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Facebook's Googly IPO delivers on Sun man's vision

Selling data ain't like shiftin' boxes, boy

Internet Security Threat Report 2014

History may record Scott McNealy as a straight-dealing leader of a major Silicon Valley tech company.

In 2006, the grinning chief executive and co-founder of Sun Microsystems stunned journalists attending one of his company’s events by calling online consumer privacy a red herring. ”You have zero privacy anyway,” he said bluntly. “Get over it.”

McNealy had been responding to a question about the implications on privacy for Sun’s Jini, which was supposed to have allowed Java devices to connect and share computing resources.

Back then, McNealy was box-happy: Sun might have invented Java, but the majority of its business came from selling Sparc and Solaris to the eBays and AT&Ts of the world.

Privacy advocates and Mozilla might argue that the web and privacy are not antithetical, but McNealy’s answer was pure Silicon Valley at its simplest: technology first, money second... and privacy – well, that’s just a socialist European idea that gets in the way.

Facebook’s IPO filing and McNealy’s echo from history should remind us of two things: firstly, how the ethos of Silicon Valley hasn’t changed, and secondly that today’s giants – the latter-day Suns – are also working in a world where making money isn't as clear-cut or predictable as selling a server to some telco or a website, much as they might be trying to convince you otherwise.

Stapled to Facebook’s IPO filing is the obligatory CEO letter, a piece of creative writing Mark Zuckerberg has used to convince investors that his company is somehow different. Mission, not money, was the genesis of Facebook, he tells us. “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,” he says here.

This kind of West Coast “we’re different” hymn was also sung by Google during its 2004 IPO, an event many are seeking to compare to that of Facebook today. “Google is not a conventional company,” Larry and Sergei gushed in their IPO letter of the time. Last year Groupon also tried the same trick, telling Wall Street's moneymen that the web alchemy it uses to bring in the dollars is such a mysterious and a different art to the standard rules of accounting that “we don't measure ourselves in conventional ways."

Fortunately, the rules of accounting are the rules of accounting, and Groupon had to alter its reporting. The rule of absolutes doesn’t apply to statements of principle, however, and we must allow events to run their course.

Back in 2004, Google’s co-founders tied not being conventional to not being "evil". "Don't be evil" translated as not loading Google’s search results: “We will be better served – as shareholders and in all other ways – by a company that does good things for the world even if we forego some short term gains,” the pair wrote. Also, Google would: “Make the world a better place" by connecting people though free services such as Gmail. Google wouldn’t shy away from risk, they said, meaning: “We may have quarter-to-quarter volatility as we realize losses on some new projects and gains on others.”

Privacy for one of the world's largest aggregators of data? Meh. “We know that some people have raised privacy concerns, primarily over Gmail's targeted ads, which could lead to negative perceptions about Google. However, we believe Gmail protects a user's privacy,” Google's founders wrote.

Don't be evil anymore

Since then, Google has been accused of loading its search to exclude competitors; its financials have been pretty much consistently reliably huge; and adventurous but low-yielding projects have been axed so that the company can focus on Microsoft and others – while Google has taken the daring step of launching Facebook and Twitter clones.

And as for the “Don’t worry about privacy, leave it all to us” routine, Google is now merging people’s profiles across 60 products with no option to opt out.

Back to Zuckerberg. His IPO letter is also padded with Googly type IPO vision; this time it’s about helping people connect and maintain relationships, about changing society, the economy and the world. “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.”

If Facebook were a charity this would be credible, but Facebook isn’t; it’s a commercial enterprise trying to make money from its biggest single asset: holding the dish on 845 million people. Strip out the candyfloss and Facebook’s business cogs soon reveal themselves.

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