web 2.0, the 2000s and lovely jubbly, social networking

From the origins of the internet in 1990, the end of the 1990s saw the emergence of e-commerce and a plethora of payments services and commercial websites.  Then not a great deal happened until the internet became social.  Blog platforms like WordPress and Typepad emerged in 2003; Facebook launched in 2004; and YouTube a year later.  The era of the social web began.

In the middle of the 2000s, I had three key moments that were awakenings around social networks.  The first was at a beautiful conference retreat on Lake Como, Italy.  I was the keynote alongside various banking alumni, and talking as usual about the future of finance.

One of the senior management team of the host organisation then got up to tell the story of how his Chief Executive was side-blinded by the appearance of YouTube back in 2006. The morning papers appeared on his desk with the headline: Google acquires YouTube for $1.65 billion.  He had never heard of this company and so called in his team and asked the question: “What is YouTube?”

None of them knew.

So he typed in www.youtube.com to his PC and the message came back: “you are firewalled out of this website.  Please contact the administrator if this is a problem.”

It sure was a problem, as this particular CEO ran a firm called McKinsey and suddenly a revolution was bubbling under their feet and they were firewalled out.  The company has changed quite a bit since but hey, that was then and this is now.

The second awakening was running a training programme with a University Corporate Education team for a large global bank.  I ran a day with a top futurist, where the futurist talked about the future of the world in the morning, and I talked about the future of banks in the afternoon.  This was back in 2006 again, and Facebook was just rising.

Back then, I hungrily was joining everything that was social, just out of pure interest.  Facebook was a nice website, but MySpace was rocking.  People were launching music careers in their MySpace profiles.  Meantime, Friends Reunited was doing pretty well too.

I therefore included a social network discussion in my presentations, and would recount how bad people were at using these new capabilities.  By way of example, I made up a story about how a senior manager at one bank had started using Facebook, and was happily posting details of her life.  There was no privacy on her profile, as people were not aware of privacy as a problem back then, so anybody could see her email and telephone number.  They could also see her husband, children, family and friends and where she hung out on the weekend.  This led to her being blackmailed ot give criminals access to the bank after they kidnapped her children on a Friday afternoon, just before she would normally pick them up from school.

I stopped telling this story in 2009 when my fiction became reality, and the head of a call centre in one big bank lost her life.  It was too close to home but, again, it frustrated me that so many people who attended these courses would come up to me at the end and say:

Tell me more about Facebook and Twitter.  I would love to use these capabilities, but spend the days at work firewalled out and the weekends are too busy with other things.

These people didn’t know what was going on in the internet world because they were firewalled out, again.

The third realisation came from blogging.  Now I’ve been blogging every single day since February 1 2007 – over ten years – and that’s how come I have a pretty good memory of my life, workwise.  I’m always blogging these stories and how things are developing and changing.  But there was a specific moment that I remember with regards to banking and blogs.  It was 2007 with Wells Fargo who, kindly, came to London in 2008 to recount their story.  Their story was basically that the #1 google search record when you entered Wells Fargo that was returned was a website called WellsFargoSucks.com.  Oh dear.  This was not the only spark for blogging, but it was one.

My UK bank friends listening to this speech were horrified.  They could not imagine engaging their customers socially online.  Weren’t you attacked with a lot of hate? they asked, prompted by the fact that they had tried an internal social experiment that ended bloodily with employees sharing their gripes more than anything else.

Sure said my friend Tim from Wells Fargo, but we overcame it by engaging in a conversation.

And that is the bottom-line here: a conversation.  It’s just a conversation that has moved from the desk to the desktop to the mobile app.  Banks that ignored or were firewalled out of such conversations know they are missing a trick, and it sill amazes me how few banks leverage social media well.  For example, I just entered bank blog on google and found that start-ups like Starling and Atom appear in the first 10 results, but if I enter Lloyds bank blog or Barclays bank blog , there’s nothing much.  There’s a blog about Lloyds digital transformation, and Barclays wealth management has one, but both sites are very corporate and not particularly social.

