am concerned the iMessage on Android would simply serve to remove [an] obstacle to iPhone families giving their kids Android phones,” Craig Federighi, Apple’s chief software executive, said in a 2013 email. Three years later, then-marketing chief Phil Schiller made a similar case to Chief Executive Tim Cook in another email: “Moving iMessage to Android will hurt us more than help us,” he said. Another warning that year came from a former Apple executive who told his old colleagues in an email that “iMessage amounts to serious lock-in.”
When Adele Lowitz, left, experimented with using an Android smartphone instead of an iPhone, one friend asked: ‘Who’s green?’ PHOTO: STEVE KOSS FOR THE WALL STREET JOURNAL
When Adele Lowitz, left, experimented with using an Android smartphone instead of an iPhone, one friend asked: ‘Who’s green?’ PHOTO: STEVE KOSS FOR THE WALL STREET JOURNAL
From the beginning, Apple got creative in its protection of iMessage’s exclusivity. It didn’t ban the exchange of traditional text messages with Android users but instead branded those messages with a different color; when an Android user is part of a group chat, the iPhone users see green bubbles rather than blue. It also withheld certain features. There is no dot-dot-dot icon to demonstrate that a non-iPhone user is typing, for example, and an iMessage heart or thumbs-up annotation has long conveyed to Android users as text instead of images.
Apple later took other steps that enhanced the popularity of its messaging service with teens. It added popular features such as animated cartoon-like faces that create mirrors of a user’s face, to compete with messaging services from social media companies. Apple’s own survey of iPhone holders made public during the Epic Games litigation found that customers were particularly fond of replacing words with emojis and screen effects such as animated balloons and confetti. Avid teen users said in interviews with The Wall Street Journal that they also liked how they could create group chats with other Apple users that add and subtract participants without having to start a new chain.
How Apple’s iPhone and Apps Trap You in a Walled GardenYOU MAY ALSO LIKEUP NEXT 0:00 / 6:21 How Apple’s iPhone and Apps Trap You in a Walled GardenApple’s hardware, software and services work so harmoniously that it is often called a “walled garden.” The idea is central to recent antitrust scrutiny and the Epic vs. Apple case. WSJ’s Joanna Stern went to a real walled garden to explain it all. Photo illustration: Adele Morgan/The Wall Street Journal
The cultivation of iMessage is consistent with Apple’s broader strategy to tie its hardware, software and services together in a self-reinforcing world—dubbed the walled garden—that encourages people to pay the premium for its relatively expensive gadgets and remain loyal to its brand. That strategy has drawn scrutiny from critics and lawmakers as part of a larger examination of how all tech giants operate. Their core question: Do Apple and other tech companies create products that consumers simply find indispensable, or are they building near-monopolies that unfairly stifle competition?
Apple in its fight against Epic Games denied it held improper monopoly power in the smartphone market, pointing to intense competition globally with other phone makers and Android’s operating system. “With iMessage we built a great service that our users love and that is different from those offered by other platforms,” the company said in a statement.
Apple and other tech giants have long worked hard to get traction with young users, hoping to build brand habits that will extend into adulthood as they battle each other for control of everything from videogames to extended reality glasses to the metaverse. Globally, Alphabet Inc.’s Android operating system is the dominant player among smartphone users, with a loyal following of people who are vocal about their support. Among U.S. consumers, 40% use iPhones, but among those aged 18 to 24, more than 70% are iPhone users, according to Consumer Intelligence Research Partners’s most recent survey of consumers.
Shoppers at an Apple store in November.
PHOTO: NIYI FOTE/ZUMA PRESS
Apple is not the first tech company to come up with a must-have chat tool among young people, and such services sometimes struggle to stay relevant. BlackBerry and America Online were among the popular online communication forums of past decades that eventually lost ground to newer entrants.
Yet grabbing users so early in life could pay dividends for generations for Apple, already the world’s most valuable publicly traded company. It briefly crossed $3 trillion in market value for the first time on Jan. 3.
“These teenagers will continue to become consumers in the future and hopefully continue to buy phones into their 40s, 50s, 60s and 70s,” said Harsh Kumar, an analyst for Piper Sandler. The firm recently found that 87% of teens surveyed last year own iPhones.
Never date a green texter
Apple’s iMessage plays a significant role in the lives of young smartphone users and their parents, according to data and interviews with a dozen of these people. Teens and college students said they dread the ostracism that comes with a green text. The social pressure is palpable, with some reporting being ostracized or singled out after switching away from iPhones.
“In my circle at college, and in high school rolling over into college, most people have iPhones and utilize a lot of those kinds of iPhone specific features” together, said Ms. Lowitz, the Michigan student.
She said she came to realize that Apple had effectively created a social network of features that keeps users, such as her and others, locked in. “There was definitely some kind of pressure to get back to that,” she said.
Many of the new iMessage features—such as the 3D-like digital avatars known as memojis—exist fundamentally as a reason to own an iPhone and don’t make money for Apple directly. Last year Apple also made it possible to share FaceTime connections with Android users—a slight crack in Apple’s self-reinforcing ecosystem as video calling became more prevalent during the pandemic. In recent years, however, it has incorporated some moneymaking elements including Apple Pay and e-commerce links to other businesses such as Starbucks.
“We know that Apple users appreciate having access to innovative features like iCloud synching across all their Apple devices, Tapback and Memoji, as well as industry-leading privacy and security with end-to-end encryption—all of which make iMessage unique,” Apple said in a statement.Youthful ExuberanceThe share of Apple iPhones in the U.S. has swelleddramatically among young smartphone owners. Source: Consumer Intelligence Research PartnersNote: Annual survey conducted each September of 2,000 U.S. peoplewho purchased a smartphone in the previous 12 months. Age 18-24Older than 242014’15’16’17’18’19’20’2120304050607080%
Apple’s iMessage uses the internet to send text, video and photo messages, while iPhone users communicating with non-Apple users use old-school cellular channels such as SMS and MMS. Apple said its closed, encrypted system ensures messages are protected from hackers. Apple also disputes the idea that users are locked in to iMessage, saying users can easily switch to other smartphones.
A Google executive said Apple could make it easier for iMessage and Android users to communicate. “There are no real technical or product reasons for this issue,” Hiroshi Lockheimer, Google senior vice president of platforms and ecosystems, said. “The solutions already exist and we encourage Apple to join with the rest of the mobile industry in implementing them. We believe people should have the ability to connect with each other without artificial limits. It simply doesn’t have to be like this.” TECH NEWS BRIEFINGWhat Apple’s Texting App Tells Us About Its Strategy to Attract Users 00:00
IPhone users switch among a variety of apps to communicate. But if you use an iPhone, it is likely you’re also using iMessage. Apple’s internal research made public during the Epic Games litigation found that a survey of U.S. iPhone users, some as young as 14, overwhelmingly use iMessage. Among those who used an instant messaging app at least once a month, 85% of those surveyed said they used iMessage compared with 57% and 16% using Meta’s Facebook Messenger and WhatsApp, respectively, the Apple research showed. Meta’s messaging apps are widely used globally. WhatsApp, for example, topped 2 billion users in 2020.
In the pitched battle for messaging, Facebook executives in recent years became interested in capturing users at a younger age, according to documents reviewed by the Journal that formed the basis of a series of articles, called the Facebook Files, published in recent months.
One Facebook study, shared internally in 2019, aimed to understand why iMessage and SnapInc.’s Snapchat were the primary messaging apps for 10- to 13-year-olds. The research focused attention on a popular game played through iMessage called “Game Pigeon.”
The third-party game, acquired through Apple’s App Store and designed to operate in the messaging app, illustrates just one of the ways iMessages connects with young people. The game consists of users taking turns playing activities, such as checkers or word games, and allows for texting back-and-forth among players. “Game Pigeon” can’t be played between iPhone and Android users.
Miles Franklin, a longtime Android loyalist, was left out of rounds of a popular online game in high school. He switched to an iPhone two years ago.
PHOTO: MILES FRANKLIN
Facebook researchers concluded the appeal revolved around the social aspect of the games, helping younger people initiate conversations. “Game Pigeon generates amusement through digital interaction without the pressures of finding topics of conversation by enabling tweens to send games as content interactions and to use shared activities as a way to connect when they feel there is nothing to talk about,” according to the study.
Rounds of “Game Pigeon” in high school among friends were the first time Miles Franklin said he realized he was left out with his Android phone. “That’s my first taste of it,” said Mr. Franklin, now a 22-year-old senior at the University of Florida in Gainesville.
He said he long considered himself an Android loyalist going back to when he got his first phone at age 13 for his birthday. That changed, however, two years ago when he switched to an iPhone because he preferred it for making TikTok videos.
While it seems simple enough to shift to another messaging service, it isn’t in real life, according to Mr. Franklin. “I personally would do that,” he said. “But I’m not everyone else. I can’t convince other people to switch over to another app because they’re not gonna want to do that unless you’re really close to them.”
Grace Fang, 20-years-old, said she too saw such social dynamics among her peers at Wellesley College in Massachusetts. “I’ve had people with Androids apologize that they have Androids and don’t have iMessage,” she said. “I don’t know if it’s Apple propaganda or just like a tribal in-group versus out-group thing going on, but people don’t seem to like green text bubbles that much and seem to have this visceral negative reaction to it.” Ms. Fang added that she finds the hubbub silly and that she prefers to avoid texting all together.
‘I’ve had people with Androids apologize that they have Androids and don’t have iMessage,” said Grace Fang.
