Facebook's Long-term Bet on the User Experience

Thinking about the news that Facebook is introducing an alpha test of a payment system, I keep thinking that the one thing facebook has left is to make a play for the wallet.  They've earned the attention- around 30 billion minutes in the first quarter of 2009 (comScore)- of the world's internet users, and an intimate relationshoips with those users's entire online life.  Facebook lives and dies by the assent of these clicking masses, as revolt afetr revolt has shown, over site design, privacy, and even its esoteric terms of use.

Facebook's reach is exploding- but monetizing attention hasn;t worked especially well.  With display ad rates plummeting, an unproven social ad model, and a long term growth strategy, Facebook deserves some wiggle room.  Itchy investors calling for an IPO In 12 To 24 Months don't make it easy to bet the way Facebook has, but the company expects to be cashflow positive by the end of the year.

Amazon IPO'd early and grew explosively, provoking skepticism that it would ever turn a profit (big hat tip to the still-poignant satirewire.com).  Founded in 1994, opening in 1996, going public in 1997, and finally turning a profit in the fourth quarter of 2001.  The company is unquestionably a juggernaut of commerce, logistics, and long term business strategy.  They've lasted all the way into web 2.0!

I'm drawn to the analogy between the two firms - can the industry at this point allow for the possibility that Facebook can build loyal users now and the profit later?

Without a doubt, the engine for Facebook's profit in the long term is a ubiquitous social graph, to be the identity that users take with them to sites across the internet.  If an e-commerce site fears abandonment, drop offs at the registration page, visitors who don't return, Facebook fears that its users will stop finding it useful.  As long as the Facebook on-site and off-site experience makes the web experience easier, social, trusted and secure, it can be an infrastructure player.

Amazon's constant optimization work, its willingness to please customers and create long-term value, as well as its back-end infrastructure plays, should suggest there is light at the end of the tunnel when you bet on your customers.