“We currently have no plans to open a development center in Israel, but that doesn’t mean that it won’t happen. Israel is an important market for Facebook, both in terms of development and in commercial terms,” Facebook VP Asia Pacific, Latin America, and Emerging Markets Blake Chandlee told “Globes”. “It’s obvious that there’s a lot of talent in Israel, and we definitely are aware of that.”
Chandlee is participating in the “Globes” Israel Business Conference 2010. “The talent in Israel is obviously why companies like Google have already opened development centers in Israel, but it’s important to remember that we’re not like Google. Google has over 20,000 employees, whereas Facebook has about 2,000. All our developers are in Palo Alto. We naturally want to copy this model to other countries, but not in the near future.”
Chandlee started out as an entrepreneur, and then served as vice present at Yahoo! Inc. (Nasdaq: YHOO) at the company’s UK offices, where he was responsible for development. He joined Facebook three years ago, and was the first to open a company office outside the US. He was in Singapore for the telephone interview, and sounded pleased by the progress there. “Facebook is succeeding in Asian markets,” he says. “For example, in Singapore, 65% of the population is already on Facebook, and even the government has begun to use this tool to communicate with its citizens. Facebook has high penetration rates in both Japan and South Korea.
However, Facebook is still banned in the world’s largest Internet market - China - after the government blocked users’ access for reasons of censorship. “Regrettably, most users in China have difficulty accessing Facebook. I won’t go into the reasons for this, but it’s something that we’re thinking about.”
“Globes”: Are you in contact with the Chinese government?
Chandlee: “There are no talks about this at the moment, but we definitely want everyone to ultimately have access to Facebook.”
Face to face with Google
Facebook has long been the world’s largest social network, and according to ComScore, it is the third largest website in the world, with 633 million different users per month, after Google Inc. (Nasdaq: GOOG), with 976 million users per month, and Microsoft Corporation (Nasdaq: MSFT) websites, with 840 million users. As a result, whereas in 2009, Facebook focused its competition against social network MySpace, and was busy with the rising popularity of Twitter, which could surpass it, it is now clear that Facebook’s real rival is the search giant.
You’re ahead of Google in time spent by users on site. When will you surpass them and become the world’s biggest website?
As for the rumors that Google plans to set up its own competing social network, called Google Me, Chandlee says, “There’s a lot of speculation about this, but we haven’t seen what it’s about, and we don’t deal with this.”
Last month, Facebook founder and CEO Mark Zuckerberg announced Facebook’s new messaging system, which would enable users to manage all their communications - chats, e-mails, and text messages - on one site. Across the web, it was called the “Gmail killer”, but Zuckerberg quickly announced that they were not competing against Google or Microsoft’s e-mail services, and that this was a completely new communications system.
Nonetheless, Chandlee does not shrug off the rivalry. “Obviously, we’ll compete against Gmail, Hotmail, and Yahoo Mail with our new system,” he says, but quickly backs off, saying, “We think that the mail is becoming less relevant as far as personal correspondence is concerned. The young generation no longer uses e-mail for communicating with friends, and all interpersonal communications is changing. Facebooks’ new system was designed in a way that says that the e-mail revolution is already here. This is a messaging system, not a mail system.”
The new service will reach Israel during the first quarter of 2011. Chandlee says, “The recent period was very pressured for our engineers, and they were busy building many products that will be launched only early next year.”
Facebook recently launched another service, “Facebook Places”, a location-based feature that enables users to update their physical location on the social network. Chandlee promises that, “Places will arrive in Israel early next year, and Facebook Deals will arrive two months later.”
Facebook Deals is a service for businesses to offer local discounts and awards to active users.
“It’s possible to do better work in Israel”
Facebook will reportedly have $1.4 billion revenue in 2010, 100% more than in 2009. Chandlee says, “Most of Facebook’s revenue comes from the US, even though 80% of Facebook users are in other countries.” This situation, he adds, “will change dramatically, and I expect that the gap will narrow quickly. That’s exactly what my job is.”
Most of Facebook’s revenue comes from advertising. Chandlee says, “We launched Facebook internationally three years ago, and 90% of the world’s largest 100 advertisers are already investing heavily in advertising on Facebook. We also have hundreds of millions of small businesses that use our advertising system in order to reach segmented target audiences. These are naturally smaller budgets, but they are an important source of our revenue.
In Israel, Facebook has linked up with portal Nana10, which beginning this year markets advertising space on Facebook Israel’s homepage as part of Nana10’s new media unit Masa.
“We have a good partner in Israel", says Chandlee. “We launched operations in Israel in order to increase local awareness and offer support to anyone who wanted to operate on Facebook,” adding, “Is it possible to do better work in Israel? I think so, and we’re devoting many efforts to this.”
Facebook’s market cap has been estimated at secondary markets at $40 billion. Does this seem high to you?
“The secondary markets are mainly driven by people’s opinions, and there’s a lot of demand compared to low supply. That’s why Facebook’s share price continues to rise, and I assume that some people believe that the price is crazy. But there are also experienced investors who are willing to buy the share at these prices, and even believe that they can still make a profit. In any case, time will tell if the price is too high or not.”
What did you think about the movie “The Social Network”. Does it resemble Facebook’s real story?
“I think that I’m the only employee who hasn’t seen the movie. I’m constantly travelling and flying, but I know that Facebook rented three cinemas in Palo Alto for one day for its employees, and afterwards it invited the employees to dinner. I’ve heard that it’s a good movie, but even though everyone says that Mark is shown in a negative light in the movie, I realized that it wasn’t as bad as I’d heard.
“If you meet Mark, you’ll understand that he isn’t as exciting a character as the movie implies. He’s said, ‘I wish my life was so interesting, but in reality, in the past six years, I’ve mostly written code.’ But we understand his portrayal in the movie; you can’t sell a movie without sex, drugs, and rock’n’roll, and I’m anxious to see it.”
“Cellcom should have used Facebook to explain the breakdown to its customers”
Last week, Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL) suffered the largest breakdown in its history, with more than three million subscribers nationwide unable to make or receive phone calls or SMS. The technical glitch was accompanied by a not-small crisis of communications, which led to many complaints by the carrier’s subscribers. Cellcom is one of the few leading Israeli brands that does not have an official Facebook page, and except for a laconic message on the company’s website, there was no special attempt to contact consumers via Facebook or Twitter.
Chandlee believes that this was a mistake. “Brands must have a Facebook page, where they manage their community according to the brand's values,” he says. “A breakdown like that, which disrupts consumers’ regular lives, will not disappear on its own. In a social environment, consumers have a voice, and when something like this happens, consumers want to complain. If they don’t have an official place to do so on Facebook, they will find someplace else.
“Cellcom should have used a brand page to explain the problem to consumers, tell what it was doing about it, and that it understood their feelings. Avoiding explanations isn’t the right way to deal with a crisis. Consumers want transparency and information, and a Facebook page makes it possible to easily disseminate the relevant information. In most cases, if a brand explains the breakdown to consumers, 90% of the complaints are solved on the spot.
Published by Globes [online], Israel business news - www.globes-online.com - on December 12, 2010
© Copyright of Globes Publisher Itonut (1983) Ltd. 2010