All language subtitles for mark.zuckerberg.inside.facebook.720p.hdtv.x264-ftp

If you would tell us your name
and the spelling so we get it right.

Mark Zuckerberg. M-A-R-K
Z-U-C-K-E-R-B-E-R-G.

Would you describe yourself as the
founder of Facebook? Yeah.

CHEERING AND APPLAUSE

In just seven years Mark Zuckerberg
has gone from college student to
multibillionaire.

I'm off to meet him.
I would say to Mark Zuckerberg,

you are a defining entrepreneur,
you're one of the top ten
entrepreneurs who has ever existed.

Zuckerberg's brainchild, Facebook,
has found its way into the personal
lives of 800 million people.

When you put technology behind the
power of who we are as people,
the world changes.

That is the power of what we do.

Once in a while a business
comes along, which defines an era,

by doing something very new
and very big.

In this case changing the way that
hundreds of millions of people
talk to each other.

What makes Facebook unique is that
its founder has so quickly created

not just a business but
a whole new global culture.

If you go back most people in the
world had no voice right, they had

no podium where they could share
things but now everyone does.

He's right.
Even the Queen is on Facebook as well
as half the population of Britain,

making Facebook the most
visited website in the UK.

It's phenomenally powerful but the
biggest issue for Facebook is
it becomes too popular.

Zuckerberg's creation has
produced lawsuits, accusations of

privacy invasion
and even inspired a Hollywood movie.

Do you see any of your code on
Facebook? You stole our whole idea.

Now Facebook's using the detailed
personal information its users

have given it
to build its own advertising machine.

But can that justify the astronomical
values being put on the company

ahead of a possible
stock market floatation?

I don't think it's crazy at all
to say Facebook will be worth
a 100 billion, Facebook is hot!

Sorry. I'm kind of nervous.
We have the President of
the United States here.

With exclusive access to
Mark Zuckerberg, we ask whether

Facebook's phenomenal growth
means compromising his student dream
of a more connected world.

'My name is Barack Obama
and I'm the guy'

who got Mark to wear a jacket
and tie.

LAUGHTER AND APPLAUSE

And I'm very proud of that.

Today
thousands of software developers,
venture capitalist and entrepreneurs

have come to rub shoulders with
Facebook's star for its annual
conference in San Francisco.

The biggest act on the bill
is still just 27 years old
but no-one doubts he's the boss.

CEO Mark Zuckerberg!

CHEERING AND APPLAUSE

Yeah!

Yeah!

Come on!

Hey welcome to F8. We're going to
change the universe!

Zuckerberg himself waits in the
wings, enjoying his very own
warm-up act.

What the hell are you doing?
Er...

I'm Mark Zuckerberg.
No, I'M Mark Zuckerberg.

The real Mark Zuckerberg is no longer
the new kid on the block.

By now, I think that most people see
that social networks are going to be
a ubiquitous tool used by billions

of people around the world
to stay connected everyday.

In Britain alone, 30 million
people have registered on Facebook.

It's free. You just give your name
and e-mail address and ask other
Facebook users to be your friend.

You can add information about your
background and tastes and upload
a photo to your own profile page.

Once you've got a few friends,
Facebook makes it easy by suggesting

more people you may know from
what you've told it about yourself.

You may be surprised how many friends
you can accumulate. The average
user has 130, many have a lot more.

200 or 250 something around there.

About 264.

500 odd.

Between 600-700.

About 700. Close to 1,000.

1,921 friends.

More than I have in real life,
definitely.

The only content on Facebook is
what its users have put on there,
so Facebook stands or falls

on their willingness to keep posting
new material for others to see.

You want us to share.
Mmm. Why?

Well, the mission of the
company is to make the world

more open and connected because
we believe that

everyone will have a much
better experience when they're doing
different things with their friends.

When there's more information
out or you can discover great
content through your friends

or you can discover
new food that you want to eat or
places to run or anything like that,

your world becomes a lot richer.

Zuckerberg practises what he
preaches, sharing a lot about his
personal life

on his own Facebook
page, which anyone can see.

He shows pictures with his long-term
girlfriend, Priscilla Chan,

lists his favourite movies and books
and records the life of his dog,
Beast.

Come on, Beast, you got this,
you got this!

Can we get some Eye Of The Tiger?

LAUGHTER

Our development is guided
by the idea that every year

the amount that people want to add
and share and express is increasing.

It seems to be true, in September
Zuckerberg was able to announce
a new record.

For the first time ever, in a
single day, we had 0.5 billion
people use Facebook.

0.5 billion people.

APPLAUSE
For many, it's now as much
a necessity as a choice.

There is social pressure to join it
and if you're not part of it you
don't get invited to certain things.