PHOTO: ASHLEY PANDYA
Jocelyn Maher, a 24-year-old master’s student in upstate New York, said her friends and younger sister have mocked her for exchanging texts with potential paramours using Android phones. “I was like, `Oh my gosh, his texts are green,’ and my sister literally went, `Ew that’s gross,’” Ms. Maher said.
She noted that she once successfully persuaded a boyfriend to switch to an iPhone after some gentle badgering. Their relationship didn’t last.
Such interactions have made fertile ground for memes on social media. During the pandemic, Jeremy Cangiano, who just finished up his MBA at the University of Massachusetts Lowell, dealt with his boredom on TikTok, quickly noticing that blue-bubble-green-bubble memes were popular among young people. He tried to cash in on it last year by selling his own merchandise that touted, “Never Date a Green Texter.”
The blue iMessage bubble was born out of a simple engineering need, according to Justin Santamaria, a former Apple engineer who worked on the original feature. At first, Apple engineers just wanted to be able to easily identify iMessages when working with other texting formats as they developed their system, he said. The effect just stuck as it moved forward for consumer rollout.
“I had no idea that there would be a cachet or like, `Ugh green bubble conversations,’” he said. The idea that it would keep users locked in to using Apple devices wasn’t even part of the conversation at the time, he said.
The idea of opening iMessage to Android users arose in 2013, according to some of the internal records made public during the courtroom fight with Epic Games. As a market rumor circulated that Google was considering the acquisition of the popular messaging app WhatsApp, senior Apple executives discussed how such an acquisition might roil competition and how they might better compete.
Eddy Cue, who oversees Apple’s services business, told his colleagues he had some of his team investigating how to make iMessage available on Android phones, according to an email that surfaced as part of the Epic Games litigation. “We should go full speed and make this an official project,” he advised. “Google will instantly own messaging with this acquisition.”
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Mr. Schiller, the executive who at the time oversaw marketing, wrote: “And since we make no money on iMessage what will be the point?” Mr. Cue responded: “Do we want to lose one of the most important apps in a mobile environment to Google? They have search, mail, free video and growing quickly in browsers. We have the best messaging app and we should make it the industry standard. I don’t know what ways we can monetize it but it doesn’t cost us a lot to run.”
Others weighed in. Mr. Federighi, Apple’s chief software executive, said in an email that he worried that making iMessage an option on Android could have a serious downside by removing an obstacle for iPhone families to get their children Android phones.
In the end, Google didn’t buy WhatsApp and Apple didn’t make its iMessage available to Android users. Facebook ultimately acquired WhatsApp in 2014 for $22 billion, ratcheting up competition with Apple.
In just a few years, the value of iMessage’s blue texts had become more clear to Apple execs. After an executive left the company and began using an Android, he wrote former colleagues in 2016 and said he had switched back to iPhones after just a few months.
His family resorted to using Facebook products to message him, former Apple Music executive Ian Rogers said in the email. “I missed a ton of messages from friends and family who all use iMessage and kept messaging me at my old address,” he wrote, adding that “iMessage amounts to serious lock-in.”
The note, which became public during Apple’s litigation with Epic Games, eventually made its way to Mr. Cook through then-marketing chief Mr. Schiller, who added his own two cents: “Moving iMessage to Android will hurt us more than help us, this email illustrates why.”
As for Ms. Lowitz, the Michigan college student, she was glad when her switch to Android—brought about by her participation in a paid research study—came to an end. She was ready to get back to her iPhone. “There’s too much within the Apple network for me to switch,” she said.
Anna Fuder, 19, a friend at Michigan who had declined to participate in the study for fear of giving up her iPhone, was overjoyed. “As soon as she switched back to her iPhone, it was like hallelujah,” Ms. Fuder said. “Blue again.
When Tim Cook took over as chief executive of Apple, it was a corporate transition unlike any other. He stepped out from the shadow of one of the best-known American CEOs and took the reins of one of the world’s biggest tech companies facing some uncertainty about how much more successful it could be.
Ten years into the job, Cook now leads the most valuable company in the world — technology or otherwise — and it remains among the most influential. More than a billion people worldwide use its devices and tens of millions of developers have built businesses on its software platforms.
Cook took over as CEO from Steve Jobs on August 24, 2011, less than two months before the Apple founder passed away. Since then, Apple’s (AAPL) market capitalization has grown around 600% to nearly $2.5 trillion, and its annual revenue has more than doubled.
If Jobs was known for his ability to create groundbreaking devices that redefined consumers‘ experience of technology, Cook may come to be known for expanding the Apple ecosystem — building a suite of subscription services and other hardware products that complement the core iPhone business Jobs launched.
Inside Apple, Cook inherited a company culture known for being relentlessly demanding and he’s now managing at a time where tech workers have been increasingly vocal about social issues. (Cook himself, who in 2014 became one of the first leading CEOs to come out as gay, has been involved in LGBTQ+ rights advocacy.)
What Cook hasn’t done is launch another product as successful and disruptive as the iPhone, but he’s found ways to keep Apple growing without that.
„It’s possibly the most successful handoff from strength to strength in corporate history,“ Mike Bailey, director of research at FBB Capital Partners, said of the transition from Jobs to Cook. „Apple, frankly, needed a cheerleader and a politician, possibly more than a micromanaging, stressed out founder.“
Bailey added: „You’re maintaining the empire, as opposed to building one.“
The growth of services
A month after taking over as CEO, Cook announced the launch of the iPhone 4S. Since then, Apple has released nearly two dozen more versions of the iPhone at a wider range of price points, along with new generations of the iPad, Mac and MacBook. Cook has also overseen the introduction of new hardware products — most successfully, the Apple Watch in 2015 and AirPods in 2016.
But even more important than the new devices brought to life under his leadership is the growth of Apple’s services business.
„From a hardware standpoint, I think you can make the argument that it’s been more iterative than revolutionary, but I think that diminishes his contribution to the company,“ said D.A. Davidson analyst Tom Forte, adding that Cook expanded the notion of what Apple is. „He said … ‚What can Apple be? Apple can be a music subscription service, Apple can be a fitness subscription service, Apple can be much more than the App Store.'“
Even in the first five years of his tenure, Apple was making meaningful revenue from its Services division, which included products such as iCloud, which launched in October 2011; Apple Podcasts, which launched in 2012; and Apple Music, which launched in 2015. In January 2016, Apple revealed for the first time that it had generated $20 billion in services sales in the previous year.
A central piece of Tim Cook’s strategy has been expanding Apple services such as Fitness+.
Since then, Apple has launched even more services, including Apple Arcade, Apple TV+ and Apple Fitness+, along with a subscription bundle, which have further boosted the business. In the 2020 fiscal year, Apple generated nearly $53.8 billion in services revenue, accounting for around 20% of the company’s total sales. (Apple doesn’t break out sales for individual services.)
Apple’s focus on services has allowed it to be less reliant on iPhone sales, which can be volatile from quarter to quarter and have begun to plateau, even dipping at times under Cook. A key focus for Cook has been offsetting that slowing iPhone growth.
„He kept the iPhone party going, but he solved a boom-bust problem by exploding their services business,“ FBB’s Bailey said.
Apple still brings in hoards of cash each year from iPhone sales. But now, it also has the more consistent, higher margin profits from subscription services to act as a buffer as customers hold onto their devices for longer. Services also give consumers yet more reasons to choose Apple hardware over others, and helps the company eke out more dollars from each person that buys one of its devices.
Cook has already said he doesn’t plan to be at Apple in another 10 years. But most followers of the company expect him to stick around for at least a few more.
In that time, he’ll have plenty on his plate that could shape the future of the company, including the long rumored release of an Apple car and AR glasses, as well as its continued efforts to build its own chips for its devices.
But he’ll also face major challenges, including Apple’s current antitrust fight with app developers and regulators. Forte also questioned whether Apple will be able to maintain its leadership position if the growth in internet of things devices means consumers become less reliant on smartphones. Apple has yet to gain the same traction in connected home devices as Amazon’s Alexa, and earlier this year killed off its original HomePod in favor of the cheaper mini version.
„An argument can be made that they’re [still] heavily dependent on the iPhone,“ Forte said. „I’m still trying to envision what the future looks like and what happens when the smartphone is no longer the center of the universe.“
Under Cook, Apple has also been working to address its impact on the environment, including plans to become carbon neutral by 2030. But given that the company is dependent on a complex global supply chain and non-renewable rare earth metals to build its products, Cook will likely have to push the company’s efforts further in the coming years, as climate change poses an increasingly existential threat.
Then there’s the question of who will take over leading the world’s biggest company when Cook does step down. Jeff Williams, Apple’s current chief operating officer, who has been dubbed Tim Cook’s Tim Cook in the tech press, would be an obvious choice if he were taking over now. But at just two years younger than Cook, that succession plan could be more questionable in even a few years, Bailey said.
„It doesn’t look like there’s another insider, number two, ready to go, so I do think that’s something Apple’s going to have to start to address over the next two years,“ he said.
As well as collecting your data, Chrome also gives Google a huge amount of control over how the web works
Despite a poor reputation for privacy, Google’s Chrome browser continues to dominate. The web browser has around 65 per cent market share and two billion people are regularly using it. Its closest competitor, Apple’s Safari, lags far behind with under 20 per cent market share. That’s a lot of power, even before you consider Chrome’s data collection practices.
Is Google too big and powerful, and do you need to ditch Chrome for good? Privacy experts say yes. Chrome is tightly integrated with Google’s data gathering infrastructure, including services such as Google search and Gmail – and its market dominance gives it the power to help set new standards across the web. Chrome is one of Google’s most powerful data-gathering tools.
