Facebook Followed You to the Supermarket

This is a story about advertising on the Web. Specifically, it’s about ads on Facebook, a hugely popular free service that’s supported solely through advertising, yet is packed with users who are actively hostile to the idea of being marketed to on their cherished social network. Considering all of this, the best place to start is with your primary concern about Web ads. This is what I hear from readers every time I write about the online ad economy, especially ads on Facebook: “I don’t know how Facebook will ever make any money—I never click on Web ads!” And that’s not all. You’ve checked with your friends and relatives. No one you know has ever intentionally clicked on a Web ad. OK, once, years ago, a co-worker told you about a guy who knows a guy who tapped an ad on his phone. True story! But don’t worry. People close to the situation dismissed it as a one-time deal. The guy wasn’t trying to tap the ad; he just had really fat fingers. He felt really bad about it afterward, too. So, the question persists: How does Facebook expect to become a huge business if most people you know never click on ads? The answer is surprisingly obvious. It’s a fact well-known to advertisers, though it’s not always appreciated by people who use Facebook or even by folks in the Web ad business: Clicks don’t matter. Whether you know it or not—even if you consider yourself skeptical of marketing—the ads you see on Facebook are working. Sponsored messages in your feed are changing your behavior—they’re getting you and your friends to buy certain products instead of others, and that’s happening despite the fact that you’re not clicking, and even if you think you’re ignoring the ads. Advertisement This isn’t conjecture. It’s science. It’s based on a remarkable set of in-depth studies that Facebook has conducted to show whether and how its users respond to ads on the site. The studies demonstrate that Facebook ads influence purchases and that clicks don’t matter. They also shed light on Facebook’s long-term business strategy. The tech world is consumed by the war between Facebook and Google—two huge sites that are constantly battling one another for users, engineers, and advertising clients. Yet Facebook’s studies suggest that its advertising fortune won’t necessarily come at the expense of Google. Instead, the findings show that people react to ads on Facebook in the same way they respond to ads on television. If Facebook’s ad business takes off, it might be at the expense of the biggest ad-supported medium in the world. Last year, Facebook partnered with Datalogix, a firm that records the purchasing patterns of more than 100 million American households. When you stop by the supermarket to buy Tide, Rice-A-Roni, and Mountain Dew this evening, there’s a good chance you’ll hand the cashier a loyalty card to get a discount on your items. That card ties your identity to your purchases—it puts a name on your Tide, Rice-A-Roni, and Mountain Dew. After you leave the store, your sales data is sent over to a server maintained by Datalogix, which has agreements with hundreds of major retailers to procure such data. Over the past few months, Facebook and Datalogix figured out a way to match their respective data sets in a manner that maintains people’s privacy (more on that below). In other words, Facebook can now tie its users to the stuff they buy at supermarkets. Armed with this data, Facebook began running a series of analyses into the effects of advertising campaigns on its site. If, say, Procter & Gamble ran a Facebook ad for Tide, Facebook could look at Datalogix’s data to see whether people who were exposed to the ad tended to purchase more Tide in the weeks after the campaign. (Tide is just an example here; Facebook has conducted more than 60 such studies for major advertisers, and while it was willing to give me general insights about its findings, it wouldn’t discuss specific advertisers.) These general insights make a strong case for Facebook ads. First, according to the study, Facebook ads work. “Of the first 60 campaigns we looked at, 70 percent had a 3X or better return-on-investment—that means that 70 percent of advertisers got back three times as many dollars in purchases as they spent on ads,” says Sean Bruich, Facebook’s head of measurement platforms and standards. What’s