How Facebook Took Over Your World and What Is Coming Next

Michael Hoefflinger, Author and Entrepreneur in Residence at XSeed Capital, joins the Social Pros Podcast to share his first-person experience with the insanely successful Facebook News Feed and his thoughts on the future of native advertising in social.

In This Episode:

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Full Episode Details

First Comes Product, Then Comes Advertising

It’s safe to say that Facebook has changed the world and how we communicate. They have defined social media and are constantly evolving to stay in front of the pack.

Moving beyond the consumer, Facebook, and, more specifically, the Facebook News Feed has fundamentally altered the course of social marketing and given rise to the existence of “native advertising.”

Mike was there for Facebook’s leap from a college network to global social behemoth and helped shape the News Feed as we know it now. His behind-the-scenes experience has given him insight into the future of social marketing and how to harness the power of the tools we have now and those that are created later.

It turns out many of us are putting the cart before the horse when it comes to advertising and social. Mike’s simple shift in perspective can put your social marketing back on track to success.

In This Episode

  • Why being successful as a leader means seeing around corners and being in it for the long-haul
  • How what’s best for the goose and gander leads to decreased organic reach for some businesses
  • Why winning marketing means meeting customers where they spend most of their time without scaring them away
  • How starting with the advertising end game leads to a losing product

 

Quotes From This Episode

“There is a ton of angst any time you’re operating on a platform controlled by somebody else. You worry about your landlord.

What is best for people, and even if that means reducing organic reach sometimes for businesses, is what’s best for everyone.

If people abandon the News Feed, the party is over for everyone. Click To Tweet

“It used to be that you either operated offline or online and now, increasingly, we see Facebook actually be able to relate those two things to each other.”

“If you are narrow you best be deep, because if you’re neither, then this is not going to end well.”

“Behind it all, artificial intelligence will play an ever increasing role of fitting the right content to the right person because that’s simply the best answer for everyone.”

You have nothing if you don't have a product that is super successful with people. Click To Tweet

“No matter how great a tech company you are, you want to have a diversified future.”

Resources

 

See you next week!

 