Google is currently under fire from privacy campaigners including rival browser makers and regulators for changes in Chrome that will spell the end of third-party cookies, the trackers that follow you as you browse. Although there are no solid plans for Europe yet, Google is planning to replace cookies with its own ‘privacy preserving’ tracking tech called FLoC, which critics say will give the firm even more power at the expense of its competitors due to the sheer scale of Chrome’s user base.
Chrome’s hefty data collection practices are another reason to ditch the browser. According to Apple’s iOS privacy labels, Google’s Chrome app can collect data including your location, search and browsing history, user identifiers and product interaction data for “personalisation” purposes. Google says this gives you the ability to enable features such as the option to save your bookmarks and passwords to your Google Account. But unlike rivals Safari, Microsoft’s Edge and Firefox, Chrome links this data to devices and individuals.
Although Chrome legitimately needs to handle browsing data, it can siphon off a large amount of information about your activities and transmit it to Google, says Rowenna Fielding, founder and director of privacy consultancy Miss IG Geek. “If you’re using Chrome to browse the internet, even in private mode, Google is watching everything you do online, all the time. This allows Google to build up a detailed and sophisticated picture about your personality, interests, vulnerabilities and triggers.”
When you sync your Google accounts to Chrome, the data slurping doesn’t stop there. Information from other Google-owned products including its email service Gmail and Google search can be combined to form a scarily accurate picture. Chrome data can be added to your geolocation history from Google Maps, the metadata from your Gmail usage, your social graph – who you interact with, both on and offline – the apps you use on your Android phone, and the products you buy with Google Pay. “That creates a very clear picture of who you are and how you live your life,” Fielding says.
As well as gathering information about your online and offline purchases, data from Google Pay can be used “in the same way as data from other Google services,” says Fielding. “This is not just what you buy, but also your location, device contacts and information, and the links those details provide so you can be identified and profiled across multiple datasets.”
Google’s power goes even further than its own browser market share. Competitor browsers such as Microsoft’s Edge are based on the same engine, Chromium. “So under the hood they are still a form of Chrome”, says Sean Wright, an independent security researcher.
Google’s massive market share has allowed the internet giant to develop web standards such as AMP in Google mobile search, which publishers must use in order to appear at the top of search results. And more recently, Chrome’s FLoC effectively gives Google control over the ad tracking tech that will replace third-party cookies – although this is being developed in the open and with feedback from other developers.
Google’s power allows it to set the direction of the industry, says Wright. “Some of those changes are good, including the move to make HTTPS encryption a default, but others are more self-serving, such as the FLoC proposal.”
Google says its Ads products do not access synced Chrome browsing history, other than for preventing spam and fraud. The firm outlines that the iOS privacy labels represent the maximum categories of data that can be gathered, and what is actually collected depends on the features you use in the app, and how you configure your settings. It also claims its open-source FLoC API is privacy-focused and will not give Google Ads products special privileges or access.
Google says privacy and security “have always been core benefits of the Chrome browser”. A Google spokesperson highlighted the Safe Browsing features that protect against threats such as phishing and malware, as well as additional controls to help you manage your information in Chrome. In recent years the company has introduced more ways you can control your data. “Chrome offers helpful options to keep your data in sync across devices, and you control what activity gets saved to your Google Account if you choose to sign in,” the spokesperson says.
But that doesn’t change the level of data collection possible, or the fact that Google has so much sway, simply through its market dominance and joined up ad-driven ecosystem. “When you are a company that has the majority share of browsers and internet search, you suddenly have a huge amount of power,” says Matthew Gribben, a former GCHQ cybersecurity consultant. “When every web developer and SEO expert in the world needs to pander to these whims, the focus becomes on making sites work well for Google at the expense of everything else.”
And as long as people use Chrome and other services – many of which are, admittedly, more user friendly than those of rivals – then Google’s power shows no signs of diminishing. Chrome provides Google with “enormous amounts of behavioural and demographic data, control over people’s browsing experience, a platform for shaping the web to Google’s own advantage, and brand ‘capture’”, Fielding says. “When people’s favourite tools, games and sites only work with Chrome, they are reluctant to switch to an alternative.”
In theory, competition and data protection laws should provide the tools to keep Google from getting out of control, says Fielding. But in practice, “that doesn’t seem to be working for various reasons – including disparities of wealth and power between Google and national regulators”. Fielding adds that Google is also useful to many governments and economies and it is tricky to enforce national laws against a global corporation.
There are steps you can take to lock down your account, such as preventing your browsing data being collected by not syncing Chrome, and turning off third-party cookie tracking. But note that the more features you use in Chrome, the more data Google needs to ensure they can function properly. And as Google’s power and dominance continues to surge, the other option is to ditch Chrome altogether.
If you do decide to ditch Chrome, there are plenty of other feature-rich privacy browser options to consider, including Firefox, Brave and DuckDuckGo, which don’t involve giving Google any of your data.
Apple employees push back against returning to the office in internal letter
“Over the last year we often felt not just unheard, but at times actively ignored”
Apple employees are pushing back against a new policy that would require them to return to the office three days a week starting in early September. Staff members say they want a flexible approach where those who want to work remote can do so, according to an internal letter obtained by The Verge.
“We would like to take the opportunity to communicate a growing concern among our colleagues,” the letter says. “That Apple’s remote/location-flexible work policy, and the communication around it, have already forced some of our colleagues to quit. Without the inclusivity that flexibility brings, many of us feel we have to choose between either a combination of our families, our well-being, and being empowered to do our best work, or being a part of Apple.”
It’s an easing of restrictions compared to Apple’s previous company culture, which famously discouraged employees from working from home prior to the pandemic. Yet it’s still more conservative compared to other tech giants. Both Twitter and Facebook have told employees they can work from home forever, even after the pandemic ends.
For some Apple workers, the current policy doesn’t go far enough, and shows a clear divide between how Apple executives and employees view remote work.
“Over the last year we often felt not just unheard, but at times actively ignored,” the letter says. “Messages like, ‘we know many of you are eager to reconnect in person with your colleagues back in the office,’ with no messaging acknowledging that there are directly contradictory feelings amongst us feels dismissive and invalidating…It feels like there is a disconnect between how the executive team thinks about remote / location-flexible work and the lived experiences of many of Apple’s employees.”
The letter, addressed to Tim Cook, started in a Slack channel for “remote work advocates” which has roughly 2,800 members. About 80 people were involved in writing and editing the note.
Apple employees say that embracing remote work is paramount for the company’s diversity and inclusion efforts. “For inclusion and diversity to work, we have to recognize how different we all are, and with those differences, come different needs and different ways to thrive,” they say.
Here are the specific asks outlined by employees in the note:
We are formally requesting that Apple considers remote and location-flexible work decisions to be as autonomous for a team to decide as are hiring decisions.
We are formally requesting a company-wide recurring short survey with a clearly structured and transparent communication / feedback process at the company-wide level, organization-wide level, and team-wide level, covering topics listed below.
We are formally requesting a question about employee churn due to remote work be added to exit interviews.
We are formally requesting a transparent, clear plan of action to accommodate disabilities via onsite, offsite, remote, hybrid, or otherwise location-flexible work.
We are formally requesting insight into the environmental impact of returning to onsite in-person work, and how permanent remote-and-location-flexibility could offset that impact.
The letter was sent out for Apple employees to sign late Friday afternoon.
Apple did not immediately respond to a request for comment from The Verge.
Read the full letter below:
Dear Tim and Executive Leadership,
Thank you for your thoughtful considerations on a hybrid approach to returning to office work, and for sharing it with all of us early this week. We appreciate your efforts in navigating what has been undeniably an incredibly difficult time for everyone around the world, and doing so for over one hundred thousand people. We are certain you have more plans than were shared on Wednesday, but are following Apple’s time-honored tradition of only announcing things when they are ready. However, we feel like the current policy is not sufficient in addressing many of our needs, so we want to take some time to explain ourselves.
This past year has been an unprecedented challenge for our company; we had to learn how to deliver the same quality of products and services that Apple is known for, all while working almost completely remotely. We did so, achieving another record-setting year. We found a way for everyone to support each other and succeed in a completely new way of working together — from locations we were able to choose at our own discretion (often at home).
However, we would like to take the opportunity to communicate a growing concern among our colleagues. That Apple’s remote/location-flexible work policy, and the communication around it, have already forced some of our colleagues to quit. Without the inclusivity that flexibility brings, many of us feel we have to choose between either a combination of our families, our well-being, and being empowered to do our best work, or being a part of Apple. This is a decision none of us take lightly, and a decision many would prefer not to have to make. These concerns are largely what prompted us to advocate for changes to these policies, and data collected will reflect those concerns.
Over the last year we often felt not just unheard, but at times actively ignored. Messages like, ‘we know many of you are eager to reconnect in person with your colleagues back in the office,’ with no messaging acknowledging that there are directly contradictory feelings amongst us feels dismissive and invalidating. Not only do many of us already feel well-connected with our colleagues worldwide, but better-connected now than ever. We’ve come to look forward to working as we are now, without the daily need to return to the office. It feels like there is a disconnect between how the executive team thinks about remote / location-flexible work and the lived experiences of many of Apple’s employees.
For many of us at Apple, we have succeeded not despite working from home, but in large part because of being able to work outside the office. The last year has felt like we have truly been able to do the best work of our lives for the first time, unconstrained by the challenges that daily commutes to offices and in-person co-located offices themselves inevitably impose; all while still being able to take better care of ourselves and the people around us.
