Facebook's insane mobile takeover is just beginning

In August of 2012 Facebook stock was trading at $19 per share -- half of its IPO price of $38 -- and the prognosis was that FB might have seen better days.

The financial press was pounding the company hard, wondering if social networking -- or the life of any one social network -- was akin to a fad. Perhaps people just naturally joined one service every couple of years, or perhaps different demographics would be attracted to different social offerings.

Turns out they were right about the faddish nature of social networks -- they do fragment along generation, geography, product design, and even devices!

What the markets got wrong was that Zuckerberg would be able to own four of the top six social networks by the end of 2014 -- and 86% of the active users.

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Monthly mobile active users of top social apps

Facebook (main app): Not broken out, safe to say 1b

FB Messenger: 500m

WhatsApp: 700m

Instagram: 300m

Twitter: ~250m

Snapchat: 100-200m

Total: 2.9b active monthly users

FB Main App + FB Messenger + Instagram + WhatsApp = 2.5b active monthly (not unique) users *

FB has 86% of the active user count of those six Apps. Stunning.

Now, I would say Twitter’s users are worth 2-5x as much as the average FB users because the product is just much more “upscale.” It draws the more elite, powerful, and intelligent folks (overall). Would be interested in seeing some demographic studies on this if anyone has them.

* These are not unique users, as folks might use two or more of these apps in a month. Facebook’s total monthly mobile is 1.19b, which means they use two apps on average -- WHICH IS AMAZING!

When Facebook SUCKED at mobile

It’s hard to believe that Facebook actually sucked at mobile only 24 months ago -- but if you go back 36 months they were outright horrible.

Sometime in 2010 or 2011, Facebook made a huge bet on wrapping HTML pages inside of their first iPhone App. It was a huge mistake.

Their 1st app was slow and buggy because HTML sucks at things like gestures, GPS, and photos … today! Way back then these types of features were either barely -- or not even -- supported by HTML.

Facebook was the laughingstock of the industry because they couldn’t get their act together.

What a difference four years makes. Today they are crushing it in mobile, without owning an operating system like Google does with Android -- let alone an operating system AND the best hardware on the planet like Apple!

Facebook’s continued mobile brilliance

Adding to Facebook’s masterful M&A track record, they’ve done another handful of savvy things:

1. They released a lightweight version of FB for Android -- for people who have low quality phones. This level of effort is simply brilliant, because the folks with the cheap phones have little choice of what to do with them. Adding a FB that’s fast and snappy!? Genius.
2. Facebook App install network, which was a skunkworks project, is generating $1 to $10 an install (based on data I have from my portfolio companies). I’m guessing $3-4 on average per install. FB is printing money, as anyone with a video game, commerce App, or subscription revenue can easily justify spending X dollar per App if Y Apps installed equals a sale or subscription -- and it does.
3. Facebook’s App install network is going to be a massive revenue generator -- when they let other Apps use it to monitor (like Google AdSense did for the web). I’m not sure where they are at on this (is it announced?), but I know that folks are working on it.
4. Instagram is working on opening up their API, and when they do it will cause a massive spike in usage and signups because developers will figure out all kinds of interesting ways to integrate with the product.
5. Facebook isn’t afraid to make huge, embarrassing swings like Poke, that slick news product no one downloaded, and that silly home screen takeover for Android that was DOA. They will keep coming at (and copying) Twitter and Snapchat -- the only two social networks they don’t own -- until they beat them or buy them. Some might consider this loathsome, but it does speak to how relentless the organization is -- owning four of six networks isn’t enough … the have to kill the other two!

You have to give it up to Sheryl and Zuck for keeping Facebook so relentless after being so far behind in mobile.

What’s next for Facebook in mobile

1. FB will give Snapchat $20b, 30b, and 40b offers over the next two years. 50-50 they get Evan to sell.
2. FB will buy Tinder for $5b.
3. They will add Apps to directly compete with Google, like maps, email, and productivity (think: Evernote). As well as cloud storage.
4. FB will attack video even harder by sharing revenue with creators for the first time in their history.
5. FB will take some big swings in entertainment, perhaps buying Spotify to nab music, and by making a run at Netflix or Hulu to get movies and TV shows. If Netflix and Spotify were owned by FB they would have 3x as many subscribers OVERNIGHT -- which means FB could overpay for those companies. 90% chance they get Spotify, 10% chance they get Netflix, and 25% they get Hulu.
6. Another run at Blackberry sounds crazy, but a proven, global, and secure operating system that is still loved by hundreds of millions around the world would make total sense (especially given Blackberry’s new ability to run Android Apps -- you know about that right?).

What do you think Zuck’s next big move is?

best @jason

[ Disclaimer One: Last year I found out that a venture capital fund I’m a Limited Partner in had put ~$6,000 of mine into WhatsApp early on. It returned well over 100x -- which was a nice surprise considering I had never really used WhatsApp, let alone known I was an investor. I elected to sell all my Facebook shares because I like to hold balanced index funds in my Wealthfront account. I can sleep better at night with a barbell strategy: absurdly risky angel investments on one end and index funds/bonds/cash on the other!

Disclaimer Two: A couple of years ago, a startup I invested in was acquired by Facebook and I was supposed to get .50 on the dollar of my $10,000 investment in Facebook shares. I still haven’t gotten them due to some patent litigation! If I ever get them I’ll probably break even. Sigh, such is the life of a crazy angel! ]

PS - We are hosting the LAUNCH Hackathon right before the LAUNCH Festival, and I will be investing in the winners (if they start a company!). 800 developers and designers fighting it out for $100,000 in investment -- and the chance to be on the main stage!

PPS - The LAUNCH Festival is 32 days away and the Main Stage agenda is OVER subscribed, as is the Product Hunt AMA stage -- the most amazing speakers on the planet. There are three tickets you can buy $49 (no food!), $1,000 (VIP, food, classroom seats, the founder party -- and the baller “SUPER VIP” ticket which gets you into four dinners/parties occurring during the event. The SUPER VIP tickets are very limited and intended for corporate folks, VCs, angels, etc., who want to support the event and do high-level networking in small groups.