Transcript

Jay: Welcome everybody back to Social Pros, the podcast for real people doing real work in social media. I am as always Jay Baer from Convince and Convert joined per usual by my special Texas friend, he is the Executive Strategist of Salesforce Marketing Cloud live from music city Austin, Texas it is the one the only Mr. Adam Brown.
Adam: Hello Jay, how are you?
Jay: I’m fantastic my man, I spent not one not two not five not seven but nine hours on my boat yesterday, which is eight hours and 45 minutes longer than I’ve spent on my boat in the past, and managed to live to tell the tale. So I am refreshed, I am full of melatonin I guess is maybe the work I’m looking for. It’s all good.
Adam: And did you wear sunscreen? I mean I want to make sure we’re promoting healthy lifestyle here on Social Pros.
Jay: I did. As a child of the desert I know a little bit about sunscreen so it’s all good.
Adam: Fantastic. Well I’m glad to see the transition, you’ve always said you’re an avid indoorsman on this show so it’s so excellent to see …
Jay: Yes, it’s true I am an indoorsman. I don’t know that driving a boat qualifies as being an outdoorsman, we’ll have to poll the listenership on that. It’s not like I’m hiking the Appalachian Trail but hey, it’s a start.
Adam: I’m excited, I’m secretly envious. We had a lovely holiday weekend here but no boats or no lakes were harmed in the making of this …
Jay: You’ve got to get out here, we’ve got to get you and Mrs. Brown on the boat sometime.
Adam: You’re right, we’re ready.
Jay: What we should do is a contest for listeners, who wants to come hang in Indiana with Jay and Adam on the boat for a weekend. That would be fun.
Adam: You know what they could do? The who could swim out farther into the lake without drowning.
Jay: Well the lake’s not very deep, so that’s going to be a pretty easy contest. You could almost walk across that lake, so I don’t think we’re going to lose any listeners.
Adam: Oh we have some religious overtones there too. Anyway, segues away.
Jay: If you’re interested in coming out to a lake with Adam and I, jay@jaybaer.com you let us know and we’ll see what’s happening.
Adam: I am so fired up, so fired up about this episode I could actually walk on water. That’s how excited I am about this show. Joining us on the podcast, Mike Hoefflinger who is the author of a new book, it’s been four-five weeks I think called “Becoming Facebook: The 10 Challenges That Defined the Company That’s Disrupting the World.” Mike was the lead of global business marketing at Facebook, essentially built out their entire advertising platform working hand in hand with Sheryl Sandberg, a terrific leader that many of you are familiar with. He’s now also the executive and resident at XSeed Capital using all of his Facebook knowledge to make new startup companies a success. Mike, welcome to Social Pros.
Michael: Thanks so much for having me guys. And by the way, driving a boat is 100% being an outdoors person, and you should feel comfortable.
Jay: Thank you. Thank you, I appreciate. You’re an Indiana guy too, right?
Michael: I am, yes. High school and college, way too much time in West Lafia no judgment.
Jay: Did you go to high school in Lafia as well?
Michael: I did.
Jay: Wow, that is really something. You are the first person I ever met who went to high school – I’m from and I live in Bloomington now so I’m gonna just ignore for the rest of the show the fact that you went to Purdue. But we’re gonna get along just fine, that’s amazing.
Michael: Yeah. I think we’ll be able to achieve a calm here for the next little while.
Jay: I’m just gonna go out on a limb and say you’re the highest ranking Facebook employee ever who is from Lafia, Indiana.
Michael: I haven’t researched the topic but that may just by good luck and fortune be true, yeah.
Jay: That may in fact be the case. So I had a question for you to start off here and I saw you posted something on your Facebook page and this is a little bit meta, about the book launch et cetera and Mr. Zuckerberg, a familiar name to everybody who listens to the show liked your post which I thought was very kind. And so my question was, Facebook was totally cool with you writing the book? It’s not a gotcha kinda book, it’s very, very illustrative, it’s very interesting, it’s very insider in a way that’s delicious and fantastic, it’s not salacious in any way but I just wanted to ask you what was the process of saying, “Hey I don’t work here anymore but I’m gonna write this book about my time here.” Where everybody was just like, “Great, do that.”
Michael: Yeah, I think when the contract came in for the book it’s something of course that I wanted Sheryl Sandberg, Mark Zuckerberg to be aware of what I was doing, and to them I wasn’t an unknown variable. I can’t imagine that they got my note and started to wonder what I was going to write down. My objective which I made clear to them and they had access to my manuscripts although they didn’t change anything, was to write down a period in Facebook’s coming of age that was much, much more important and frankly much more interesting than what had been able to be captured in other books or movies to the extent that we even think that that was a fact prior. I mean the last seven-eight years have just been a very profound time for Facebook and the world and nobody had had a chance to write it down, that’s all I was trying to do and they’ve been big fans of the book and of course the fact that we used to work together helped.
Jay: So, and I think it’s an important note, the book doesn’t focus on a startup year in some sort of dorm room to creation myth but really from the time that Facebook went public until the recent past. And the hyper growth went from a very successful company to a company that dominates the world in many ways, it’s that period of time that the book focuses on, yes?
Michael: Yeah and a little bit before that. I mean very, very roughly the core of the book and the 10 challenges that we talk about and the lessons in turn that I think all of us, even if you’re not named Mark Zuckerberg or Sheryl Sandberg can take away from it, start very roughly in 2008 kind of 2009. And then they end a little bit towards the end of last year and that period, that seven-eight year period Facebook went from not being number one in social media in the US to growing its user base by 10-a dozen times depending on how you count, and its revenue by a hundred x and then oh by the way added three additional tools that now make them four of the top six ways that we communicate in the world.
Jay: Instagram, WhatsApp, et cetera.
Michael: Exactly, Messenger, yeah.
Jay: Yeah. Do you think Facebook would be possible as we know it without Mark Zuckerberg and Sheryl Sandberg?