Looking around the corner, we believe the future of work will be significantly more location and timezone flexible. In fact, we are already a distributed company with offices all over the world and across many different timezones. Apple’s organizational hierarchy lends itself towards offices that often follow the same structure, wherein people in the same organization are more likely to be co-located in an office. At the same time, we strongly encourage cross-functional, cross-organization collaboration, and our organization’s many horizontal teams reflect this. Such collaboration is widely celebrated across our organization, and arguably leads us to our best results — it’s one of the things that makes Apple, Apple. However, orgs are rarely co-located within walking distance, let alone in the same building, meaning our best collaboration has always required remote communication with teams in other offices and across timezones, since long before the pandemic. We encourage distributed work from our business partners, and we’ve been a remote-communication necessary company for some time, a vision of the future that Steve Jobs himself predicated in an interview from 1990. This may explain how mandatory out-of-office work enabled tearing down cross-functional communication barriers to deliver even better results.
Almost all of us have worked fully remote for over a year now, though the experience arguably would have been better less one pandemic. We have developed two major versions of all our operating systems, organized two full WWDCs, introduced numerous new products, transitioned to our own chipsets, and supported our customers with the same level of care as before. We have already piloted location-flexible work the last 15 months under much more extreme conditions and we were very successful in doing so, finding the following benefits of remote and location-flexible work for a large number of our colleagues:
Diversity and Inclusion in Retention and Hiring
Tearing Down Previously Existing Communication Barriers
Better Work Life Balance
Better Integration of Existing Remote / Location-Flexible Workers
Reduced Spread of Pathogens
We ask for your support in enabling those who want to work remotely / in location-flexible ways to continue to do so, letting everyone figure out which work setup works best for them, their team, and their role — be it in one of our offices, from home, or a hybrid solution. We are living proof that there is no one-size-fits-all policy for people. For Inclusion and Diversity to work, we have to recognize how different we all are, and with those differences, come different needs and different ways to thrive. We feel that Apple has both the responsibility to recognize these differences, as well as the capability to fully embrace them. Officially enabling individual management chains and individual teams to make decisions that work best for their teams roles, individuals, and needs — and having that be the official stated policy rather than the rare individual exceptions — would alleviate the concerns and reservations many of us currently have.
We understand that inertia is real and that change is difficult to achieve. The pandemic forcing us to work from home has given us a unique opportunity. Most of the change has already happened, remote/location-flexible work is currently the “new normal,” we just need to make sure we make the best of it now. We believe that Apple has the ability to be a leader in this realm, not by declaring ‘everyone just work from home for forever,’ as some other companies have done, but by declaring an official broad paradigm policy, that allows individual leaders to make decisions that will enable their teams to do the best work of their lives. We strongly believe this is the ideal moment to “burn the boats” — to boldly declare ‘yes this can be done, and done successfully, because there is no other choice for the future.’
We have gathered some of our requests and action items to help continue the conversation and make sure everyone is heard.
We are formally requesting that Apple considers remote and location-flexible work decisions to be as autonomous for a team to decide as are hiring decisions.
We are formally requesting a company-wide recurring short survey with a clearly structured and transparent communication / feedback process at the company-wide level, organization-wide level, and team-wide level, covering topics listed below.
We are formally requesting a question about employee churn due to remote work be added to exit interviews.
We are formally requesting a transparent, clear plan of action to accommodate disabilities via onsite, offsite, remote, hybrid, or otherwise location-flexible work.
We are formally requesting insight into the environmental impact of returning to onsite in-person work, and how permanent remote-and-location-flexibility could offset that impact.
We have great respect for Apple and its leadership; we strongly believe in the Innovation and Thinking Differently (from “the way things have always been done” and “industry standards”) that are part of Apple’s DNA. We all wish to continue to “bleed six colors” at Apple itself and not elsewhere. At Apple, our most important resource, our soul, is our people, and we believe that ensuring we are all heard, represented, and validated is how we continue to defend and protect that precious sentiment.
This is not a petition, though it may resemble one. This is a plea: let’s work together to truly welcome everyone forward.
An Apple sign is up for auction, but it’s nothing like the ones you’ll see at an Apple Store today.
This sign features the famous six-color rainbow logo from somewhere around 1978.
An unusual sign is available for auction with bidding starting at $12,000. You know with numbers like that involved this is going to be something special. This time around it’s a sign from 1978 with the original Apple six-color rainbow logo. Apple Computer is written beneath the famous multi-colored Apple.
The large acrylic sign measures 48.5 x 60.5-inches so you aren’t likely to put this on your office wall. But despite its age, the auctioneer lists the sign as being in „very good condition.“
Source: Nate D Sanders Auctions
Original Apple Computer Inc. sign, circa 1978, displaying the famous rainbow apple logo. Large sign measuring over 4′ x 5′ is one of the earliest Apple retail signs, displayed by an authorized reseller who learned about Apple by attending a computer conference in 1976. Acrylic sign in metal frame measures 48.5″ x 60.5″. A few surface marks, and some yellowing to background, but rainbow colors remain bright. Overall very good condition.
With biding starting at $12,000 there’s no telling what price this thing will ultimately sell for. You can check the auction out for yourself and place a bid if you like. Do it soon, though. This auction ends on February 25th at 5 pm PT.
Everyone who has seen The Social Network knows the story of Facebook’s founding. It was at Harvard in the spring semester of 2004. What people tend to forget, however, is that Facebook was only based in Cambridge for a few short months. Back then it was called TheFacebook.com, and it was a college-specific carbon copy of Friendster, a pioneering social network based in Silicon Valley.
Mark Zuckerberg’s knockoff site was a hit on campus, and so he and a few school chums decided to move to Silicon Valley after finals and spend the summer there rolling Facebook out to other colleges, nationwide. The Valley was where the internet action was. Or so they thought.
In Silicon Valley during the mid-aughts the conventional wisdom was that the internet gold rush was largely over. The land had been grabbed. The frontier had been settled. The web had been won. Hell, the boom had gone bust three years earlier. Yet nobody ever bothered to send the memo to Mark Zuckerberg—because at the time, Zuck was a nobody: an ambitious teenaged college student obsessed with the computer underground. He knew his way around computers, but other than that, he was pretty clueless—when he was still at Harvard someone had to explain to him that internet sites like Napster were actually businesses, built by corporations.
But Zuckerberg could hack, and that fateful summer he ended up meeting a few key Silicon Valley players who would end up radically changing the direction of what was, at the time, a company in name only. For this oral history of those critical months back in 2004 and 2005, I interviewed all the key players and talked to a few other figures who had insight into the founding era. What emerged, as you’ll see, is a portrait of a corporate proto-culture that continues to exert an influence on Facebook today. The whole enterprise began as something of a lark, it was an un-corporation, an excuse for a summer of beer pong and code sprints. Indeed, Zuckerberg’s first business cards read, “I’m CEO … bitch.” The brogrammer ’tude was a joke … or was it?
Sean Parker (cofounder of Napster and first president of Facebook): The dotcom era sort of ended with Napster, then there’s the dotcom bust, which leads to the social media era.
Steven Johnson (noted author and cultural commentator): At the time, the web was fundamentally a literary metaphor: “pages”—and then these hypertext links between pages. There was no concept of the user; that was not part of the metaphor at all.
Mark Pincus (co-owner of the fundamental social media patent): I mark Napster as the beginning of the social web—people, not pages. For me that was the breakthrough moment, because I saw that the internet could be this completely distributed peer-to-peer network. We could disintermediate those big media companies and all be connected to each other.
Steven Johnson: To me it really started with blogging in the early 2000s. You started to have these sites that were oriented around a single person’s point of view. It suddenly became possible to imagine, Oh, maybe there’s another element here that the web could also be organized around? Like I trust these five people, I’d like to see what they are suggesting. And that’s kind of what early blogging was like.
Ev Williams (founder of Blogger, Twitter, and Medium): Blogs then were link heavy and mostly about the internet. “We’re on the internet writing about the internet, and then linking to more of the internet, and isn’t that fun?”
Steven Johnson: You would pull together a bunch of different voices that would basically recommend links to you, and so there was a personal filter.
Mark Pincus: In 2002 Reid Hoffman and I started brainstorming: What if the web could be like a great cocktail party? Where you can walk away with these amazing leads, right? And what’s a good lead? A good lead is a job, an interview, a date, an apartment, a house, a couch.
And so Reid and I started saying, “Wow, this people web could actually generate something more valuable than Google, because you’re in this very, very highly vetted community that has some affinity to each other, and everyone is there for a reason, so you have trust.” The signal-to-noise ratio could be be very high. We called it Web 2.0, but nobody wanted to hear about it, because this was in the nuclear winter of the consumer internet.
Sean Parker: So during the period between 2000 and 2004, kind of leading up to Facebook, there is this feeling that everything that there was to be done with the internet has already been done. The absolute bottom is probably around 2002. PayPal goes public in 2002, and it’s the only consumer internet IPO. So there’s this weird interim period where there’s a total of only six companies funded or something like that. Plaxo was one of them. Plaxo was a proto–social network. It’s this in-between thing: some kind of weird fish with legs.
Aaron Sittig (graphic designer who invented the Facebook „like“): Plaxo is the missing link. Plaxo was the first viral growth company to really succeed intentionally. This is when we really started to understand viral growth.
Sean Parker: The most important thing I ever worked on was developing algorithms for optimizing virality at Plaxo.
Aaron Sittig: Viral growth is when people using the product spreads the product to other people—that’s it. It’s not people deciding to spread the product because they like it. It’s just people in the natural course of using the software to do what they want to do, naturally spreading it to other people.
Sean Parker: There was an evolution that took place from the sort of earliest proto–social network, which is probably Napster, to Plaxo, which only sort of resembled a social network but had many of the characteristics of one, then to LinkedIn, MySpace, and Friendster, then to this modern network which is Facebook.