Meanwhile, banks have relegated twitter to a customer service and PR program, and the rest don’t matter.

It’s interesting as the best practices of financial social networking are shown by banks in Turkey, where they provide conversations through Facebook platforms, and in India, where ICICI bank goes an extra mile to use Facebook as their bank platform, rather than as a channel.   Equally, I still love the story of Fidor Bank using Facebook Likes to determine their interest rates.

Some banks truly understand the compelling power of the social network, and that power is that it is customer created.  People create their networks.  People cerate their content.  People are living their lives and recording their lives digitally.  My decade of blogging and being social is there forever.  In fact, if Facebook or Twitter ever deleted my digital social history I would sue them, as that’s my life, right there.  And my friends.  Many of my best friends, I’ve never met. They might be psychos for all I know – and I think a few of them probably are, but hey, just don’t troll me – and that is the beauty of the web 2.0 age.  We have allowed everyone to connect easily and create content without friction.

Now I, like the billions of other people on this planet with a mobile phone, continually update my profile with shares, likes, updates, video, photos and more.  In fact, the combination of smartphone with a camera and a socially networked platform is the truly transformational moment we are seeing.  After all, there are probably more photographs being taken in this one day, than were ever taken in 150 years before the smartphone arrived.

This is the internet age, and the big change in web 2.0 was the movement from business to consumer.  The consumer was put in control.  It is people who now created content, and the strong control structures that businesses had locked into web 1.0 were eradicated in web 2.0.

Consumers are now media channels with millions of followers and bloggers, vloggers and podcast radio shows are the new name of the game.  People like Pewdiepie rise from the minions to become megastars with 50 million subscribers to his premium YouTube channel, only to fall just as fast.  But ti wasn’t just the social network that drove this change.  It was the combination of mobile social.

As the nascent industry emerged, so did the smartphone with the launch of Apple’s first generation in 2007.  Since then, there are more phones than people on this planet and I’m not going to go into a deep dive of the mobile phenomena, except to underscore that without it, there would be no social networking as we know it today.  24*7 in your pocket and purse is the transformation, and before the iPhone we mostly used our Nokia’s and Blackberry’s for email and telephone calls.  Now we live our lives through our phones.  That has been the parallel innovation of Web 2.0 which, interestingly, was almost missed by many including Mark Zuckerberg  (In 2012, Facebook was so mobile-challenged that it had to warn investors publicly via an SEC filing about its weakness in the mobile market) .

This is because, until around 2012, it was easy to separate mobile and social, as mobile uses the telephone carriers network whilst social is on the internet.  But the two have converged thanks to 3G and its successors, 4G and soon 5G.  Many firms separated apps from their services, and didn’t see the rise of the messenger, the chatroom, the photo stream and such like.

On that last point, the camera on the phone is a specific innovation that made a huge difference in adoption, and today’s mobile smartphones are 100 times better digital cameras than the high end dedicated digital cameras that were available a decade ago.  That is why more photos are taken in a day today than the total number printed in the last century.  With digital it’s easy to take 100 photos a day; in old money, that was three Kodak films that would need to be taken to the lab, printed and picked up a week later.

So the web 2.0 phenomena was a combination of factors from mobile smartphones to phones with cameras to the mobile internet, combined with social mobile apps.

That is the biggest change and naturally led to web 3.0, where customers create their own value network structures.  Who needs institutions and governments to do this, when we all live lives connected globally with people we’ve never met?

Anyways, I said I wouldn’t linger on the mobile network piece, but it is worth finishing this blog entry with an astounding analysis of how Facebook turned itself around from Fortune a year ago:

What Media Companies Can Learn From Facebook’s Incredible Mobile Turnaround by Mathew Ingram, January 28, 2016

A lot of things about Facebook's latest earnings report are worthy of superlatives, including its 52% revenue growth, a profit that more than doubled, and the fact that the site has nearly one billion daily users. But even more incredible, if possible, is the fact that 80% of the company's advertising revenue came from mobile.