Michael: Well I mean the super short answer in my opinion is definitely no, and I do think that these kinds of leaders are unbelievably crucial to these kinds of companies. I don’t think that we can honestly imagine Facebook without the two of them, and not only without the two of them but I think the two of them very specifically as a CEO-COO tandem I think are one of the great CEO-COO tandems in any business at any time ever. Because that’s actually a very, very tricky dance. You have to be supremely able to completely trust each other, to completely agree that you do that best and I do this best, and yet still find total common ground even though one of you works for the other. And so there have only been very, very few tandems like that. I mean you would maybe say Jobs plus Cook, you would maybe say Andy Grove plus Greg Barett at Intel but it’s very rare that that happens. And so I think you have to give them a particular credit for that, but I think it’s also difficult to imagine Amazon without Jeff Bezos, I think it’s very difficult to imagine Netflix without Reed Hastings. It’s impossible arguably to imagine Tesla, SpaceX, Boring Company, whatever he’s going to come up with next without Elon because I think they have two incredibly crucial things that you can directly correlate to the success of the business. One is fundamentally the vision, the ability to see something around a corner that is clever, but that most of the world at that point actually thinks is foolish. Because if they see something that’s clever and everybody else thinks it’s clever then it’s gonna just be a massive food fight at low market share that kind of stuff. And the other thing is they can wake up every morning and have the will to lead over very, very, very long periods of time to see these visions and missions come together. I don’t think that you can separate the way that Mark thinks about the future, the way that he’s a doer rather than a pontificator from Facebook’s success.
Jay: One of the things that we talk about a lot on this show, and have for a number of years now is the decline of organic reach for businesses on Facebook. As you well know there was a time when organic reach was quite plentiful on the platform inside News Feed and businesses and corporations using Facebook who had reached their fans in ways that were not dissimilar from how you would use email, just at a lower cost. Of course those days are long gone and organic reach in News Feed has fallen dramatically in most cases, and now most businesses have turned to paid Facebook advertising to fill that gap and achieve the kind of reach that they feel like they need to achieve to interact with their audiences. Without putting too fine a point on it, I don’t know if that was your fault. So what do you think about that? How do you… looking backwards, there’s a lot of still sort of angst in the business community about that. How do you feel about that and what is your advice going forward for corporations who want to use News Feed to reach their audiences?
Michael: Well and I am of course well familiar with that and had many, many, many a conversation with customers, that was my job, my team’s jobs to communicate not only what is happening, but why it’s happening and how you can continue to take advantage of this system that does connect businesses and people extremely well. And I think that the place you have to start is that it’s not even a fault, and I know that there was a ton of angst and I think to a certain extent still is any time you’re operating on a platform controlled by somebody else you worry about your landlord. And incidentally Facebook by the way has to worry about its landlords, otherwise known as Android and iOS. But so the angst of course for the customer base was totally understandable, the reason it was not actually a fault, the reason it was not actually a mistake is that you have to keep the Facebook News Feed which is now 11 years old and I think clearly on the way to becoming one of the great media of all time, clean and well lit. The most important thing is that the people using News Feed continue to have a very positive sentiment about it, continue to feel that it is something that they want to see more or less once every waking hour. And what is good for people, which is to continue to have the content from friends, the content from things you’re connected to very finely balanced. What is best for people, and even if that means reducing organic reach sometimes for businesses, is what’s best for everyone. It’s certainly best for people and if people do not like the News Feed, then everyone loses. Forget about how much organic distribution you’re getting, if people abandon the News Feed the party is over for everyone, right? Including Facebook’s customers and Facebook. So it does seem like the faucet is being turned off, but what is being watched out for is the fact that consumers continue to feel the News Feed is a place they want to be so that we can continue to have these opportunities to connect in unique ways. So what is the advice? The advice is to do what you always do in marketing, which is to be keenly aware of what your customers are most interested in, to communicate that to them and if you put investment behind communicating it to them that you have a strong feeling what you’re trying to accomplish, the ability to measure that, and the confidence and satisfaction that whoever your provider is, whether it’s Facebook or another advertising platform is driving the results for you that you want. Which is why Facebook is so obsessed with a relatively unsexy topic, let’s say outside of the audience that’s listening to you right now of measuring efficacy across all the objectives that Facebook advertising delivers against.
Jay: One of the things that’s so remarkable about Facebook as an advertising platform, we talked about this a moment ago before the episode was recording, is that Facebook advertising is viable for the biggest companies in the world and the Facebook advertising is viable for the smallest companies in the world. And that is, it’s not unprecedented but it’s darn near unprecedented. As somebody who was one of the architects behind that platform, how did you pull that off and what is the secret sauce behind that ubiquity?
Michael: The secret sauce behind the ubiquity I think is simply the scale at which people all across the world have embraced Facebook. Because essentially feeling connected is the human condition and I think Facebook by design and also a little bit by good timing and by having a great fit to mobile, which is comfortably the most profound shift in consumer media consumption ever. I think it was simply a wonderful fit, and everything starts there. If people all across the world want to use a service roughly once every waking hour you have the opportunity to provide a bunch of things to advertisers, to businesses to help them connect with those people that used to be contradictions, right? It used to be that you either had a ton of reach as Superbowl or you had very exact targeting, right? Condé Nast. It used to be that you either convert intent, you know Google, or create demand to the first order kind of TV. It used to be that you either operated offline or online, and now increasingly we see Facebook actually be able to relate those two things to each other. It used to be you either serve giant customers like Procter and Gamble or the dentist in Idaho, and now we can do both of those things. And that was really the simple story that we tried to communicate, that no matter who the people are that you as a business care about or how many of them you are, you will find them most effectively in the place that they spend so much time every day, everywhere on Facebook. And I think it was one of those rare marketing opportunities for myself, my team of really just trying to do the best job we could of explaining what the reality of the story was, rather than having to dress up anything.
