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Facebook Seeks Growth over Profits

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NTDTV
October 14, 2008

ANCHOR:
Facebook founder Mark Zuckeberg shared his tips for navigating a tough financial climate during a visit to London. He is confident that his strategy of emphasizing sustained growth over short-term revenues is still feasible.

STORY:
Appearing at the Future of Web Apps event in London, Facebook founder and CEO Mark Zuckerberg explained how the company he started at Harvard in 2004 plans to optimize its services for an ever more dynamic online and mobile environment in order to maintain momentum now that Facebook has more than 110 million active users.

Though the growth rate of the Facebook platform over the past year has been phenomenal, the current gloom surrounding the economy is intensifying interest in how the site plans to deliver on its promise by finding a model that effectively monetizes all that activity.

After all, the 1.6 percent stake Microsoft bought in Facebook last year for 240 million dollars implies a valuation of 15 billion dollars for the 4 year old company.

[Reporter]:
"We are speaking now in extraordinary economic times. what does that do to your timetable, if anything, in terms of making a profitable business out of the site?"

[Mark Zuckerberg, Facebook CEO]:
"Well the important thing for us is what we really want to do is help people share more information and the priority is going to be just continuing to spread facebook throughout the world. We just hit this important milestone for the company where more than 100 million people are sharing information on the site. In some ways that's a huge milestone and in a lot of other ways it's just the beginning. Right there could be hundreds of millions of more people who could use the site. While we're doing that what we want to do is optimize our revenue flow for sustainability, so we're not trying to optimize for the highest profits right now. We're just trying to optimize to keep growth going and all that. I think that's going to be definitely possible for us to do, even in this economic environment."

Even before the recent spate of market turmoil, there were doubts in some quarters whether social networks would ever develop into an effective delivery platform for commercial messages.

This is WPP CEO Martin Sorrell speaking to Reuters TV in May of this year.

[Martin Sorrell, WPP CEO]: (May 2008)
"The reason why people group themselves around these sites is because they are not commercial."

Zuckerberg concedes that the social advertising model is still in its infancy and will require further innovation. He says recent changes to the plaform's design are intended to clear up the clutter, but hints that the 'new Facebook' is still a work on progress.

[Mark Zuckerberg, Facebook CEO]:
"There are also a bunch of people who have given us feedback that we're really appreciative of and, you know, we're considering a lot of that because it's obviously not perfect in its first version."

Zuckerberg suggests that Facebook can learn lessons from the chipmaker Intel which governs its trajectory by something called Moore's law.

The notion is that the rate of sharing online is now expanding rapidly, in the same way processing power tends to double every two years.

However, designing microchips is one thing.

Staying in step with an expanding and opinionated user base throws up its own distinct challenges.

Category: News & Politics

Tags:

ntd facebook Mark Zuckeberg London Harvard economy

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