Ezra Callahan (one of Facebook’s very first employees): In the early 2000s, Friendster gets all the early adopters, has a really dense network, has a lot of activity, and then just hits this breaking point.
Aaron Sittig: There was this big race going on and Friendster had really taken off, and it really seemed like Friendster had invented this new thing called “social networking,” and they were the winner, the clear winner. And it’s not entirely clear what happened, but the site just started getting slower and slower and at some point it just stopped working.
Ezra Callahan: And that opens the door for MySpace.
Ev Williams: MySpace was a big deal at the time.
Sean Parker: It was a complicated time. MySpace had very quickly taken over the world from Friendster. They’d seized the mantle. So Friendster was declining, MySpace was ascending.
Scott Marlette (programmer who put photo tagging on Facebook): MySpace was really popular, but then MySpace had scaling trouble, too.
Aaron Sittig: Then pretty much unheralded and not talked about much, Facebook launched in February of 2004.
Dustin Moskovitz (Zuckerberg’s original right-hand man): Back then there was a really common problem that now seems trivial. It was basically impossible to think of a person by name and go and look up their picture. All of the dorms at Harvard had individual directories called face books—some were printed, some were online, and most were only available to the students of that particular dorm. So we decided to create a unified version online and we dubbed it “The Facebook” to differentiate it from the individual ones.
Mark Zuckerberg (Facebook’s founder and current CEO): And within a couple weeks, a few thousand people had signed up. And we started getting emails from people at other colleges asking for us to launch it at their schools.
Ezra Callahan: Facebook launched at the Ivy Leagues originally, and it wasn’t because they were snooty, stuck-up kids who only wanted to give things to the Ivy Leagues. It was because they had this intuition that people who go to the Ivy Leagues are more likely to be friends with kids at other Ivy League schools.
Aaron Sittig: When Facebook launched at Berkeley, the rules of socializing just totally transformed. When I started at Berkeley, the way you found out about parties was you spent all week talking to people figuring out what was interesting, and then you’d have to constantly be in contact. With Facebook there, knowing what was going on on the weekend was trivial. It was just all laid out for you.
Facebook came to the Stanford campus—in the heart of Silicon Valley— quite early: March 2004.
Sean Parker: My roommates in Portola Valley were all going to Stanford.
Ezra Callahan: So I was a year out of Stanford, I graduated Stanford in 2003, and me and four of my college friends rented a house for that year just near the campus, and we had an extra bedroom available, and so we advertised around on a few Stanford email lists to find a roommate to move into that house with us. We got a reply from this guy named Sean Parker. He ended up moving in with us pretty randomly, and we discovered that while Napster had been a cultural phenomenon, it didn’t make him any money.
Sean Parker: And so the girlfriend of one of my roommates was using a product, and I was like, “You know, that looks a lot like Friendster or MySpace.” She’s like, “Oh yes, well, nobody in college uses MySpace.” There was something a little rough about MySpace.
Mark Zuckerberg: So MySpace had almost a third of their staff monitoring the pictures that got uploaded for pornography. We hardly ever have any pornography uploaded. The reason is that people use their real names on Facebook.
Adam D’Angelo (Zuckerberg’s high school hacking buddy): Real names are really important.
Aaron Sittig: We got this clear early on because of something that was established as a community principle at the Well: You own your own words. And we took it farther than the Well. We always had everything be traceable back to a specific real person.
Stewart Brand (founder of the Well, the first important social networking site): The Well could have gone that route, but we did not. That was one of the mistakes we made.
Mark Zuckerberg: And I think that that’s a really simple social solution to a possibly complex technical issue.
Ezra Callahan: In this early period, it’s a fairly hacked-together, simple website: just basic web forms, because that’s what Facebook profiles are.
Ruchi Sanghvi (coder who created Facebook’s Newsfeed): There was a little profile pic, and it said things like, “This is my profile” and “See my friends,” and there were three or four links and one or two other boxes below that.
Aaron Sittig: But I was really impressed by how focused and clear their product was. Small details—like when you went to your profile, it really clearly said, “This is you,” because social networking at the time was really, really hard to understand. So there was a maturity in the product that you don’t typically see until a product has been out there for a couple of years and been refined.
Sean Parker: So I see this thing, and I emailed some email address at Facebook, and I basically said, “I’ve been working with Friendster for a while, and I’d just like to meet you guys and see if maybe there’s anything to talk about.” And so we set up this meeting in New York—I have no idea why it was in New York—and Mark and I just started talking about product design and what I thought the product needed.
Aaron Sittig: I got a call from Sean Parker and he said, “Hey, I’m in New York. I just met with this kid Mark Zuckerberg, who is very smart, and he’s the guy building Facebook, and they say they have a ‘secret feature’ that’s going to launch that’s going to change everything! But he won’t tell me what it is. It’s driving me crazy. I can’t figure out what it is. Do you know anything about this? Can you figure it out? What do you think it could be?” And so we spent a little time talking about it, and we couldn’t really figure out what their “secret feature” that was going to change everything was. We got kind of obsessed about it.
Two months after meeting Sean Parker, Mark Zuckerberg moved to Silicon Valley with the idea of turning his dorm‐room project into a real business. Accompanying him were his cofounder and consigliere, Dustin Moskovitz, and a couple of interns.
Mark Zuckerberg: Palo Alto was kind of like this mythical place where all the tech used to come from. So I was like, I want to check that out.
Ruchi Sanghvi: I was pretty surprised when I heard Facebook moved to the Bay Area, I thought they were still at Harvard working out of the dorms.
Ezra Callahan: Summer of 2004 is when that fateful series of events took place: that legendary story of Sean running into the Facebook cofounders on the street, having met them a couple months earlier on the East Coast. That meeting happened a week after we all moved out of the house we had been living in together. Sean was crashing with his girlfriend’s parents.
Sean Parker: I was walking outside the house, and there was this group of kids walking toward me—they were all wearing hoodies and they looked like they were probably pot-smoking high-school kids just out making trouble, and I hear my name. I’m like, Oh, it’s coincidence, and I hear my name again and I turn around and it’s like, “Sean, what are you doing here?”
It took me about 30 seconds to figure out what was going on, and I finally realize that it’s Mark and Dustin and a couple of other people, too. So I’m like, “What are you guys doing here?” And they’re like, “We live right there.” And I’m like, “That’s really weird, I live right here!” This is just super weird.
Aaron Sittig: I get a call from Sean and he’s telling me, “Hey, you won’t believe what’s just happened.” And Sean said, “You’ve got to come over and meet these guys. Just leave right now. Just come over and meet them!”
Sean Parker: And so I don’t even know what happened from there, other than that it just became very convenient for me to go swing by the house. It wasn’t even a particularly formal relationship.
Aaron Sittig: So I went over and met them, and I was really impressed by how focused they were as a group. They’d occasionally relax and go do their thing, but for the most part they spent all their time sitting at a kitchen table with their laptops open. I would go visit their place a couple times a week, and that was always where I’d find them, just sitting around the kitchen table working, constantly, to keep their product growing.
All Mark wanted to do was either make the product better, or take a break and relax so that you could get enough energy to go work on the product more. That’s it. They never left that house except to go watch a movie.
Ezra Callahan: The early company culture was very, very loose. It felt like a project that’s gotten out of control and has this amazing business potential. Imagine your freshman dorm running a business, that’s really what it felt like.
Mark Zuckerberg: Most businesses aren’t like a bunch of kids living in a house, doing whatever they want, not waking up at a normal time, not going into an office, hiring people by, like, bringing them into your house and letting them chill with you for a while and party with you and smoke with you.
Ezra Callahan: The living room was the office with all these monitors and workstations set up everywhere and just whiteboards as far as the eye can see.
At the time Mark Zuckerberg was obsessed with file sharing, and the grand plan for his Silicon Valley summer was to resurrect Napster. It would rise again, but this time as a feature inside of Facebook. The name of Zuckerberg’s pet project? Wirehog.
Aaron Sittig: Wirehog was the secret feature that Mark had promised was going to change everything. Mark had gotten convinced that what would make Facebook really popular and just sort of cement its position at schools was a way to send files around to other people—mostly just to trade music.
Mark Pincus: They built in this little thing that looked like Napster—you could see what music files someone had on their computer.
Ezra Callahan: This is at a time when we have just watched Napster get completely terminated by the courts and the entertainment industry is starting to sue random individuals for sharing files. The days of the Wild West were clearly ending.
Aaron Sittig: It’s important to remember that Wirehog was happening at a time where you couldn’t even share photos on your Facebook page. Wirehog was going to be the solution for sharing photos with other people. You could have a box on your profile and people could go there to get access to all your photos that you were sharing—or whatever files you were sharing. It might be audio files, it might be video files, it might be photos of their vacation.
Ezra Callahan: But at the end of the day it’s just a file-sharing service. When I joined Facebook, most people had already kind of come around to the idea that unless some new use comes up for Wirehog that we haven’t thought of, it’s just a liability. “We’re going to get sued someday, so what’s the point?” That was the mentality.
Mark Pincus: I was kind of wondering why Sean wanted to go anywhere near music again.
Aaron Sittig: My understanding was that some of Facebook’s lawyers advised that it would be a bad idea. And that work on Wirehog was kind of abandoned just as Facebook user growth started to grow really quickly.
Ezra Callahan: They had this insane demand to join. It’s still only at a hundred schools, but everyone in college has already heard of this, at all schools across the country. The usage numbers were already insane. Everything on the whiteboards was just all stuff related to what schools were going to launch next. The problem was very singular. It was simply, “How do we scale?”