Jay: One last question from me before I turn over to Adam for a moment, which is there’s been a lot of chatter recently in the social media marketing community about Instagram versus Snapchat, Instagram stories, Snapchat stories, et cetera and that Instagram is slowly squeezing the life out of Snapchat by copying their top features. I don’t think that’s really much debated in terms of the feature for feature mimicry and some of the things in Messenger as well, do you feel like that is, and these are things have happened since you departed Facebook. Do you feel like this is a business strategy, a happy accident, do you feel like the mission of the company now is to say, “Look we’ve got four of the top six ways to communicate, let’s make sure we’re not having a battle the seventh, eighth, ninth ways to communicate in the future that’s kind of build a moat around the attention that we’ve garnered for the platforms that we own.”
Michael: I do think it is that, and what’s normally to me most interesting about it is that it’s a path that was laid back in 2012 so five full years ago when; I spent an entire chapter in the book on how this got started because it’s so important, when Zuckerberg at a time in the earlier 2012 when he could’ve sat back and been very, very complacent. He had 900 million users, profitable company about to head into a 100 billion dollar IPO I think the vast majority of the universe would have forgiven him for phoning it in for a while. And at that time instead he decided that what’s important is that Facebook become more than just Facebook. And he said, “Hey look it’s actually possible that people want to communicate in ways that are, and feel connected in ways that are beyond Facebook the app itself,” and we’re gonna start by bringing Instagram into the fold. And not just acquiring for their talent and then shutting down their service and keep growing Facebook, but actually grow what Kevin Systrom and Mike Kriegor, the co-founders of Instagram were trying to build, which is this community that was about capturing moments, about at the time very curated, very visually centric content with a slightly different audience skew although there was substantial overlap to Facebook. And so they acquired Instagram, grew it to now 700 million users, I think their success in helping Kevin Systrom build Instagram allowed them to bring Jan Koum and Mike Atkin who built WhatsApp into the fold, then able to bring David Marcus over from PayPal to run Messenger and now they have four tools that in and of themselves are very successful but also gives them the ability to play defense against an up and comer. Because Facebook has to know that we used to be small, but we beat the big guys and so that’s existence proof that when we become the big guys, we need to look out for the smaller guy. And so it’s awesome to look at Zuck and say, “Hey amazing strategy, good defense, you’re using these four tools to make sure you’ve got a moat around your services, that you’re not allowing Snapchat to cut into the center of that,” but we all have to remember that that came because Zuckerberg was willing to disrupt himself in 2012 before he needed to. And so the story in my mind of defense against Snapchat now, the most important part of it actually started five years ago.
Jay: It appears Mike, at least from where I sit that the whole idea of the evolution of continuing to evolve the product, is something that this Snapchat is not having the same level of success in doing. I mean if we harken back to Facebook and Facebook’s IPO and there were some speed bumps along the way especially as the Facebook News Feed ads product came to fruition. I haven’t seen that evolution happen at Snapchat, is that an accurate portrayal of them being a one trick pony and not diversifying and distributing their insights either through acquisition or new products?
Michael: In my instinct is that I think we need to allow the jury to be out on that one a little bit, the same way the period that you described in 2012, the middle of the year they’re too deeply into the fall after the IPO which is very dicey, you had all the issues with the [inaudible 00:20:17] then you had a hundred plus days where Facebook stock basically was in decline, they lost half of their 100 billion dollar valuation over that period of time. From the outside looking in it looked very dire, people were beginning to worry whether they would not be able to make the mobile transition. Fortunately internally since the fall of 2011 they had been working on making as I described in the book the biggest decision in my mind in Facebook’s lifetime, which is to allow ads in News Feed which of course worked so wonderfully well. Especially in mobile, so that by the end of 2012 they were able to show that business, growth, revenue, and profitability reacceleration that everybody thought wouldn’t come. And so I’d maybe in similar way I think we have to allow for Evan Spiegel the Snap’s CEO and Snapchat’s to also go through that evolution in their product. They are making an interesting bet, which is more or less they have said, “We our goal is not to be big like a Facebook or WhatsApp or maybe in some ways even Instagram. Instead we will concentrate on being the primary habit of a very, very interesting audience to advertisers,” which is let’s call it Gen Z and the younger millennials. And I think then have very, very high average revenue per user. That is more or less Snapchat’s stated strategy. So what they need to show is that they are the best in the world at that, because if they are not that then they are certainly also not the size of Facebook and all of a sudden they’re kind of neither. Which by the way is a good description of Twitter, and I’m not value judging that I think it’s just fact that they’re not big enough to be Facebook and they’re not cool and nichey enough to be Snapchat and I think that’s Twitter’s struggle right now. So Evan has certainly made a bet for himself, he will need to pay that off, he will need to become the MTV if you will of this generation and make that work. I think you certainly have to give them credit for bringing about the stories format, Kevin Systrom himself the CEO of Instagram has said, “Congratulations Snapchat, great feature. We will have that too.” I think it’s a little early to say whether Snapchat is a one trick pony, and I think you had to give them credit for the growth that they’ve had with this particular audience to date.
Jay: And at least it’s a pony, right? I mean even having this conversation validates them at some level.
Michael: Oh for sure. For sure. And by the way when I call them in my mind very similar MTV which in its time was a phenomenal media product, I think that’s meant to give Snapchat a lot of credit. That’s not a diss.
Jay: All three of us are the same age, we grew up with MTV so we know.
Michael: Yeah, and I think that was certainly from our perspective as watchers and viewers and also if you will you have to give MTV credit for changing the media landscape a little bit, the advent of music videos, shows, and the kinds of things that they did. I think Snapchat discovered what DJ Khaled, et cetera, did. I mean it’s like what’s happening on Snapchat is also to some degree new media, right? 9×16 video formats, who would have thought that was an idea a couple years ago? So I think you do have to give them credit for that, but they have to watch out now for the downside of the bet that they’ve made, which is that if you are narrow you best be deep, because if you’re neither then this is not going to end well.
