AMERICA has, since its earliest days, been the crucible of great fortunes created within a lifetime. Cornelius Vanderbilt, John D Rockefeller and Andrew Carnegie all died richer than Croesus, each owning the equivalent of more than $150bn (in today’s money) after recognising the world-changing potential of railways, oil and steel.
But another name needs to be added to this pantheon: Mark Zuckerberg, who has yet to touch their stratospheric wealth, but who has established an empire with a dizzying speed that would make even these great men envious.
Facebook, which he dreamed up in his Harvard dorm with a couple of other students, celebrated its 10th birthday this week.
In that short time (Zuckerberg is only 29), the website helped to redefine how a generation goes about its daily life. It has become a family photo album, an address book, a daily newspaper and a school-and-work reunion site.
Facebook’s scale is hard to fathom. There are 1.23-billion users — half of the world’s population with internet access.
About 750-million use Facebook daily. Every day, 350-million new photos are uploaded to the site. And, according to Lou Kerner, founder of the Social Internet Fund, “more than 20% of all time spent on the internet is spent on Facebook”.
After initial doubt about how it would make any money, its stock market valuation passed $150bn last week, cementing Zuckerberg’s wealth at $30bn.
The current generation of students — plotting the next gazillion-dollar web company — has never known university life without Facebook.
Joe Sowerby Thomas, in his first year at Oxford, is typical. He says: “Nearly all university social activities are organised via Facebook. On my phone, if I was getting in touch with a friend, I’d use Facebook rather than texting. I can think of only one person in college who isn’t on Facebook.”
CSS Insight internet analyst Martin Garner said: “Social networking has really changed the world and Facebook has been the strongest and biggest player within it. It is a really big deal.”
But its success led in recent months to fear that it may be due for a tumble, that in another 10 years we will talk about it as we now talk about MySpace and Bebo — once huge websites that died a death.
A report by Princeton University researchers suggested Facebook would lose 80% of its users by 2017. Comparing the site to a virus, it said Facebook had “already reached the peak of its popularity and has entered a decline phase”.
This came a few weeks after another academic report said Facebook was losing a worrying number of teenage users, who thought the site was as cringe-worthy as your mother twerking. Having parents or grandparents monitoring your drunken exploits was beyond the pale.
“Facebook is not just on the slide — it is basically dead and buried,” wrote Daniel Miller, professor of material culture at University College London, in explaining the “teen flight”.
“Mostly they feel embarrassed to be even associated with it,” said Miller.
The company’s chief financial officer admitted that it had recently seen “a decrease in daily users, partly among younger teens”.
Garner said his 15-year-old son had “defriended” him on Facebook. “That was a bit of a moment.”
Snapchat — a site that allows members to send pictures to each other before the photos are deleted after 10 seconds — is a firm favourite among teenagers, along with WhatsApp and Instagram.
But these reports underestimate not only Facebook’s innovation, but also the sophistication of teenagers able to juggle social networks.
Nate Elliott at Forrester Research said: “Social interaction is not a zero-sum game. The rise of Twitter did not kill Facebook. Likewise the rise of Facebook did not kill texting. Even if Snapchat becomes successful in the next 10 years, it does not mean Facebook goes away.”
The company is aware of the threats and has neutralised some. It bought Instagram for $1bn but was spurned by Snapchat after it offered a reported $3bn.
Facebook still managed to attract 89% of all 18-to 24-year-olds in America in November, as close to saturation as it is possible to get.
Its future lies in ensuring that it makes lots of money from users by encouraging them to come back as often as possible.
Already, 61% of monthly users visit daily, up from 55% in 2012. That is loyalty many websites would kill for.
Perhaps its greatest opportunity lies in developing the internet for the world’s 4.5-billion people now offline.
It has teamed up with handset manufacturers to create simple smartphones in a project called internet.org. This could mean that many African and Asian consumers’ first taste of carrying the internet in their pocket will be via Facebook. It will be how they keep in touch with their family, bank or doctor.
“This is a huge untapped market,” said Stuart Miles, founder of the Pocket-link website. “If they can get a pared-down Facebook on to these less sophisticated smartphones — that will be a huge deal.”
Elliott said Facebook’s future over the next decade was as secure as it could be.
“Ten years is a long time, but we’ve rarely seen a dominant company so good at maintaining its lead, at maintaining its edge,” he said. “If anyone can stay on top, it’s Facebook.”
Not just in 10 years, but in 100, we may well be talking about Zuckerberg and Facebook as we now talk about Rockefeller, Vanderbilt or Carnegie. — © The Daily Telegraph, London
• This article was first published in Sunday Times: Business Times