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Heads are turning to Internet's golden child

November 18, 2007|Jessica Guynn | Times Staff Writer

PALO ALTO — Google Inc. is used to being the center of attention, the giant that executives at other Internet companies wish Silicon Valley would shut up about already.

For the moment, they've got their wish. People here can't stop talking about Facebook Inc.

Commanding their attention: the social networking site's rocketing growth, cheeky business strategies and staggering valuation.

Microsoft Corp. last month took a small stake in Facebook that valued the company at $15 billion. The deal may have positioned Facebook's 23-year-old co-founder and chief executive, Mark Zuckerberg, to one day supplant Google co-founder Sergey Brin as the technology industry's youngest self-made billionaire.

Brin, whose company lost the bidding war to Microsoft, downplayed the defeat at a recent gathering for analysts, saying, "We don't feel at a higher level that we need to own everything successful on the Internet."

Maybe not. Google's spectacular success has made it the seventh-most valuable company in the United States. Still, after years of all-Google-all-the-time, it's Facebook's turn in the spotlight.

Started in a Harvard University dorm room less than four years ago, Facebook spread like wildfire among college students. Last year, it opened membership to the world, and the wildfire is still raging. Facebook now has more than 54 million users, second among social networking sites behind only Beverly Hills-based MySpace. And it's sucking up Web traffic and Silicon Valley engineering talent.

Presidential hopefuls and entertainment heavyweights seek out Facebook's executives. Venture capitalists and software developers stalk its employees in coffee shops and on the site itself. Users post love songs about it on YouTube. Programmers and marketers pack conferences devoted to understanding the site better. Stanford University even offers a course in creating free software for Facebook.

One ex-Google employee who recently joined Facebook's ranks called it "that company that shows up once in a very long while," meaning that it is bursting with the creative intensity that set Mountain View, Calif.-based Google apart when it was smaller.

As Google aims to organize the world's information, Facebook aims to connect the world's people. On Facebook, high school and college kids mingle with baby boomers and retirees, squeezing their social and professional lives into minimalist profile pages they load with photos, games, polls and updates on their activities.

Half of them visit the site at least once a day to announce hook-ups or breakups, send friends virtual gifts and cocktails, stump for political candidates or support cancer patients and survivors, all of which generates an average of 2 billion page views a day.

Offering a new gateway

Facebook has become such an integral part of some people's lives that it's replacing e-mail. That's exactly what Zuckerberg has in mind: his site as the starting point and focal point of the Internet experience.

On a recent afternoon, the Harvard dropout sat in a Facebook conference room, wearing his trademark uniform of hooded sweat shirt, jeans and Adidas flip-flops. His boyish face, framed by curly brown hair, lit up when he talked about Facebook's potential to transform how people connect.

"The things that are most powerful aren't the things that people would have done otherwise if they didn't do them on Facebook," he said. "Instead, it's the things that would never have happened otherwise."

Like his role models, Apple Inc. CEO Steve Jobs and Google founders Brin and Larry Page, Zuckerberg means it when he says he wants his company to change the world. Despite his young age, he has risen above rivals and confounded skeptics with a string of strategic moves inspired by his goal of making good technology and keeping users happy.

He rejected takeover offers that would have netted him several hundred million dollars, girding instead for an initial public offering that investors have said could happen in about a year. He secured $40.7 million in funding from top private investors, plus $240 million from Microsoft.

Zuckerberg keeps a tight rein on his fledgling company, trying to avoid the kinds of mistakes made by past Internet highfliers that crashed.

And he waited to milk the site for serious advertising revenue until this month, when Facebook unveiled an ambitious plan to harness word-of-mouth advertising and turn users into spokespeople for brands.

Members already alert their friends about the things they love and hate, including movies, restaurants, clothing and cars. Now advertisers can feast on all the information they share, and even attach commercial messages.

They can do this when users befriend a product on its Facebook page or engage with the product on sites run by Facebook partners. For example, members can tell their pals when they add movies to their rental queue on or sell items on eBay.

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