Adam: Well I think especially look as you said, the audience that they are focusing on, it’s a fairly fickle bunch in terms of wanting that compelling content that you talk about, the authentic content, but also a venue and a place where advertising can appear and coexist peacefully, and I use air quotes around that and even coming from an advertiser I know that’s a little bit of a stretch, but I think Mike that was something that was I think very powerful part of what you created at Facebook with the News Feed’s ads. I think a lot of credit’s given to Sergey Brin and Larry Page for coming up with AdWords which truly transformed paid advertising as we know it, not just in digitally but everywhere, but the other really interesting part of what you created with News Feed ads was this idea that you can if you want to see it, it’s right there. But it’s not intrusive, it’s not a popover, it’s not a popunder, there’s not a close box, it appears as harmoniously especially if it’s an ad that’s targeted to you so hopefully it’s going to be a little bit more interesting, it appears there with all the other content from your true friends and networks. And I think that is something that any other product is going to have to wrestle with and my question for you is, where is that? Is that going to be in a more Messenger oriented product? Is visual and video and imagery the next big thing? Is artificial intelligence Mike going to again completely transform not only what we’re looking at but where we’re looking at it?
Michael: I think you have to imagine that it will, and I think you’re absolutely right by the way to give Larry, Sergey, Alphabet, Google, a lot of a credit for building a product that first and foremost works great for consumers, I think we can all remember the first time that we hit the “I’m feeling lucky” button on Google, it delivered better results at a time when we all thought that Yahoo Search was gonna be the end game. So I think they built a great product for people, then they built an advertising product that fit into that great product for people that gave advertisers the ability to participate in a way that was consistent with that look and feel as opposed to disruptive with that look and feel. You have to wonder a little bit these days when three quarters of your above the fold on the first screen of search results is all ads, they’ll have to wrestle with that a little bit. But they certainly built something with the ads and content that result that you were looking at were harmonious and I think it’s no accident that you see Facebook building a similar product. First they built a great experience for people which was the News Feed, then they built ads that were harmonious with that. The ads they don’t get a more or less opportunity to communicate with users than users do. They get exactly the same format, exactly the same media, right? Text, then pictures, then video, then 360 degree video, then canvas, and on and on and on. If a person doesn’t have access to it on Facebook and in the News Feed, then a business doesn’t have access to it either. And so the product is very harmonious, if anything as you said it’s a little bit more harmonious even than Google Search because your thumb can completely control that. If you stop, great for the advertiser, if you keep moving, tough luck. We need a better ad with better targeting, better messaging the next time around. And so as you said, super strong control for the user while still giving a very powerful tool to advertisers. And you have to assume that we’re going to keep seeing products like this, again the advent of 9 by 16 full screen ads inside Snapchat stories, I think we will see that format as you use your right thumb to keep clicking as through the stories format we see that of course Instagram, WhatsApp, Messenger, Facebook have it too now I think we will see that format, it kind of fits naturally with that flow. Thrive, very, very short video will thrive for sure. And I do think behind it all as you mentioned artificial intelligence will play an ever increasing role of fitting the right content to the right person because that’s simply the best answer for everyone. No good business, no good advertiser in the world wants to piss off their customers, they want to create great things that are relevant and move the cause of their customer forward. And they want to participate in platforms that allow them to find the people that will benefit from the product or service that they have.
Jay: Yeah, I mean advertising as content, advertising as entertainment, advertising that’s hyper relevant therefore valued is the Holy Grail, it has been for decades. And now we’re getting there.
Michael: Well absolutely, and more generally advertising that’s appropriate to its audience. And there’s absolutely advertising that is purely entertainment focused that is completely appropriate for so many products, and for those products’ customers. And then there’s other advertising that has to be more informative, other advertising that has to mean more revelatory, other advertising that has to make you aware of something that you hadn’t thought about before because that’s the right answer at the intersection between that business and that consumer.
Jay: Speaking of advertising and sponsors, should take just a second to acknowledge this weeks sponsors on the Social Pros podcast. A brand new ebook from our friends at Yext. It’s called ‘The Everywhere Brand’ written by myself and Chief Marketing Officer of a newly public company Yext formerly cohost of the Social Pros podcast. Consumer attention is a finite resource, we’re talking about that here today, you need to capture it when and where consumers are searching. With the 2020s fast approaching it’s time to look beyond your website and your app and give your brand the visibility and opportunity it deserves by becoming an everywhere brand. To find out what an everywhere brand is and how you can become one, and trust me because I half wrote this book you do want to download it, go to offers.yext.com/everywherebrand. That’s offers.yext.com/everywherebrand. All lowercase you’re gonna like that. Also this week the show is brought you by Salesforce Marketing Cloud, the employers of Mr. Adam Brown among other people. Social media accounts for one third of all time spent online, naturally of course marketers have embraced the channel, talking about that today. Some highly effective strategies have surfaced, and some that are not so effective, a new report from our friends at Salesforce Marketing Cloud shines the light on 50 standout best practices for marketers on social media including insights on social listening for better metrics, strengthening relationships with fans, and creating scroll-stopping content and ads that actually work, we just talked about stopping the thumb not 30 seconds ago. How’s that for relevancy? Ladies and gentlemen go to candc.ly/getsocialebook. Candc.ly/getsocialebook and as always if you’ve missed the link or you’re not sure go to socialpros.com, we have every show in the vast history of this program, 270 episodes, every single show is at socialpros.com and all the links to our sponsors. Thanks so much to Yext and Salesforce Marketing Cloud Data. Back to you.
