Wednesday Grok: Zuckerberg finally speaks after Facebook IPO criticism

Mobile misstep, IPO a bummer, and no Facebook Phone.

After months of being corn holed in the tech press and weeks spent enduring muttering about his leadership, Facebook CEO Mark Zuckerberg finally went public today for the first time since the company’s much criticised IPO.

The reaction to his presentation — a one-on-one interview on stage with Michael Arrington at Disrupt SF — was immediate and overwhelmingly positive. The tech press lapped it up and so did the markets.

Investors drove the price of the stock up over 6 per cent on after hour markets.

Coverage of the event is already extensive around the Web, with Techcrunch having the most comprehensive coverage. Grok won’t try and cover it all, but he will pull out a few highlights.

Not surprisingly, given the question marks over its mobile strategy, mobility was featured prominently. The Zuck described Facebook’s decision to try and develop its mobile platform using HTML 5 instead of native apps as the biggest strategic mistake the company had made. It recently launched a native iPhone app and there is an Android app in the wings.

“It's easy to underestimate how fundamentally good mobile is for us,” said Zuckerberg. “First, there are more users. Second is, per person who's using Facebook on mobile, there's more engagement and they're spending more time. Third, per person on mobile, we think we're going to make more money on them than on desktop,” Zuckerberg told Arrington.*

He ruled out Facebook building its own phone saying, “Do you believe me yet? It’s always been such a juicy story, but it’s so clearly the wrong strategy for us... Theoretically. We’re not. We could get 10 million, 20 million people to use it. That doesn’t move the needle for us.”

On the vexed question of the performance of company’s stock since the IPO (it’s fallen from a high of $45 to now just more than $20), Zuckerberg said, “The performance of the stock has been disappointing, and we care about our shareholder. We’re going to do the things that we think are going to build value in the long term.” Business Insider characterised Zuckerberg’s Vaudeville act as evidence that he is finally “getting real”.

“He was also realistically self-critical when it came to Facebook's products, particularly its mobile ones. And he explained why Facebook has been so slow to get going in mobile. The explanation was clear and logical: Facebook bet heavily on a technical strategy — building mobile versions of its website rather than native Smartphone apps — that just wasn't the right one for the time.”

PandoDaily took a similar line suggesting that Facebook’s strategy post IPO of following the Google playbook proved to be harder than it first appeared.

“Today on stage at Disrupt SF, he called the stock’s performance ‘disappointing’. He admitted it is not good for morale. But the most important take away from that portion of the interview was unspoken. After all that posturing about only caring about the mission, the reluctance to participate in the IPO road show, and launching a $1 billion acquisition of Instagram during a quiet period — consequences be damned — today a humbled Zuckerberg showed that he recognises he has to play the game.”

Grok is frankly a little surprised by the reaction from the tech press. After all, Zuckerberg is 28, not 17 and there is the small but important point that this is a guy who has built a company with a billion customers in less than a decade. It would have been far more surprising if he hadn’t acquitted himself well.

Also, there’s a slight hint in the reaction to the performance of relief that he said something, anything, after months of silence and gathering tension.

One final point — and maybe it is there but I missed it. The real problem with Facebook’s mobile strategy (and everyone else’s for that matter) is not HTML5 v native apps. It is the absence of anything that looks like a sustainable business model unless mobile ad yields improve dramatically or someone invents a great new way to monetise content on a screen with a form factor that literally fits into the palm of your hand.

*Quotes were obtained from Business Insider’s live blog for this piece, unless otherwise stated.

Andrew Birmingham is the CEO of Silicon Gully Investments. Follow him on Twitter @ag_birmingham.

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