more, half of the campaigns showed a 5X return—advertisers got back five times what they spent on Facebook ads. But the most interesting finding was the total lack of correlation between purchases and clicks. “On average, if you look at people who saw an ad on Facebook and later bought a product, [fewer than] 1 percent had clicked on the ad,” Bruich says. In other words, the click doesn’t matter; people who click on ads aren’t necessarily buying, and people who are buying are almost certainly not clicking. This shouldn’t surprise you, because it’s how most other ads work. There are generally two kinds of marketing messages in the world—“direct-response” and “demand-generation.” Direct ads are those that call on people to take an action more or less immediately—click to visit a site, call an 800 number, order something from a catalog. Google’s Adwords, the little text ads that show up alongside your search results, are a form of direct ads. Adwords are supremely measurable—advertisers pay Google for clicks, and they can track how many of the people who click end up buying from their site. Adwords are also extremely effective; because they’re shown to you when you’re looking to buy something (when you have “high purchase intent,” in the jargon), people who click on them frequently end up buying. Consequently, Adwords have made Google the most successful advertising company in the history of the world. Yet in the larger advertising industry, direct-response ads like Google’s are something of an anomaly—a way to sell certain products at certain opportune times, but not the way that most marketers approach their jobs. Instead, the vast majority of the advertising world is structured around “demand generation.” These ads aren’t trying to get you to take some action right away. Instead, they’re trying to plant an idea in your head—to introduce you to a new product, to get a name stuck in your head, to improve how you feel about a company. (That’s why demand-generation ads are also known as “brand advertising.”) Other than infomercials, pretty much every ad you see on TV is a demand-generation spot. That’s true of ads in print magazines, on the radio, at bus stops, on billboards and most of the banner ads on your favorite news websites, too. According to some estimates, demand-generation ads account for more than 80 percent of the money spent on ads. Facebook has been selling itself as an ideal venue for brand advertising for several years now. That’s not just because there’s a lot of money in brand ads; it’s also because Facebook has long seemed like a relatively poor environment for direct-response ads. People who go to Facebook do not have high purchase intent—they’re going there to catch up with their friends, not to search for something to buy. Of course, that’s true of TV, too—no one sits down to the tube expecting to find new stuff to buy. Usually we just want to goof off. There’s another way in which our Facebook use resembles how we watch TV: We spend a lot of time there. People spend about 7 hours a month on Facebook, more than on any other site. One of the only things we do more often than waste time on Facebook is watch TV. We do that a lot more often, clocking in an average of about 5 hours a day in the United States. But demand-generating advertising has been a relatively tough sell for Facebook. That’s because the online ad business is structured around measurement—around advertisers’ ability to precisely track how people are responding to their ads—and brand advertising is notoriously difficult to measure. The lack of measurement explains why some advertisers have been so skeptical of Facebook—see General Motors’ very public denunciation of the site last year. Again, though, it’s useful to compare Facebook with television. In its early days, TV also had a problem with measurement. No one knew how to tell whether commercials were really working. But in the 1970s and ’80s, advertisers and analytics firms like Nielsen came up with a variety of ways to analyze ads on the tube. Among other things, they instituted standardized measurements to compare TV to other media—like “gross ratings points”—and, after surveying consumers’ purchases, they figured out how people’s TV viewing affected their buying habits. Today, thanks to a practice known as “mix modeling,” the return on TV advertising is exquisitely