Aaron Sittig: Facebook would launch at a school, and within one day they would have 70 percent of undergrads signed up. At the time, nothing had ever grown as fast as Facebook.
Ezra Callahan: It did not seem inevitable that we were going to succeed, but the scope of what success looked like was becoming clear. Dustin was already talking about being a billion-dollar company. They had that ambition from the very beginning. They were very confident: two 19-year-old cocky kids.
Mark Zuckerberg: We just all kind of sat around one day and were like, “We’re not going back to school, are we?” Nahhhh.
Ezra Callahan: The hubris seemed pretty remarkable.
David Choe (noted graffiti artist): And Sean is a skinny, nerdy kid and he’s like, “I’m going to go raise money for Facebook. I’m going to bend these fuckers’ minds.” And I’m like, “How are you going to do that?” And he transformed himself into an alpha male. He got like a fucking super-sharp haircut. He started working out every day, got a tan, got a nice suit. And he goes in these meetings and he got the money!
Mark Pincus: So it’s probably like September or October of 2004, and I’m at Tribe’s offices in this dusty converted brick building in Potrero Hill—the idea of Tribe.net was like Friendster meets Craigslist—and we’re in our conference room, and Sean says he’s bringing the Facebook guy in. And he brings Zuck in, and Zuck is in a pair of sweatpants, and these Adidas flip-flops that he wore, and he’s so young looking and he’s sitting there with his feet up on the table, and Sean is talking really fast about all the things Facebook is going to do and grow and everything else, and I was mesmerized.
Because I’m doing Tribe, and we are not succeeding, we’ve plateaued and we’re hitting our head against the wall trying to figure out how to grow, and here’s this kid, who has this simple idea, and he’s just taking off! I was kind of in awe already of what they had accomplished, and maybe a little annoyed by it. Because they did something simpler and quicker and with less, and then I remember Sean got on the computer in my office, and he pulled up The Facebook, and he starts showing it to me, and I had never been able to be on it, because it’s college kids only, and it was amazing.
People are putting up their phone numbers and home addresses and everything about themselves and I was like, I can’t believe it! But it was because they had all this trust. And then Sean put together an investment round quickly, and he had advised Zuck to, I think, take $500,000 from Peter Thiel, and then $38,000 each from me and Reid Hoffman. Because we were basically the only other people doing anything in social networking. It was a very, very small little club at the time.
Ezra Callahan: By December it’s—I wouldn’t say it’s like a more professional atmosphere, but all the kids that Mark and Dustin were hanging out with are either back at school back East or back at Stanford, and work has gotten a little more serious for them. They are working more than they were that first summer. We don’t move into an office until February of 2005. And right as we were signing the lease, Sean just randomly starts saying, “Dude! I know this street artist guy. We’re going to come in and have him totally do it up.”
David Choe: I was like, “If you want me to paint the entire building it’s going to be $60,000.” Sean’s like, “Do you want cash or do you want stock?”
David Choe: I didn’t give a shit about Facebook or even know what it was. You had to have a college email to get on there. But I like to gamble, you know? I believed in Sean. I’m like, This kid knows something and I am going to bet my money on him.
Ezra Callahan: So then we move in, and when you first saw this graffiti it was like, “Holy shit, what did this guy do to the office?” The office was on the second floor, so as you walk in you immediately have to walk up some stairs, and on the big 10-foot-high wall facing you is just this huge buxom woman with enormous breasts wearing this Mad Max–style costume riding a bulldog.
It’s the most intimidating, totally inappropriate thing. “God damn it, Sean! What did you do?” It’s not so much that we set out to paint that, because that was the culture. It was more that Sean just did it, and that set a tone for us. A huge-breasted warrior woman riding a bulldog is the first thing you see as you come in the office, so like, get ready for that!
Ruchi Sanghvi: Yes, the graffiti was a little racy, but it was different, it was vibrant, it was alive. The energy was just so tangible.
Katie Geminder (project manager for early Facebook): I liked it, but it was really intense. There was certain imagery in there that was very sexually charged, which I didn’t really care about but that could be considered a little bit hostile, and I think we took care of some of the more provocative ones.
Ezra Callahan: I don’t think it was David Choe, I think it was Sean’s girlfriend who painted this explicit, intimate lesbian scene in the woman’s restroom of two completely naked women intertwined and cuddling with each other—not graphic, but certainly far more suggestive than what one would normally see in a women’s bathroom in an office. That one only actually lasted a few weeks.
Max Kelly (Facebook’s first cyber-security officer): There was a four-inch by four-inch drawing of someone getting fucked. One of the customer service people complained that it was “sexual in nature,” which, given what they were seeing every day, I’m not sure why they would complain about this. But I ended up going to a local store and buying a gold paint pen and defacing the graffiti—just a random design— so it didn’t show someone getting fucked.
Jeff Rothschild (investor turned Facebook employee): It was wild, but I thought that it was pretty cool. It looked a lot more like a college dorm or fraternity than it did a company.
Katie Geminder: There were blankets shoved in the corner and video games everywhere, and Nerf toys and Legos, and it was kind of a mess.
Jeff Rothschild: There’s a PlayStation. There’s a couple of old couches. It was clear people were sleeping there.
Karel Baloun (one of the earliest Facebook programmers): I’d probably stay there two or three nights a week. I won an award for “most likely to be found under your desk” at one of the employee gatherings.
Jeff Rothschild: They had a bar, a whole shelf with liquor, and after a long day people might have a drink.
Ezra Callahan: There’s a lot of drinking in the office. There would be mornings when I would walk in and hear beer cans move as I opened the door, and the office smells of stale beer and is just trashed.
Ruchi Sanghvi: They had a keg. There was some camera technology built on top of the keg. It basically detected presence and posted about who was present at the keg—so it would take your picture when you were at the keg, and post some sort of thing saying “so-and-so is at the keg.” The keg is patented.
Ezra Callahan: When we first moved in, the office door had this lock we couldn’t figure out, but the door would automatically unlock at 9 am every morning. I was the guy that had to get to the office by 9 to make sure nobody walked in and just stole everything, because no one else was going to get there before noon. All the Facebook guys are basically nocturnal.
Katie Geminder: These kids would come in—and I mean kids, literally they were kids—they’d come into work at 11 or 12.
Ruchi Sanghvi: Sometimes I would walk to work in my pajamas and that would be totally fine. It felt like an extension of college; all of us were going through the same life experiences at the same time. Work was fantastic. It was so interesting. It didn’t feel like work. It felt like we were having fun all the time.
Ezra Callahan: You’re hanging out. You’re drinking with your coworkers. People start dating within the office …
Ruchi Sanghvi: We found our significant others while we were at Facebook. All of us eventually got married. Now we’re in this phase where we’re having children.
Katie Geminder: If you look at the adults that worked at Facebook during those first few years—like, anyone over the age of 30 that was married—and you do a survey, I tell you that probably 75 percent of them are divorced.
Max Kelly: So, lunch would happen. The caterer we had was mentally unbalanced and you never knew what the fuck was going to show up in the food. There were worms in the fish one time. It was all terrible. Usually, I would work until about 3 in the afternoon and then I’d do a circuit through the office to try and figure out what the fuck was going to happen that night. Who was going to launch what? Who was ready? What rumors were going on? What was happening?
Steve Perlman (Silicon Valley veteran who started in the Atari era): We shared a break room with Facebook. We were building hardware: a facial capture technology. The Facebook guys were doing some HTML thing. They would come in late in the morning. They’d have a catered lunch. Then they leave usually by mid-afternoon. I’m like, man, that is the life! I need a startup like that. You know? And the only thing any of us could think about Facebook was: Really nice people but never going to go anywhere.
Max Kelly: Around 4 I’d have a meeting with my team, saying “here’s how we’re going to get fucked tonight.” And then we’d go to the bar. Between like 5 and 8-ish people would break off and go to different bars up and down University Avenue, have dinner, whatever.
Ruchi Sanghvi: And we would all sit together and have these intellectual conversations: “Hypothetically, if this network was a graph, how would you weight the relationship between two people? How would you weight the relationship between a person and a photo? What does that look like? What would this network eventually look like? What could we do with this network if we actually had it?”
Sean Parker: The “social graph” is a math concept from graph theory, but it was a way of trying to explain to people who were kind of academic and mathematically inclined that what we were building was not a product so much as it was a network composed of nodes with a lot of information flowing between those nodes. That’s graph theory. Therefore we’re building a social graph. It was never meant to be talked about publicly. It was a way of articulating to somebody with a math background what we were building.
Ruchi Sanghvi: In retrospect, I can’t believe we had those conversations back then. It seems like such a mature thing to be doing. We would sit around and have these conversations and they weren’t restricted to certain members of the team; they weren’t tied to any definite outcome. It was purely intellectual and was open to everyone.
Max Kelly: People were still drinking the whole time, like all night, but starting around 9, it really starts solidifying: “What are we going to release tonight? Who’s ready to go? Who’s not ready to go?” By about 11-ish we’d know what we were going to do that night.
Katie Geminder: There was an absence of process that was mind-blowing. There would be engineers working stealthily on something that they were passionate about. And then they’d ship it in the middle of the night. No testing—they would just ship it.
Ezra Callahan: Most websites have these very robust testing platforms so that they can test changes. That’s not how we did it.
Ruchi Sanghvi: With the push of a button you could push out code to the live site, because we truly believed in this philosophy of “move fast and break things.” So you shouldn’t have to wait to do it once a week, and you shouldn’t have to wait to do it once a day. If your code was ready you should be able to push it out live to users. And that was obviously a nightmare.