This may not seem all that surprising—after all, mobile is rapidly taking over the digital world, and the growth rates of almost any service focused on the mobile market have been meteoric. So the fact that a lot of Facebook's revenue comes from mobile makes sense.

The incredible part is the sheer speed with which Facebook has gone from being the underdog to being one of the most dominant players in mobile advertising, and in mobile media as a whole. And the way it did that has some lessons for media companies.

In 2012, Facebook was so mobile-challenged that it had to warn investors publicly via an SEC filing about its weakness in the mobile market. At the time, it hadn't gone public yet, but it was preparing to do so, and it filed an amended prospectus saying it was struggling with mobile advertising and not having much success.

In the filing, the company said that it did not "directly generate any meaningful revenue from the use of Facebook mobile products, and our ability to do so successfully is unproven." The network said it had tried inserting what it called "sponsored stories" into mobile Facebook feeds, but wasn't having much luck.

By the end of 2012, Facebook's mobile revenue was at 25% of overall revenue, and by the end of 2013 it was at 50% of revenue. Last year, less than four years after saying it was making nothing on mobile and wasn't sure it ever would, Facebook booked more than $4 billion in mobile advertising revenue, or 80% of the total.

Most traditional media companies, meanwhile—whose businesses are in many ways very similar to Facebook's, since they also monetize their readers or users through advertising—continue to struggle with mobile. That's why so many have chosen to partner with Facebook on its mobile "Instant Articles" feature: Because they know Facebook is much, much better than they are at serving up mobile articles and advertising.

Right now, anyone in the media reading this is probably thinking: "Well, of course Facebook went from zero to $4 billion in mobile advertising revenue. The company went public at a huge valuation, and has had money pouring through the doors ever since. We would all be killing it on mobile if we had that kind of cash and user base to exploit."

That may be true, but it misses the central point, which is that user growth and lots of cash isn't really what helped Facebook do what it did. It was a relentless and single-minded focus on getting mobile right—and in particular, getting it right for users, not getting it right for the finance or the advertising sales department.

Look at what Mark Zuckerberg said in response to a comment on the recent earnings call. As my Fortune colleague Erin Griffith describes it, an analyst mentioned a "billion-dollar conversation" that Zuckerberg supposedly had with the mobile team about all the money they were leaving on the table. Here's what the Facebook founder said:

I don’t know where you got that story from. I never had a conversation with the engineering team, where we were behind on mobile and I said, “We need to do this to make money.” That’s not really how we operate. What happened was we realized mobile was growing faster than desktop and people were shifting their usage. It was the more important thing for people’s consumer experience.

That’s when we made the shift. Not in our business first, but in how we developed the products. I told all of our product teams, when they come in for reviews: “Come in with mobile. If you come in and try to show me a desktop product, I’m going to kick you out. You have to come in and show me a mobile product.”

Are there any CEOs or publishers at media companies who did anything even approaching what Mark Zuckerberg did? Who kicked their design or usability or revenue teams out if they came in with a desktop product and told them to come back with a mobile one? Unlikely. If they had, many would probably be a lot further down the road than they are.

And yes, I know that newspapers and TV companies and other traditional media entities have existing legacy businesses to run, based in print or broadcast. But so did Facebook—it had a giant money-spinning machine based on the desktop, and yet it deliberately took the chance of cannibalizing that product to make mobile work.

Not only that, but Facebook did this first by focusing on the user, and what they might want or need—things like speed of loading, and ads that weren't intrusive, etc.—not on generating revenue. What did publishers do? Spent all their time adding more slow-loading ads and popups and tracking widgets, until the actual content at the heart of the user experience was almost impossible to see or engage with.

No one is saying that media companies could have had Facebook's growth rate, or $4 billion in mobile advertising, if they had only done this sooner. But they would undoubtedly be a lot farther ahead than they are now, and ironically, they probably wouldn't have had to rely as much on Facebook for distribution as they do now. But that ship has sailed.