measurable. Large advertisers like Procter & Gamble know exactly how much they’re getting out of it—and that’s why, despite all the many other devices that now intrude our lives, TV advertising rates remain as high as ever. Now Facebook is trying to bring to the Web same rigorous metrics that have ruled brand advertising on television. “We’re trying to create industry standards around how people advertise online,” says Brad Smallwood, the Facebook vice president in charge of its measurement and insights team. At the core of this work is Facebook’s partnership with Datalogix, though given Facebook users’ (justifiable) squeamishness about how the site uses their data, Facebook and Datalogix had to perform their analysis very carefully. Advertisement What they came up with was a Rube Goldbergian system that strips out personally identifiable information from the databases at Facebook, Datalogix, and the major retailers while still matching people and their purchases. The system works by creating three separate data sets. First, Datalogix “hashes” its database—that is, it turns the names, addresses and other personally identifiable data for each person in its logs into long strings of numbers. Facebook and retailers do the same thing to their data. Then, Datalogix compares its hashed data with Facebook’s to find matches. Each match indicates a potential test subject—someone on Facebook who is also part of Datalogix’s database. Datalogix runs a similar process with retailers’ transaction data. At the end of it all, Datalogix can compare the Facebook data and the retail data, but, importantly, none of the databases will include any personally identifiable data—so Facebook will never find out whether and when you, personally, purchased Tide, and Procter & Gamble and Kroger will never find out your Facebook profile. Then, each time a major campaign runs on Facebook, the company can see how people’s purchases were affected by ads. What’s most important is that Datalogix gives Facebook extremely large data sets, which allows for enough statistical power to draw fundamental lessons about how people respond to ads. “If 40 million people were exposed to an ad campaign, you could end up with a very high percentage of them available for the analysis,” Bruich says. “You could begin to answer questions like, ‘For this type of product, what is the optimal frequency for the campaign—how many times should people see the ad?’ And does it differ for people who buy a lot of the product versus a little? And should you show a different number to heavy users of Facebook versus other users?” Facebook has already begun to improve the effectiveness of ads on its site. One of its findings, for instance, is that for particular brands and product types, there is a “sweet spot” for ad impressions—an optimal number of times to show an ad to a user before the message becomes ineffective. By homing in on that optimal rate, Facebook was able to improve the return on investment of some campaigns by 40 percent. It also found that by customizing the frequency of an ad based on factors like how often a user purchased a certain brand or product category, the company could improve return on investment by 22 percent. Certainly that’s good for Facebook and for advertisers. But it’s also not terrible—and might be even good—for users. If Facebook’s research shows that companies were wasting money by serving some people the same ad too many times, that could mean you’ll be subjected to that kind of thing less often in the future. As Facebook’s measurement systems improve, you might even see better ads—one of the eventual goals the system, Bruich says, is to figure out what kinds of ads appeal to what kinds of users, so over time you’ll be presented with ads that are less likely to annoy you. And if, as you insist, ads really don’t work on you—that you never buy things because of marketing you see on Facebook—it’s theoretically possible that Facebook’s system would be able to figure that out, too, and maybe the site won’t show you any messages. But that’s unlikely. You may not love the ads you see—and you’ll still never click on them. But unbeknownst to you, Facebook ads still work on you. Resistance is futile. http://www.slate.com/articles/technology/technology/2013/03/facebook_advertisement_studies_their_ads_are_more_like_tv_ads_than_google.2.html