Adam: Jay thank you, always relevant Jay, and always omnipotent, omniscient. So thank you for that. And Mike Hoefflinger author of ‘Becoming Facebook: The 10 Challenges That Defined the Company That is Disrupting the World’ great to have you on Mike. One of the things that we were talking about a little bit before the commercials was again the transformation of all these companies in the social space, and you have been doing this for quite some time, working all the way back on the original processor with Andy Grove at Intel. And I’m curious, in something at least as it relates to social products I have begun to see. I think truly when Mark conceptualized Facebook, I think when Larry and Sergey came up with Google they were thinking about a tool and a product but they weren’t necessarily initially thinking about the ad unit that was going to be presented on that platform, on that site, on that channel. Whereas today I think the newer social media properties are kind of being developed with that advertising product thought and baked in from the onset. And my question for you is, do you generally agree with that and how is that changing how these products work and interact? Are products better or are they not better?
Michael: Well the key word these days seems to be native advertising and I won’t bother apologizing for the trite word but I think you have to think much deeper. I mean you would call search ads native, I think it goes back to what we were just talking which is advertising experiences that are harmonious with the fundamental value of the consumer product. And I think to that degree you have to say the way Larry and Sergey built, the way that Zuck built which is … And even arguably the way that Evan Spiegel at Snapchat built is you have nothing if you don’t have a product that is super successful with people. So there is little point in attempting to jump to the advertising end game until you have a product that, I talk about in the book a whole chapter on how does Facebook grow intentionally, ’cause there’s nothing about their gaudy number of user base and engagement that is accidental. They obsess about the metric that tells them whether or not they’re doing great with consumers. They obsess about the magic moment that gets you emotionally connected to the product which is seeing stuff from your friends in the News Feed. They obsess about the core product value that gets you to use it once every waking hour which is to feel connected to the things and people that matter to you. And I think there’s very little point trying to build a consumer product, especially these days when there’s eight million options in mobile apps and we haven’t figured out what’s beyond mobile, there’s no point building something by starting with the advertising end game. You have to prove to yourself and to your users that you can build something that they love, then you build an advertising tool that’s appropriate to that and you continue to evolve both of those things. Nothing can ever stay still, Mark young as he may be at 33 still is an absolute disciple of Andy Grove, who unfortunately of course passed away last year. The management Bible, ‘Only the Paranoid Survive,’ and Andy might have been two generations older than Zuck and also two generations earlier in technology but Zuck knows that if he doesn’t keep evolving his platforms, you also mentioned Spiegel earlier. There is no guarantee of success, especially in Silicon Valley where you literally have new dreams that live on the old ones, Google of course lives at SGI’s old campus, Facebook lives at Sun’s old campus. I think you have to build products that people love, that people continue to love, then you build advertising that’s harmonious with that. And so far that’s been the only recipe that has worked at any kind of depth and length.
Jay: Mike one of the things that’s interesting about Facebook is that there have been several attempts, I guess how I’ll frame it, to get more into direct commerce. There was a period where we talked a lot about F-commerce and people setting up Facebook stores and conducting commerce transactions on the platform, specifically as opposed to advertising and then transacting off the platform. To me that’s one of the areas where Amazon really does have a massive, massive lead is that they have access to our wallets at consumer level in a way that Facebook doesn’t yet. What’s your take on that?
Michael: I think that’s a fantastic point, and you’re absolutely right it has certainly been tried to do it semi-natively on these platforms to not great success. I mean if you want to oversimplify the conclusion, and instead you now see something much more pragmatic which is these platforms doing a really, really smooth, efficient, friction-free job of deep linking you into the platforms that are known for transactions, of course Amazon first and foremost. And it’s a perfect example by the way of this intense competition between the Facebooks of the world and the Amazons of the world. Being great in the advertising space these days is controlled heavily by access to consumers and the data that you have about those people. So certainly you’re going to give Google and Facebook a lot of credit, but you also have to give Amazon a lot of credit and so it’s fascinating to watch the relationship between Facebook and Amazon. They have clearly built now at Facebook ads that deep link into that product page and Amazon that make sure that they’re using the best of what Facebook is good at, which is communicating with people very, very frequently, giving businesses the opportunity to connect with those people and driving them very, very efficiently to the destinations where then ecommerce takes place. If you think about that flow from Facebook to Amazon if you have one-click enabled, you’re a couple of clicks away between Facebook ad and the box showing up on your doorstep. And Facebook and Amazon have simply decided that in that path they will simply do what each does best. In the meantime they continue to stare at each other and go, “Hey I might be able to do what you do,” in both directions by the way. Facebook potentially may be doing ecommerce down the road. But probably more important, and I point this out in the last chapter in the book, which is about is there any chance that Facebook can fail, if Amazon decides to stand up and say, “We know hundreds of millions of people. As a matter of fact when it comes to transactions we know them even better,” and suddenly it becomes not just a one or two billion dollar a year advertising company, but a three, five, seven billion dollar a year advertising company. Especially in areas like let’s say CPG for example, or retail that are important and meaningful to Facebook. That could be a real threat over time and we’ll have to see whether those two are going to be friends in the long term, which I think is probably the likely end game here, or foes.