Katie Geminder: Can our servers stand up to something? Or security: How about testing a feature for security holes? It really was just shove it out there and see what happens.
Jeff Rothschild: That’s the hacker mentality: You just get it done. And it worked great when you had 10 people. By the time we got to 20, or 30, or 40, I was spending a lot of time trying to keep the site up. And so we had to develop some level of discipline.
Ruchi Sanghvi: So then we would only push out code in the middle of the night, and that’s because if we broke things it wouldn’t impact that many people. But it was terrible because we were up until like 3 or 4 am every night, because the act of pushing just took everybody who had committed any code to be present in case anything broke.
Max Kelly: Around 1 am, we’d know either we’re fucked or we’re good. If we were good, everyone would be like “whoopee” and might be able to sleep for a little while. If we were fucked then we were like, “OK, now we’ve got to try and claw this thing back or fix it.”
Katie Geminder: 2 am: That was when shit happened.
Ruchi Sanghvi: Then another push, and this would just go on and on and on and on and on until like 3 or 4 or 5 am in the night.
Max Kelly: If 4 am rolled around and we couldn’t fix it, I’d be like, “We’re going to try and revert it.” Which meant basically my team would be up till 6 am So, go to bed somewhere between 4 and 6, and then repeat every day for like nine months. It was crazy.
Jeff Rothschild: It was seven days a week. I was on all the time. I would drink a large glass of water before I went to sleep to assure that I’d wake up in two hours so I could go check everything and make sure that we hadn’t broken it in the meantime. It was all day, all night.
Katie Geminder: That was very challenging for someone who was trying to actually live an adult life with, like, a husband. There was definitely a feeling that because you were older and married and had a life outside of work that you weren’t committed.
Mark Zuckerberg: Why are most chess masters under 30? Young people just have simpler lives. We may not own a car. We may not have family … I only own a mattress.
Kate Geminder: Imagine being over 30 and hearing your boss say that!
Mark Zuckerberg: Young people are just smarter.
Ruchi Sanghvi: We were so young back then. We definitely had tons of energy and we could do it, but we weren’t necessarily the most efficient team by any means whatsoever. It was definitely frustrating for senior leadership, because a lot of the conversations happened at night when they weren’t around, and then the next morning they would come in to all of these changes that happened at night. But it was fun when we did it.
Ezra Callahan: For the first few hundred employees, almost all of them were already friends with someone working at the company, both within the engineering circle and also the user support people. It’s a lot of recent grads. When we move into the office was when the dorm room culture starts to really stick out and also starts to break a little bit. It has a dorm room feeling, but it’s not completely dominated by college kids. The adults are coming in.
Jeff Rothschild: I joined in May 2005. On the sidewalk outside the office was the menu board from a pizza parlor. It was a caricature of a chef with a blackboard below it, and the blackboard had a list of jobs. This was the recruiting effort.
Sean Parker: At the time there was a giant sucking sound in the universe, and it was called Google. All the great engineers were going to Google.
Kate Losse (early customer service rep): I don’t think I could have stood working at Google. To me Facebook seemed much cooler than Google, not because Facebook was necessarily like the coolest. It’s just that Google at that point already seemed nerdy in an uninteresting way, whereas like Facebook had a lot of people who didn’t actually want to come off as nerds. Facebook was a social network, so it has to have some social components that are like really normal American social activities—like beer pong.
Kate Geminder: There was a house down the street from the office where five or six of the engineers lived that was one ongoing beer pong party. It was like a boys’ club—although it wasn’t just boys.
Terry Winograd (noted Stanford computer-science professor): The way I would put it is that Facebook is more of an undergraduate culture and Google is more of a graduate student culture.
Jeff Rothschild: Before I walked in the door at Facebook, I thought these guys had created a dating site. It took me probably a week or two before I really understood what it was about. Mark, he used to tell us that we are not a social network. He would insist: “This is not a social network. We’re a social utility for people you actually know.”
MySpace was about building an online community among people who had similar interests. We might look the same because at some level it has the same shape, but what it accomplishes for the individual is solving a different problem. We were trying to improve the efficiency of communication among friends.
Max Kelly: Mark sat down with me and described to me what he saw Facebook being. He said, “It’s about connecting people and building a system where everyone who makes a connection to your life that has any value is preserved for as long as you want it to be preserved. And it doesn’t matter where you are, or who you’re with, or how your life changes: because you’re always in connection with the people that matter the most to you, and you’re always able to share with them.”
I heard that, and I thought, I want to be a part of this. I want to make this happen. Back in the ’90s all of us were utopian about the internet. This was almost a harkening back to the beautiful internet where everyone would be connected and everyone could share and there was no friction to doing that. Facebook sounded to me like the same thing. Mark was too young to know that time, but I think he intrinsically understood what the internet was supposed to be in the ’80s and in the ’90s. And here I was hearing the same story again and conceivably having the ability to help pull it off. That was very attractive.
Aaron Sittig: So in the summer of 2005 Mark sat us all down and he said, “We’re going to do five things this summer.” He said, “We’re redesigning the site. We’re doing a thing called News Feed, which is going to tell you everything your friends are doing on the site. We’re going to launch Photos, we’re going to redo Parties and turn it into Events, and we’re going to do a local-businesses product.” And we got one of those things done, we redesigned the site. Photos was my next project.
Ezra Callahan: The product at Facebook at the time is dead simple: profiles. There is no News Feed, there was a very weak messaging system. They had a very rudimentary events product you could use to organize parties. And almost no other functions to speak of. There’s no photos on the website, other than your profile photo. There’s nothing that tells you when anything on the site has changed. You find out somebody changed their profile picture by obsessively going to their profile and noticing, Oh, the picture changed.
Aaron Sittig: We had some people that were changing their profile picture once an hour, just as a way of sharing photos of themselves.
Scott Marlette: At the time photos was the number-one most requested feature. So, Aaron and I go into a room and whiteboard up some wireframes for some pages and decide on what data needs to get stored. In a month we had a nearly fully functioning prototype internally to play with. It was very simple. It was: You post a photo, it goes in an album, you have a set of albums, and then you can tag people in the photos.
Jeff Rothschild: Aaron had the insight to do tagging, which was a tremendously valuable insight. It was really a game changer.
Aaron Sittig: We thought the key feature is going to be saying who is in the photo. We weren’t sure if this was really going to be that successful; we just felt good about it.
Facebook Photos went live in October 2005. There were about 5 million users, virtually all of them college students.
Scott Marlette: We launched it at Harvard and Stanford first, because that’s where our friends were.
Aaron Sittig: We had built this program that would fill up a TV screen and show us everything that was being uploaded to the service, and then we flicked it on and waited for photos to start coming in. And the first photos that came in were Windows wallpapers: Someone had just uploaded all their wallpaper files from their Windows directory, which was a big disappointment, like, Oh no, maybe people don’t get it? Maybe this is not going to work?
But the next photos were of a guy hanging out with his friends, and then the next photos after that were a bunch of girls in different arrangements: three girls together, these four girls together, two of them together, just photos of them hanging out at parties, and then it just didn’t stop.
Max Kelly: You were at every wedding, you were at every bar mitzvah, you were seeing all this awesome stuff, and then there’s a dick. So, it was kind of awesome and shitty at the same time.
Aaron Sittig: Within the first day someone had uploaded and tagged themselves in 700 photos, and it just sort of took off from there.
Jeff Rothschild: Inside of three months, we were delivering more photos than any other website on the internet. Now you have to ask yourself: Why? And the answer was tagging. There isn’t anyone who could get an email message that said, “Someone has uploaded a photo of you to the internet”—and not go take a look. It’s just human nature.
Ezra Callahan: The single greatest growth mechanism ever was photo tagging. It shaped all of the rest of the product decisions that got made. It was the first time that there was a real fundamental change to how people used Facebook, the pivotal moment when the mindset of Facebook changes and the idea for News Feed starts to germinate and there is now a reason to see how this expands beyond college.
Dustin Moskovitz: News Feed is the concept of viral distribution, incarnate.
Ezra Callahan: News Feed is what Facebook fundamentally is today.
Sean Parker: Originally it was called “What’s New,” and it was just a feed of all of the things that were happening in the network—really just a collection of status updates and profile changes that were occurring.
Katie Geminder: It was an aggregation, a collection of all those stories, with some logic built into it because we couldn’t show you everything that was going on. There were sort of two streams: things you were doing and things the rest of your network was doing.
Ezra Callahan: So News Feed is the first time where now your homepage, rather than being static and boring and useless, is now going to be this constantly updating “newspaper,” so to speak, of stuff happening on Facebook around you that we think you’ll care about.
Ruchi Sanghvi: And it was a fascinating idea, because normally when you think of newspapers, they have this editorialized content where they decide what they want to say, what they want to print, and they do it the previous night, and then they send these papers out to thousands if not hundreds of thousands of people. But in the case of Facebook, we were building 10 million different newspapers, because each person had a personalized version of it.
Ezra Callahan: It really was the first monumental product-engineering feat. The amount of data it had to deal with: all these changes and how to propagate that on an individual level.
Ruchi Sanghvi: We were working on it off and on for a year and a half.
Ezra Callahan: … and then the intelligence side of all this stuff: How do we surface the things that you’ll care about most? These are very hard problems engineering-wise.
Ruchi Sanghvi: Without realizing it, we ended up building one of the largest distributed systems in software at that point in time. It was pretty cutting-edge.
Ezra Callahan: We have it in-house and we play with it for weeks and weeks—which is really unusual.