The value of facebook

LETTER FROM MARK ZUCKERBERG
Facebook was not originally created to be a company. It was built to accomplish a social mission — to make the world more open and connected.
We think it’s important that everyone who invests in Facebook understands what this mission means to us, how we make decisions and why we do the things we do. I will try to outline our approach in this letter.
At Facebook, we’re inspired by technologies that have revolutionized how people spread and consume information. We often talk about inventions like the printing press and the television — by simply making communication more efficient, they led to a complete transformation of many important parts of society. They gave more people a voice. They encouraged progress. They changed the way society was organized. They brought us closer together.
Today, our society has reached another tipping point. We live at a moment when the majority of people in the world have access to the internet or mobile phones — the raw tools necessary to start sharing what they’re thinking, feeling and doing with whomever they want. Facebook aspires to build the services that give people the power to share and help them once again transform many of our core institutions and industries.
There is a huge need and a huge opportunity to get everyone in the world connected, to give everyone a voice and to help transform society for the future. The scale of the technology and infrastructure that must be built is unprecedented, and we believe this is the most important problem we can focus on.
We hope to strengthen how people relate to each other.
Even if our mission sounds big, it starts small — with the relationship between two people.
Personal relationships are the fundamental unit of our society. Relationships are how we discover new ideas, understand our world and ultimately derive long-term happiness.
At Facebook, we build tools to help people connect with the people they want and share what they want, and by doing this we are extending people’s capacity to build and maintain relationships.
People sharing more — even if just with their close friends or families — creates a more open culture and leads to a better understanding of the lives and perspectives of others. We believe that this creates a greater number of stronger relationships between people, and that it helps people get exposed to a greater number of diverse perspectives.
By helping people form these connections, we hope to rewire the way people spread and consume information. We think the world’s information infrastructure should resemble the social graph — a network built from the bottom up or peer-to-peer, rather than the monolithic, top-down structure that has existed to date. We also believe that giving people control over what they share is a fundamental principle of this rewiring.
We have already helped more than 800 million people map out more than 100 billion connections so far, and our goal is to help this rewiring accelerate.
We hope to improve how people connect to businesses and the economy.
We think a more open and connected world will help create a stronger economy with more authentic businesses that build better products and services.
As people share more, they have access to more opinions from the people they trust about the products and services they use. This makes it easier to discover the best products and improve the quality and efficiency of their lives.
One result of making it easier to find better products is that businesses will be rewarded for building better products — ones that are personalized and designed around people. We have found that products that are “social by design” tend to be more engaging than their traditional counterparts, and we look forward to seeing more of the world’s products move in this direction.
Our developer platform has already enabled hundreds of thousands of businesses to build higher-quality and more social products. We have seen disruptive new approaches in industries like games, music and news, and we expect to see similar disruption in more industries by new approaches that are social by design.
In addition to building better products, a more open world will also encourage businesses to engage with their customers directly and authentically. More than four million businesses have Pages on Facebook that they use to have a dialogue with their customers. We expect this trend to grow as well.
We hope to change how people relate to their governments and social institutions.
We believe building tools to help people share can bring a more honest and transparent dialogue around government that could lead to more direct empowerment of people, more accountability for officials and better solutions to some of the biggest problems of our time.
By giving people the power to share, we are starting to see people make their voices heard on a different scale from what has historically been possible. These voices will increase in number and volume. They cannot be ignored. Over time, we expect governments will become more responsive to issues and concerns raised directly by all their people rather than through intermediaries controlled by a select few.
Through this process, we believe that leaders will emerge across all countries who are pro-internet and fight for the rights of their people, including the right to share what they want and the right to access all information that people want to share with them.
Finally, as more of the economy moves towards higher-quality products that are personalized, we also expect to see the emergence of new services that are social by design to address the large worldwide problems we face in job creation, education and health care. We look forward to doing what we can to help this progress.
Our Mission and Our Business
As I said above, Facebook was not originally founded to be a company. We’ve always cared primarily about our social mission, the services we’re building and the people who use them. This is a different approach for a public company to take, so I want to explain why I think it works.
I started off by writing the first version of Facebook myself because it was something I wanted to exist. Since then, most of the ideas and code that have gone into Facebook have come from the great people we’ve attracted to our team.
Most great people care primarily about building and being a part of great things, but they also want to make money. Through the process of building a team — and also building a developer community, advertising market and investor base — I’ve developed a deep appreciation for how building a strong company with a strong economic engine and strong growth can be the best way to align many people to solve important problems.
Simply put: we don’t build services to make money; we make money to build better services.
And we think this is a good way to build something. These days I think more and more people want to use services from companies that believe in something beyond simply maximizing profits.
By focusing on our mission and building great services, we believe we will create the most value for our shareholders and partners over the long term — and this in turn will enable us to keep attracting the best people and building more great services. We don’t wake up in the morning with the primary goal of making money, but we understand that the best way to achieve our mission is to build a strong and valuable company.
This is how we think about our IPO as well. We’re going public for our employees and our investors. We made a commitment to them when we gave them equity that we’d work hard to make it worth a lot and make it liquid, and this IPO is fulfilling our commitment. As we become a public company, we’re making a similar commitment to our new investors and we will work just as hard to fulfill it.
The Hacker Way

