Ben Gilbert: commitment

Transcript context

…2012 to their then-CFO talking about the time they’re discussing the Instagram acquisition, but laying out the idea behind an acquisition strategy. The basic plan would be to buy these companies and leave their products running while, over time, incorporating the social dynamics they’ve invented into our core products. One thing that may make neutralizing a potential competitor more reasonable here is that there are network effects around social products and a finite number of different social mechanics to invent. Once someone wins at a specific mechanic, it’s difficult for others to supplant them without doing something different. It’s possible someone beats Instagram by building something that is better to the point where they get network migration. But this is harder as long as Instagram keeps running as a product. Pause. Which is pretty interesting. That is the argument of why to keep Instagram separate and running as its own product. Instagram’s already discovered this fascinating new mechanic around publishing one image at a time with these beautiful filters. If anybody else tries to come after them, they’re already ahead. Actually, the best thing to do is own Instagram and let it keep doing its thing. Anyway, resuming. Integrating their products with ours to improve the service is also a factor. But in reality, we already know these companies’ social mechanics, and we will integrate them over the next 12–24 months anyway. The integration plan involves building their mechanics into our products rather than directly integrating their products, if that makes sense, by a combination of these two things: neutralizing a potential competitor, integrating their products with ours to improve the service. One way of looking at this is that what we’re really buying is time. Even if some new competitor springs up buying Instagram, Path, Foursquare, et cetera, now will give us a year or more to integrate their dynamics before anyone can get close to their scale again. Within that time, if we incorporate the social mechanics they are using, those new products won’t get much traction because we will already have their mechanics deployed at scale. It is God damn brilliant, David. Here’s my commentary based on all this. It is so smart to basically say, well, if we buy them, we basically get two strategies that we get to execute at the same time. One, we just leave them alone and let it keep succeeding. It’s actually not a current potential threat. We don’t know if it will turn into a potential threat. Hell, Instagram wasn’t making any money yet. WhatsApp didn’t have a feed. It was just a way people connected. It’s not like just because they had a network, they were going to turn it into a feed. There’s this idea that it’s not a competitor now. By buying it, we basically get this option on if it becomes a competitor, if we completely leave them alone and let them decide what to do. to a feed. There’s this idea that it’s not a competitor now. By buying it, we basically get this option on if it becomes a competitor, if we completely leave them alone and let them decide what to do. But then there’s also, look, we will integrate those mechanics into our core product, Facebook, the blue app that already has well-built out network effects. And by owning this thing that could become a competitor, there isn’t white space in the middle. Anyone just like us is also going to take time, they’re not going to do it as good as the original, and they don’t have our network. Therefore, whether the winner turns out to be the original product or us incorporating the mechanic into the blue app, we’ve won either way. probably what’s going to happen is both. Yes, so brilliant.…

Stored transcript either side of the excerpt. The highlighted words are the published quote; the surrounding text is unedited source, never generated.