Katie Geminder: So I remember being like, “OK, you guys, we have to do some level of user research,” and I finally convinced Zuck that we should bring users into a lab and sit behind the glass and watch our users using the product. And it took so much effort for me to get Dustin and Zuck and other people to go and actually watch this. They thought this was a waste of time. They were like, “No, our users are stupid.” Literally those words came out of somebody’s mouth.
Ezra Callahan: It’s the very first time we actually bring in outside people to test something for us, and their reaction, their initial reaction is clear. People are just like, “Holy shit, like, I shouldn’t be seeing this, like this doesn’t feel right,” because immediately you see this person changed their profile picture, this person did this, this person did that, and your first instinct is Oh my God! Everybody can see this about me! Everyone knows everything I’m doing on Facebook.
Max Kelly: But News Feed made perfect sense to all of us, internally. We all loved it.
Ezra Callahan: So in-house we have this idea that this isn’t going to go right: This is too jarring a change, it needs to be rolled out slowly, we need to warm people up to this—and Mark is just firmly committed. “We’re just going to do this. We’re just going to launch. It’s like ripping off a Band-Aid.”
Katie Geminder: We wrote a little letter, and at the bottom of it we put a button. And the button said, “Awesome!” Not like, “OK.” It was, “Awesome!” That’s just rude. I wish I had a screenshot of that. Oh man! And that was it. You landed on Facebook and you got the feature. We gave you no choice and not a great explanation and it scared people.
Jeff Rothschild: People were rattled because it just seemed like it was exposing information that hadn’t been visible before. In fact, that wasn’t the case. Everything shown in News Feed was something people put on the site that would have been visible to everyone if they had gone and visited that profile.
Ruchi Sanghvi: Users were revolting. They were threatening to boycott the product. They felt that they had been violated, and that their privacy had been violated. There were students organizing petitions. People had lined up outside the office. We hired a security guard.
Katie Geminder: There were camera crews outside. There were protests: “Bring back the old Facebook!” Everyone hated it.
Jeff Rothschild: There was such a violent reaction to it. We had people marching on the office. A Facebook group was organized protesting News Feed and inside of two days, a million people joined.
Ruchi Sanghvi: There was another group that was about how “Ruchi is the devil,” because I had written that blog post.
Max Kelly: The user base fought it every step of the way and would pound us, pound Customer Service, and say, “This is fucked up! This is terrible!”
Ezra Callahan: We’re getting emails from relatives and friends. They’re like, “What did you do? This is terrible! Change it back.”
Katie Geminder: We were sitting in the office and the protests were going on outside and it was, “Do we roll it back? Do we roll it back!?”
Ruchi Sanghvi: Now under usual circumstances if about 10 percent of your user base starts to boycott the product, you would shut it down. But we saw a very unusual pattern emerge.
Max Kelly: Even the same people who were telling us that this is terrible, we’d look at their user stream and be like: You’re fucking using it constantly! What are you talking about?
Ruchi Sanghvi: Despite the fact that there were these revolts and these petitions and people were lined up outside the office, they were digging the product. They were actually using it, and they were using it twice as much as before News Feed.
Ezra Callahan: It was just an emotionally devastating few days for everyone at the company. Especially for the set of people who had been waving their arms saying, “Don’t do this! Don’t do this!” because they feel like, “This is exactly what we told you was going to happen!”
Ruchi Sanghvi: Mark was on his very first press tour on the East Coast, and the rest of us were in the Palo Alto office dealing with this and looking at these logs and seeing the engagement and trying to communicate that “It’s actually working!,” and to just try a few things before we chose to shut it down.
Katie Geminder: We had to push some privacy features right away to quell the storm.
Ruchi Sanghvi: We asked everyone to give us 24 hours.
Katie Geminder: We built this janky privacy “audio mixer” with these little slider bars where you could turn things on and off. It was beautifully designed—it looked gorgeous—but it was irrelevant.
Jeff Rothschild: I don’t think anyone ever used it.
Ezra Callahan: But it gets added and eventually the immediate reaction subsides and people realize that the News Feed is exactly what they wanted, this feature is exactly right, this just made Facebook a thousand times more useful.
Katie Geminder: Like Photos, News Feed was just—boom!—a major change in the product and one of those sea changes that just leveled it up.
Jeff Rothschild: Our usage just skyrocketed on the launch of News Feed. About the same time we also opened the site up to people who didn’t have a .edu address.
Ezra Callahan: Once it opens to the public, it’s becoming clear that Facebook is on its way to becoming the directory of all the people in the world.
Jeff Rothschild: Those two things together—that was the inflection point where Facebook became a massively used product. Prior to that we were a niche product for high-school and college students.
Mark Zuckerberg: Domination!
Ruchi Sanghvi: “Domination” was a big mantra of Facebook back in the day.
Max Kelly: I remember company meetings where we were chanting “dominate.”
Ezra Callahan: We had company parties all the time, and for a period in 2005, all Mark’s toasts at the company parties would end with “Domination!”
Mark Pincus: In 2006 Yahoo offered Facebook $1.2 billion ,I think it was, and it seemed like a breathtaking offer at the time, and it was difficult to imagine them not taking it. Everyone had seen Napster flame out, Friendster flame out, MySpace flame out, so to be a company with no revenues, and a credible company offers a billion-two, and to say no to that? You have to have a lot of respect to founders that say no to these offers.
Dustin Moskovitz: I was sure the product would suffer in a big way if Yahoo bought us. And Sean was telling me that 90 percent of all mergers end in failure.
Mark Pincus: Luckily, for Zuck, and history, Yahoo’s stock went down, and they wouldn’t change the offer. They said that the offer is a fixed number of shares, and so the offer dropped to like $800 million, and I think probably emotionally Zuck didn’t want to do it and it gave him a clear out. If Yahoo had said, “No problem, we’ll back that up with cash or stock to make it $1.2 billion,” it might have been a lot harder for Zuck to say no, and maybe Facebook would be a little division of Yahoo today.
Max Kelly: We literally tore the Yahoo offer up and stomped on it as a company! We were like, “Fuck those guys, we are going to own them!” That was some malice-ass bullshit.
Mark Zuckerberg: Domination!!!
Kate Losse: He had kind of an ironic way of saying it. It wasn’t a totally flat, scary “domination.” It was funny. It’s only when you think about a much bigger scale of things that you’re like, Hmmmm: Are people aware that their interactions are being architected by a group of people who have a certain set of ideas about how the world works and what’s good?
Ezra Callahan: “How much was the direction of the internet influenced by the perspective of 19-, 20-, 21-year-old well-off white boys?” That’s a real question that sociologists will be studying forever.
Kate Losse: I don’t think most people really think about the impact that the values of a few people now have on everyone.
Steven Johnson: I think there’s legitimate debate about this. Facebook has certainly contributed to some echo chamber problems and political polarization problems, but I spent a lot of time arguing that the internet is less responsible for that than people think.
Mark Pincus: Maybe I’m too close to it all, but I think that when you pull the camera back, none of us really matter that much. I think the internet is following a path to where the internet wants to go. We’re all trying to figure out what consumers want, and if what people want is this massive echo chamber and this vain world of likes, someone is going to give it to them, and they’re going to be the one who wins, and the ones who don’t, won’t.
Steve Jobs: I don’t see anybody other than Facebook out there—they’re dominating.
Mark Pincus: So I don’t exactly think that a bunch of college boys shaped the internet. I just think they got there first.
Mark Zuckerberg: Domination!!!!
Ezra Callahan: So, it’s not until we have a full-time general council onboard who finally says, “Mark, for the love of God: You cannot use the word domination anymore,” that he stops.
Sean Parker: Once you are dominant, then suddenly it becomes an anticompetitive term.
Steven Johnson: It took the internet 30 years to get to 1 billion users. It took Facebook 10 years. The crucial thing about Facebook is that it’s not a service or an app—it’s a fundamental platform, on the same scale as the internet itself.
Steve Jobs: I admire Mark Zuckerberg. I only know him a little bit, but I admire him for not selling out—for wanting to make a company. I admire that a lot.
The written language is very different from the spoken word. And so, I’ve taken the liberty of correcting slips of the tongue, dividing streams of consciousness into sentences, ordering sentences into paragraphs, and eliminating redundancies. The point is not to polish and make what was originally spoken read as if it were written, but rather to make the verbatim transcripts of what was actually said readable in the first place.
That said, I’ve been careful to retain the rhythms of speech and quirks of language of everyone interviewed for this article intact, so that what you hear in your mind’s ear as you read is true in every sense of the word: true to life, true to the transcript, and true to the speakers‘ intended meaning.
The vast majority of the words found in this article originated in interviews that were given to me especially for this article. Where that wasn’t possible I tried, with some success, to unearth previously unpublished interviews and quote from them. And in a few cases I’ve resorted to quoting from interviews that have been published before.
Mark Zuckerberg’s quotes were uttered at a guest lecture he gave to Harvard’s Introduction to Computer Science class in 2005 and in an interview he gave to the Harvard Crimson in February that same year. Dustin Moskovitz’s quotes were taken from a keynote address at the Alliance of Youth Movements Summit in December of 2008 and from David Kirkpatrick’s authoritative history, The Facebook Effect. David Choe’s comments were made on The Howard Stern Show in March 2016. Steve Jobs made his remarks to his biographer, Walter Isaacson. The interview was aired on 60 Minutes soon after Jobs died in 2011.
On October 29, 1969, in this room at UCLA, a student programmer sent the first message using ARPANET, a precursor to the modern internet. The message didn’t go well. The programmer, Charley Kline, got halfway through the word login before the program crashed. It wasn’t a great start.
It would take a few more decades until the internet started entering our homes, but its impact is almost incalculable. It’s transformed nearly every facet of life, and whole human generations identify around its existence.