As part of building a strong company, we work hard at making Facebook the best place for great people to have a big impact on the world and learn from other great people. We have cultivated a unique culture and management approach that we call the Hacker Way.
The word “hacker” has an unfairly negative connotation from being portrayed in the media as people who break into computers. In reality, hacking just means building something quickly or testing the boundaries of what can be done. Like most things, it can be used for good or bad, but the vast majority of hackers I’ve met tend to be idealistic people who want to have a positive impact on the world.
The Hacker Way is an approach to building that involves continuous improvement and iteration. Hackers believe that something can always be better, and that nothing is ever complete. They just have to go fix it — often in the face of people who say it’s impossible or are content with the status quo.
Hackers try to build the best services over the long term by quickly releasing and learning from smaller iterations rather than trying to get everything right all at once. To support this, we have built a testing framework that at any given time can try out thousands of versions of Facebook. We have the words “Done is better than perfect” painted on our walls to remind ourselves to always keep shipping.
Hacking is also an inherently hands-on and active discipline. Instead of debating for days whether a new idea is possible or what the best way to build something is, hackers would rather just prototype something and see what works. There’s a hacker mantra that you’ll hear a lot around Facebook offices: “Code wins arguments.”
Hacker culture is also extremely open and meritocratic. Hackers believe that the best idea and implementation should always win — not the person who is best at lobbying for an idea or the person who manages the most people.
To encourage this approach, every few months we have a hackathon, where everyone builds prototypes for new ideas they have. At the end, the whole team gets together and looks at everything that has been built. Many of our most successful products came out of hackathons, including Timeline, chat, video, our mobile development framework and some of our most important infrastructure like the HipHop compiler.
To make sure all our engineers share this approach, we require all new engineers — even managers whose primary job will not be to write code — to go through a program called Bootcamp where they learn our codebase, our tools and our approach. There are a lot of folks in the industry who manage engineers and don’t want to code themselves, but the type of hands-on people we’re looking for are willing and able to go through Bootcamp.
The examples above all relate to engineering, but we have distilled these principles into five core values for how we run Facebook:

Focus on Impact
If we want to have the biggest impact, the best way to do this is to make sure we always focus on solving the most important problems. It sounds simple, but we think most companies do this poorly and waste a lot of time. We expect everyone at Facebook to be good at finding the biggest problems to work on.
Move Fast
Moving fast enables us to build more things and learn faster. However, as most companies grow, they slow down too much because they’re more afraid of making mistakes than they are of losing opportunities by moving too slowly. We have a saying: “Move fast and break things.” The idea is that if you never break anything, you’re probably not moving fast enough.
Be Bold
Building great things means taking risks. This can be scary and prevents most companies from doing the bold things they should. However, in a world that’s changing so quickly, you’re guaranteed to fail if you don’t take any risks. We have another saying: “The riskiest thing is to take no risks.” We encourage everyone to make bold decisions, even if that means being wrong some of the time.
Be Open
We believe that a more open world is a better world because people with more information can make better decisions and have a greater impact. That goes for running our company as well. We work hard to make sure everyone at Facebook has access to as much information as possible about every part of the company so they can make the best decisions and have the greatest impact.
Build Social Value
Once again, Facebook exists to make the world more open and connected, and not just to build a company. We expect everyone at Facebook to focus every day on how to build real value for the world in everything they do.
Thanks for taking the time to read this letter. We believe that we have an opportunity to have an important impact on the world and build a lasting company in the process. I look forward to building something great together.
[signed Mark Zuckerberg]

Facebook’s Risk Factors: Mobile, Gov, Slowed Growth, Google+

“Summary Risk Factors”:

• Our business is subject to numerous risks described in the section entitled “Risk Factors” and elsewhere in this prospectus. You should carefully consider these risks before making an investment. Some of these risks include:
• If we fail to retain existing users or add new users, or if our users decrease their level of engagement with Facebook, our revenue, financial results, and business may be significantly harmed;
• We generate a substantial majority of our revenue from advertising. The loss of advertisers, or reduction in spending by advertisers with Facebook, could seriously harm our business;
• Growth in use of Facebook through our mobile products, where we do not currently display ads, as a substitute for use on personal computers may negatively affect our revenue and financial results;
• Facebook user growth and engagement on mobile devices depend upon effective operation with mobile operating systems, networks, and standards that we do not control;
• We may not be successful in our efforts to grow and further monetize the Facebook Platform;
• Our business is highly competitive, and competition presents an ongoing threat to the success of our business;
• Improper access to or disclosure of our users’ information could harm our reputation and adversely affect our business;
• Our business is subject to complex and evolving U.S. and foreign laws and regulations regarding privacy, data protection, and other matters. Many of these laws and regulations are subject to change and uncertain interpretation, and could harm our business;
• Our CEO has control over key decision making as a result of his control of a majority of our voting stock;
• The loss of Mark Zuckerberg, Sheryl K. Sandberg, or other key personnel could harm our business;
• We anticipate that we will expend substantial funds in connection with tax withholding and remittance obligations related to the initial settlement of our restricted stock units (RSUs) approximately six months following our initial public offering;
• The market price of our Class A common stock may be volatile or may decline, and you may not be able to resell your shares at or above the initial public offering price; and
• Substantial blocks of our total outstanding shares may be sold into the market as “lock-up” periods end, as further described in “Shares Eligible for Future Sale.” If there are substantial sales of shares of our common stock, the price of our Class A common stock could decline.