Adam: And to that point Mike, certainly the Amazon Echo device, the new Echo, the vision device, the one with the screen these are in a lot of ways a bit Trojan horses to get inside the home and to be … With video content now and video chat and things like which you’re able to do on the new Echo devices. In a way beginning to do some of those exact things that you articulated. The other big thing that I think Amazon is really winning on right now is artificial intelligence, and I’m curious how you see AI impacting Facebook, specifically Facebook Messenger, something that Jay and I oftentimes talk about on the show is social customer service. That is certainly an area right now that Twitter is winning in, but certainly Facebook Messenger is very, very quickly creating a product that is going to be extremely powerful to do that. And a way to help the company as well as help the user through some of those customer service issues and challenges and opportunities is with artificial intelligence. What do you feel that Sheryl and Mark and the other leadership at Facebook are doing in and around that, and do you see that as being something that is going to transform the paid advertising, paid marketing side of social media as we know it?
Michael: I think you have to feel that that is going to have be very important down the road. No matter how great a tech company you are, you want to have a diversified future. And we see Amazon doing a good job of that, obviously the ecommerce business fundamentally, the Prime subscription business, obviously the advent of AWS as a 10 billion dollar plus a year business. We see them diversifying nicely whereas if you look at Google and Facebook they have absolutely phenomenal core businesses, but not yet a phenomenal what you might call second business. And so you are going to see Sandberg and Zuckerberg apply I think formulas that you have seen them use at Facebook, which is great consumer product then an appropriately good advertising experience, ads in News Feed. Instagram, great consumer product, make sure that Kevin and Mike have everything they need infrastructurally so that can grow to become a huge service like it is now with 700 million. Then begin to turn on the advertising engine slowly and carefully to make sure that it’s working for people and businesses, the way that it did at Facebook. And now of course even though they don’t break out the Instagram results on a quarterly basis, we have to assume that that is working extremely well. I think they are sitting down with David Marcus who runs the Messenger product right now to figure out what the same answer is there, which is certainly you want to use Facebook Instagram probably to drive with advertising people to Messenger, but when you’re on Messenger the harmonious experience there is communication. And as you mentioned of course, customer relationship management. Some of that will have to be done to your point about AI, some of it will have to continue to be done by people in the near term simply because they are best at truly understanding what I just asked in that Messenger thread. But we’re seeing some early signs that messaging to people on Messenger has 30% better open rate than the best open rates across their other marketing options. We’re seeing AI beginning to be able to take care of some basic communications between people and businesses and then we’re seeing this combination of AI with human backstops. When the AI throws up its computing hands and says, “Oh my god I’m not sure I can handle this,” then a person can take over while the AI watches what that person would have done so that the AI is one piece of information better the next time.
Adam: It learns for the next time.
Jay: Yep, yep, do you think the end game there Mike is that Facebook Messenger plus Instagram messaging, which is not massive but it’s a thing, plus WhatsApp becomes email? I mean we’ve talked about this on the show a number of times, I actually wrote half a chapter about in my most recent book that if Facebook has its way that Facebook becomes email. Because email has not really evolved at all, partially because nobody own it, do you think that’s where we end up?
Michael: You have to imagine that that would be a fairly desirable future for Facebook, and would fit in very nicely with the overall system. Not just for Facebook but also for businesses and for people. One thing that has been amazing to me, and you guys are right in the middle of this of course is the resilience of email. I mean you keep wanting to write it off as eventually it will be replaced, for the reason exactly that you mentioned which is it doesn’t seem to be a particularly innovative, because there’s no commercial interest behind it. And yet in my mind it’s remained very resilient, now it is interesting to see what is happening here in the early days of, for lack of a better label, Messenger monetization broadly speaking. And I think you’re going to see Facebook be very intentional here because there are some clear signs that this could be a powerful additional way for people and businesses to communicate, and that is what they are always looking for. Always the same recipe, great for people, then great for people and businesses. They’re clearly beginning to chart a course here where that’s possible, and it’s a course that is nicely related to what they’ve already established with the importance of pages and Facebook based advertising. So you have to assume that they are going to do everything they possibly can to find a way for Messenger to outperform email, to become a better tool, and Messenger, very specifically Messenger capital M, it will be their vehicle for trying that. And then when they have hit the jackpot in terms of what works, then they will bring it over to WhatsApp which they generally want to be very not distracted by monetization efforts. And so in a way David Marcus and Jan Koum are gonna … David is in some ways Jan’s forerunner, “Jan why don’t you continue to concentrate on continuing to grow out and be super huge,” and David instead will focus on figuring out the monetization angle and then presumably quite a similar product would then happen at WhatsApp. And between those two platforms and the way that they’ve super roughly divided up the world, minus China as we talk about in the book, you’re gonna see this become quite big.
Jay: It’s amazing to have not only a forbearer like, you essentially have your R and D but when you structure it like that, you also are unilaterally setting customer expectations. Because if Instagram does something and then it bleeds over to Messenger, and then it bleeds over from Messenger to WhatsApp, each sort of stair-step in that process educates all consumers about what to expect and what is permissible or what is okay from a monetization perspective. So it is truly going to, and almost unprecedented I’d say.
