Who Needs Customers?

The July 25 NYT ran an article, “Industries Find Surging Profits in Deeper Cuts.”

The essence was that our economy is in a unique situation: profits are soaring – not because sales are rising, but because costs have been cut to the bone and are staying that way. Meanwhile, unemployment is terrible, and may well stay that way for 3–5 years (David Gergen’s view).

Here’s a quote:

“This seeming contradiction – falling sales and rising profits – is one reason the mood on Wall Street is so much more buoyant than in households, where pessimism runs deep and joblessness shows few signs of easing.”

It reminds me of a story my father used to tell about an elderly couple in a small New England town. The husband had been employed by the town for 30 years to polish the Civil War cannons on the village green. One day he came home and announced to his wife, “I’m going into business for myself – I bought a cannon.”

Think about it.

The Early Days of Facebook

This morning, I noticed that the Harvard Crimson website featured a link to the original February 9, 2004 Crimson story reporting the creation of what is now Facebook. Note the quaint headline, “Hundreds Register for New Facebook Website“.

Remember, this was 2004 and Mark Zuckerberg was a sophomore in college. Today, just six years later, Facebook announced that it had reached 500 million members, and Mark Zuckerberg is a billionaire.

The article is very interesting reading. Here are a few quotes:

“After about a week of coding, Zuckerberg launched thefacebook.com last Wednesday afternoon.” “‘Everyone’s been talking a lot about a universal face book within Harvard,’ Zuckerberg said. ‘I think it’s kind of silly that it would take the University a couple of years to get around to it. I can do it better than they can, and I can do it in a week.’” [A Harvard official responded that the creation of a University facebook was not that far off.]

The story of Facebook’s origin is reasonably well known. However, the article mentions a little-known fiasco that preceded it.

“Zuckerberg said that he hoped the privacy options would help restore his reputation following student outrage over facemash.com, a website he created in the fall semester.” “Using without permission photos from House facebooks, Facemash juxtaposed the pictures of two random Harvard undergraduates and asked users to judge their physical attractiveness.”

Facemash landed Zuckerberg before Harvard’s Ad Board (the disciplinary committee), but he learned from his mistake. “‘Facemash was a joke, it was funny, but at its root it had problems – not only the idea but the implementation. It was distributing materials that were Harvard’s. I was very careful with [thefacebook.com] to make sure that people don’t upload copyrighted material,’ he said.”

The rest is history. What does this tell managers and entrepreneurs? Here’s my short list.

(1) There is a tremendous power to showcase projects – just trying things and learning by doing. Thefacebook.com never would have stood the test of a formal business case because its market could not have been measured at the time it was developed.

(2) Don’t be deterred by an early stumble. Facemash certainly was ill-advised, but Mark Zuckerberg managed to learn from this experience and move on to do something that really endured.

(3) As Nike would say, “Just Do It.” Almost everyone has some good ideas in mind, but few have the resolve to put them into action – either within your company or on your own. This is one of the essential things that separates leaders from followers.