Facebook Seeks Bigger Role in Software for Mobile Apps

Facebook Inc. is angling to play a bigger role in shaping the way software gets developed for mobile devices.
The social network, which has turned its popular website into a platform for developing games and other add-on programs, so far hasn't wielded the same influence on mobile gadgets like Apple Inc.'s hit iPhone and iPad. But there are signs the company is trying to change that situation.

Facebook is angling to play a bigger role in shaping the way software gets developed for mobile devices, Geoffrey Fowler reports.

Facebook executives, among other things, are encouraging developers who write Facebook apps to do so for mobile devices using a relatively new technology standard called HTML5. The company has also been using HTML5 to enhance its own mobile offerings, which are used by more than 250 million people to tap into its services.
Some app developers and analysts believe Facebook's underlying motivation is to position itself as an alternative development platform for programmers that now tailor mobile apps specifically for Apple's iOS operating system or Google Inc.'s Android. Technology blog TechCrunch reported that Facebook is working on a mobile platform dubbed "Project Titan" that was designed to bypass Apple by using the HTML5 technology that works with the iPhone and iPad's mobile browser, Safari.
Bret Taylor, Facebook's chief technology officer, wouldn't discuss forthcoming products. But he did express strong support for HTML5, an update of the Web's fundamental programming technology that is expected to allow apps to be written for use in browsers on different operating systems—including iOS and Android—without needing to be completely rewritten for each.
Mr. Taylor said the technology can help Facebook and app developers reach new users and "close the gap" between existing Web and mobile user experiences. But he doesn't view HTML5 and apps written directly for iOS and other operating systems as an "either-or" decision.
"Facebook and all of our developers will choose both," Mr. Taylor said. "You want to reach as many people in as many places as possible."
Facebook could in the future also play more of a role in helping users discover apps on mobile phones, he said, but declined to specify how it would do so.
HTML5, developed with contributions from many tech companies and organizations, has a growing number of supporters in Silicon Valley. Apple, for example, is backing the technology as an alternative to Adobe Systems Inc.'s Flash technology as a way to add interactivity to Web applications.
Such technologies can address major pain points for mobile-app developers—for one thing, making it possible to create one version of a program that works on multiple devices, rather than devoting scarce resources to making multiple versions of apps. Facebook could use its own popularity and data about the habits of users' friends to help mobile-app developers gain greater visibility, say some developers
Facebook has been courting smaller developers for its HTML5 project, promising those who use it greater promotion of their apps, one developer said.
App companies, in theory, could also more quickly update Web-based apps. One of the limitations of the Apple App Store system is that developers must submit app changes to Apple, which then has to approve the changes before the apps are updated. However, developers that write Web apps using HTML5 could instantly push out changes, one developer said.
An Apple spokesman declined comment.
But app developers say Facebook's effort faces challenges. For one thing, HTML5 applications such as games can look dated compared with apps written for specific mobile devices. Those apps also are better at exploiting a mobile device's camera, location, graphics circuitry and other hardware features than Web-based apps.
Outfit7, which developed a popular app called Talking Tom Cat, said it has been in communication with Facebook in recent months. But it has decided not to support HTML5 for now because the company doesn't see how it could help the user experience.
"Native-like experience doesn't mean the experience is the same," said Andrej Nabergoj, Outfit7's chief executive. He said HTML5 doesn't have the voice and video support necessary for its apps, and that HTML5 presents more performance challenges the more complex an app becomes. "We have to care about what is in the best interest for the user," Mr. Nabergoj said.
Facebook, for the moment, is a long way from being as dominant in mobile as it is on the Web. Currently, its software for mobile phones doesn't allow users to directly access the apps that many users use on Facebook's ordinary website.
The apps are a growing source of revenue for the company, which makes money from displaying ads and taking a 30% cut of virtual goods sales, whose transactions take place in Facebook's own currency called Credits.
Facebook already offers a software-development kit so that iOS apps can incorporate many aspects of Facebook's technology, such as signing into games and services with users' Facebook accounts, Mr. Taylor said.

http://professional.wsj.com/article/SB10001424052702304319804576390243972729286.html

Facebook's Mark Zuckerberg, Villain or Hero?