Michael: Definitely. And again an opportunity that Zuckerberg created for himself when he took the first step beyond Facebook itself by acquiring Instagram, using the success there to pick up WhatsApp to grow Messenger, et cetera. So he now has some significant strategic options. I think what has been interesting is that they never get in a room, and Zuck points at the product leaders for Facebook, Chris Cox the Chief Product Officer, the product leader for Instagram Kevin Systrom, the product leader for WhatsApp and says, “Tomorrow morning all of you guys are gonna implement ads exactly like this,” or, “Tomorrow morning all of you guys are going to implement stories exactly like this.” I think they still try to be very cautious about, “If we are implementing this, we begin to test that with 10 thousand people. We roll it out in New Zealand. And if people don’t respond to it the way we think, we’re going to be able to roll that back.” So he never gets anybody into a dark room somewhere and points to them and says, “All of you are going to do it exactly like this tomorrow morning.” So they’re still very cautious, always just religiously concerned about the sentiment of the user base even as they implement something as they eventually certainly did, call it stories on all four of their platforms but that’s certainly exactly what they did. Even though their product teams were able to move with some degree of independence.
Jay: So we’ve decided that email is John Travolta of technology, and we’ve also decided that New Zealand is the hidden test bed that we didn’t know existed. So we’ve got that out of this episode if nothing else. I could talk to you-
Michael: Small, English speaking countries that don’t necessarily have a super strong connection to the US.
Jay: It’s Northern Ireland or New Zealand, that’s the place to be.
Michael: No joke.
Jay: We could do this all day, Adam and I could literally talk to you for eight hours but you have other things to do. Folks, we’re going to wrap this up in just a second but I want to remind you this book is all that. Go to, ironically probably, Amazon, which is hilarious, and pick up a copy of ‘Becoming Facebook: The 10 Challenges That Defined the Company That’s Disrupting the World’ from our friend Mike Hoefflinger. Mike, one thing I want to ask you briefly before we get into the two questions that we ask every guest on the program is: you told us earlier that you have some background in semi-professional break-dancing, and I need you to just comment on that just for my own personal amusement.
Michael: Well … How do I explain that. I explain it this way, I was going to junior high school in Minneapolis at the time that Prince hit, which it’s one of the few things that come out of Minneapolis and so that’s all I’ll say about that. It was very appropriate to the time and the place, as odd as it sounds now looking back at it.
Jay: Ladies and gentlemen we will try to negotiate with Mike Hoefflinger for video evidence of same. If we are able to secure that video you can go to socialpros.com to see the Global Advertising Head for Facebook previously doing a 1984 era Purple Rain break-dance skit. Mike, thanks so much for being on the show. We’re gonna wrap it up with the two questions that we’ve asked everybody here across six years of this podcast. First one is, what one tip would you give somebody who’s looking to become a social pro?
Michael: Well I think the most important thing is don’t over plan. You’ve got to have a point of view on who you’re communicating with, at a net sense. I’ve said this so often to customers, social media marketing is marketing. So be obsessed about understanding your customer, have a point of view on what it is that they would want or need to know from you. But then be open to reacting to how they are responding, or not responding. And that is by the way the formula by which Facebook grew. They had a point of view about what people wanted and then they simply paid attention to the usage data that came back and built those products. That’s the advent of News Feed, right? We used to poke around profiles by going to each one individually, Facebook noticed that and said, “Hey why don’t we put this together to give you your newspaper that’s personalized to you.” So have a point of view, but listen to what you’re getting back from your customers.
Jay: Terrific advice. Last question for Mike Hoefflinger, author of ‘Becoming Facebook’ is: if you could do a Skype call, or maybe now the new Facebook Live Chat feature which rolled out last week, if you could do a simultaneous video call with any living person, who would it be and why?
Michael: I think right now the one I would choose is Jeff Bezos for a couple of reasons. One is, in my mind he’s very, very clearly in that list, a very, very short list – maybe a half a dozen CEOs in consumer technology over the last 40 years that have absolutely continually built the future for us. He’s safely on that list, I think right now you could almost make an argument that he is in the top 3, and I think if you look at it a certain way you could make an argument that he’s at the top. And I say this as a monster fan of Mark Zuckerberg, obviously. But I’ll tell you why I would choose to do a call with Jeff, it’s because out of that list, that very, very short list of these top CEOs, he is probably the quietest in public. And I think it would give me a chance to actually ask him some questions and have him talk about his perspective because I think out of the top CEOs, I think we probably hear from Jeff directly the least.
Jay: I’m sure that’s true. Terrific answer, and I don’t disagree with his placement on that list. I mean it’s a pretty selective company when you think about the folks who have simultaneously built a multi-billion dollar B2B enterprise, and while building a multi-billion dollar B2C enterprise. Just the concept of that is almost impossible to consider, but yet they’ve managed to do it.
Michael: And you have to give him credit, I think it’s sometimes easy to forget he is the longest tenured Internet CEO of the bunch. He is now in his third decade of driving his mission, he doesn’t appear tired to me at all. And I think is one of the leaders in the world along with Andy Grove, Bill Gates that Zuckerberg very specifically considers a mentor and has huge degrees of respect for.
Jay: Adam knows that my coffee mug is a circa 1995 commemorative mug that Amazon sent me for being one of their first 500 customers. And so I feel like some day I’m going to be able to eBay that sucker ironically and make some money on that thing.
Michael: No, no, no you can’t do that. I mean I have a Mac Plus from 300 years ago in my office, relics like that you’ve got to keep, you can never sell them.
Adam: Cherish that.
Jay: I love it. Mike thanks so much for being on the podcast, congratulations on the book, a fantastic read. Ladies and gentlemen, Social Pros fans, dial up your local bookstore or use your Internet fingers to get a copy of ‘Becoming Facebook: The 10 Challenges That Defined the Company That’s Disrupting the World’ from Mike Hoefflinger, really appreciate your time and your insights. Terrific book, congratulations. Thanks for being on the show.
Michael: Thanks very much for having me, you guys. Really appreciate it.
Jay: Adam. That was spectacular, was it not?
Adam: Fantastic, always a pleasure and my thank you again for all your insights.
Michael: Oh, you’re so welcome but I’m sure you say that to everybody for the last six years.
Jay: We do but we don’t always mean it. So that’s the real truth.
Michael: We have records, I can look this up. Maybe not records as good as video of me break-dancing, if only we had had phones back then.
Jay: Oh my. Yeah, good and bad. We’ll be back next week with another scintillating episode of the Social Pros Podcast, remember socialpros.com for all of the archives across six years, lots of greatness in the archives for Adam Brown. I am Jay Baer and this has been Social Pros.

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