The release of the movie The Social Network about Facebook co-founder Mark Zuckerberg raises a good question about who succeeds in business. For the New York Times, quoting Gawker founder Nick Denton, it's the issue of "whether it is possible to be successful without being at least a bit of a brute."
Despite what you have probably read in the leadership literature, the answer to the question is almost certainly "no."
Even Robert Sutton's bestseller, The No Asshole Rule, has a chapter giving the brutes their due. He presents the evidence that bad behavior often leads to gains in personal power and stature as it helps individuals intimidate and vanquish rivals. At the level of organizational effects, he allows that it can motivate perfectionism and bring underperformers to their senses.
To those grudging compliments I would add another line of defense: People committed to an idea are often so focused on getting the idea implemented that they are insensitive to their effects on others. Their focus, persistence, and resilience blocks out anything that stands in their way — and the feelings of others belong in that category. That might be the story with Zuckerberg.
For that matter, it is probably a big part of Laura Esserman's success. She's the breast cancer surgeon and medical visionary who is featured in Chip and Dan Heath's book Switch and in a recent Wall Street Journal article (which by the way only hints at her achievement, because it covers just one of her four profoundly influential initiatives). Esserman is, by her own admission, quick to anger and sometimes hard on those who work with her. With 45,000 women in the U.S. still dying each year from breast cancer, she has an impatience for progress that is hard to begrudge. Sometimes that overrides her desire to be liked.

The fact is that people who get great things done are, like the rest of us, imperfect human beings. They have weaknesses alongside their strengths, and bad days interspersed with the good. They exhibit both appropriate and inappropriate behavior. This reality seems tough to accept. When I teach my course on power, students typically try to infer people's underlying motivations, decide if they "like" the characters we are studying, and determine whether individuals are "good" or "bad." This human leaning toward oversimplified judgments has a number of negative consequences.
First, it retards learning. Once people determine someone is "bad" or "flawed," they think they don't have much to learn from that individual. That's wrong — we should be focused on learning from all people and all situations. This is true because, as the research literature teaches us, we can learn as much from failures as from successes. It's also true because even a deeply flawed leader can have a strength worth emulating.
Second, characterizing multiply-dimensioned human beings into oversimplified categories like "good" or "bad" inevitably can only deceive us. It eliminates nuance and inappropriately reduces the complex nature of human behavior and social life. A reductionist view may make things seem clearer, but provides a not very veridical view of the world and the people with whom we need to interact.
Third, it resists useful revision. Once we categorize someone, we stop paying attention to their actual behavior and instead assimilate everything into our (already formed) judgments. That compromises our ability to interact effectively with those around us. For the "good," we become too trusting, not seeing the possibility of self-interested behavior on their part. As for the "bad," we foreclose the whole idea of interacting with people who might be beneficial.
Fourth and maybe most importantly, our creation of "heroes" or "villains" is potentially immobilizing. Author and teacher Michael Eric Dyson explains this eloquently as he reveals the dangers of lionizing leaders. Dr. Martin Luther King, for example, was flesh and blood, and "investing in King's perfection allows us to dismiss the humanity of the underregarded." Dyson notes that we would be better off to allow the man his imperfections because "with a more nuanced view of King in play, we should be inspired to create social change in our communities, armed with the belief that good things can be done by imperfect people." Similarly, commenting on the revelation that Jesse Jackson fathered a child out of wedlock, Dyson points out that "leaders cannot possibly satisfy the demand for purity that some make" and that leaders who believe they are heroes "often possess a self-satisfaction that stifles genuine leadership." Leaders, and others, who recognize that good and bad runs through every human being, are more likely to be prudent, not overconfident, and more humble.
It may be true that the search for, and construction of, heroes and villains is inevitable in literature and film and in life. One way to experience The Social Network is with the sense that we must consign Mark Zuckerberg to the one category or the other. But if we really want to understand social behavior, well enough to get important things done, we would be well served to recognize that the keys to success will never be as simple as that.

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Google vs. Facebook on Places

Google Inc. has warily watched the rise of social-networking site Facebook Inc. Now the Internet companies are bringing their rivalry to a new area: the race for local business-ad dollars.

On Wednesday, Facebook announced an initiative called Facebook Places, which allows its users to share their physical locations online. It paves the way for the start-up to become a player in the growing Web business of supplying local information and advertising. 

 

The rollout of Facebook Places follows the launch of Google Places in April. Google Places, building on prior Google business listings, offers up Web pages dedicated to individual businesses, showing where they are located, street-level images, and customer reviews of services or products, be it Joe's Pizza or the dry cleaner. Businesses can also advertise through their Google Place pages.
With these services, both Google and Facebook are attempting to organize and provide information about any location, including schools, parks, and tens of millions of local businesses. And both want businesses to advertise online and potentially target ads in real-time to users of mobile devices, right where they are.

The launch of Facebook Places ratchets up the competition between Google and Facebook. Google, which thrived by selling relevant ads alongside its Internet-search results, faces challenges from Facebook as more Web users could rely on their Facebook friends—not just Google—to discover content or available products. Much of the content generated by Facebook's 500 million users is also invisible to Google's search engine.
Google has been scrambling to develop a social-networking-type service to rival Facebook's, people familiar with the matter have said.
Now they are both after local-ad dollars. So far, only a fraction of local businesses advertise online. But in an interview Wednesday, Facebook Chief Executive Mark Zuckerberg called the local market a "big space."

Overall, small and medium-sized businesses with 100 or fewer employees spent $35 billion to $40 billion in all forms of local advertising in the U.S. in 2009, estimates BIA/Kelsey, a local-media advisory firm. Matthew Booth, a senior vice president at BIA/Kelsey, estimates that about 1.2 million small businesses in the U.S. already pay Google to appear in text ads alongside Internet search results.

Jason Schneider

Mr. Zuckerberg said Facebook and Google "will compete a little bit."
Google struck a polite tone about Facebook Places. "We always welcome additional tools that help put people in touch with information about the world around them," said John Hanke, a Google vice president of product management.
Google and Facebook aren't the only ones fixated on places. Twitter Inc., the microblogging service, earlier this year launched Twitter Places, which allows users to broadcast, or "tweet," their location, including at businesses, to followers of their messages. Over time, the company is expected to try to line up local businesses to offer deals to users in connection with the feature.
Google last September began creating Place pages for millions of public places, including businesses. Businesses that contact Google can lay claim to a Place page, gaining more control over the content on the page. They also can see the origin of Google users who visit their page and sign up to advertise their services to users of Google's search and maps.
Google, which for years has been amassing business listings, says more than four million businesses have a Place page and "thousands" have paid to have their listing highlighted in search queries and maps for about $1 a day, according to Mr. Hanke. He added that about 20% of Google search queries focused on local places. More than 10 billion search queries were executed through Google last month, according to comScore Inc.

Now Facebook is asking businesses to create a Place page on its site and is encouraging them to advertise their products to users. In addition, Facebook is letting users "check in" at public places using their mobile phones, which can pinpoint their location through GPS and other means. Checking in allows people to notify friends in their social network that they are at a bar, for example.
A host of companies have built mobile-device applications centered around the check-in concept, including Foursquare Labs Inc. and Booyah Inc. For instance, users of Booyah's popular iPhone check-in game, MyTown, are able to check in almost anywhere. The applications sometimes show their users ads from local businesses based on their location.

Google lets app makers such as Booyah tap into its database of 50 million places around the world. Booyah is using that Google data to expand MyTown into foreign countries. At the same time, Google is starting to serve MyTown users with offers from local businesses, said Booyah CEO Keith Lee.
Following suit, Facebook aims to amass a database of local businesses and give app developers access to that data.
Booyah has already jumped in: When Facebook told Booyah about its forthcoming Places product three weeks ago, the company built a new iPhone check-in game, InCrowd, in time for the launch on Wednesday.
Write to Amir Efrati at amir.efrati@wsj.com
 

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