I always said I'd never us it but
since I've got it, I've ended up
using it more and more and more.

What makes it so addictive
is that you are... It's like
living a second life.

No-one e-mails any more but
everyone's posting on Facebook.

Facebook not only attracts massive
numbers of users - 800 million at
the last count -

but more surprisingly, every day half
of them log on to the site making it
the stickiest on the internet.

Now Zuckerberg wants them
to get even more attached.

We're not trying to make it so that
people spend more time on Facebook,

we're trying to make it so that
the time that you spend

is so valuable that you want
to keep on coming back every day.

Facebook has signed up more people
than live in the United States

and European Union
combined, including me.

Questions about how we communicate
on it, about privacy and sharing
and about Zuckerberg himself

will come into sharp focus as the
company heads towards a likely stock
market flotation next year.

There's speculation it could be worth
a $100 billion but Facebook will only

be worth that if Zuckerberg can
keep the trust of ordinary users.

Thank you.

CHEERING AND APPLAUSE

That's why his own story and motives
are key to the company's prospects.

Zuckerberg's Facebook journey
began just seven years ago
at Harvard University.

He was studying psychology
and computer science.

When not in lectures he was forming
his vision of a more social internet.

I remember hanging out with my
friends and going to the local
pizza place and talking about,

you know, in the future, you're
going to be able to share all the
stuff that you want and you're going
to

be able to have access to it, know
all the things that you're doing
and all these different experiences.

But we just figured someone else
was going to do it. Who are we
to go build this?

We were 19 years old, we were in
college, we knew nothing about
companies

but we want this to exist.

We've focused on it probably
more than anyone else and we're one
of the companies

that's helping to
bring this about. It's really cool
and who'd have thought, right?

Harry Lewis taught Zuckerberg
computer science. Decades earlier,
he also taught Bill Gates.

The thing I would say about
Zuckerberg is that

he was very eager to learn
and very sceptical

about whether anything we
were teaching him was actually

the right things for him to learn.

I think Bill Gates had exactly
the same feeling. It was not
disrespect for what was being taught

but maybe not exactly what he
was interested in and so on.

So he was absorbing
everything and not paying any
attention to it at the same time.

Zuckerberg's invention of Facebook
began with a false start.

At the time a facebook was just the
name of this kind of printed album
of students photos and details.

Zuckerberg used his fellow
students' facebook pictures

to make a mischievous website,
to rate their looks.

Kind of as a prank my roommates
and I came up with this idea that

we'd go through and take all the
pictures off of all the facebooks
and make a site that

juxtaposed two of the same gender
and let users click on the one that
they thought was more attractive.

He called it Facemash.

Within hours of going online, there
were complaints to the university
authorities.

So you have a website that
pisses off the administration.

I almost got
kicked out of school for that.

HE LAUGHS

Yeah, that was a little chequered
point in our history.

Joe Green was Zuckerberg's
collaborator and roommate.

You can see Mark's mind at work,
figuring out these social dynamics.

The Facemash was literally up
for four or five hours and was like

the most used site on
campus on a Sunday afternoon.

Harvard had been planning to put
its facebooks online but shelved

the idea because of privacy issues
highlighted by Facemash.

Harvard issued a statement that
because of privacy concerns that
I'd raised from this prank,

their online facebook
would be delayed indefinitely.

So I was like well you know
that's a bit like ridiculous like

these websites aren't that
hard to make so I'll just
kind of throw one together

in a week or a week and a half
and we'll have our online Facebook.

So I did and that was "Thefacebook."

Thefacebook, as it was called, got
round the privacy problem by inviting

people to post their own information,
which they were eager to do.

Within a few days thousands
of people were, were on it
at Harvard and I remember in

?the first week alone I'd come
home from classes and see that

10% of students at Harvard were
logged on at any one point in time.
Then that was just really cool.

So then by the second week
we'd all these people

from other colleges around us like
MIT and other colleges

in the neighbourhood were e-mailing
in asking if we could release
Facebook at their schools too.

Zuckerberg wasn't your typical
geek. He was as interested in

how people were using Facebook
as in its computer code.

Is it the human side that drives
you on this rather than the
technological, the computing side?

It's really both. I took a lot of
computer science classes and I was
formerly a psychology major

and I think that those two
things together really represent
the DNA of what Facebook is.

We're a technology company
and we design social products
and there are a lot of

technology companies and a lot of
people who think about social issues

but there aren't a
lot of people doing both.

The genius is when you get a
really creative person who can
take different disciplines,

different subject matters
and find where the opportunities are
and spend lots of time being

creative with them and, and that
certainly something that Zuckerberg
took advantage of while he was here.

There aren't many 20-something's
whose lives have been turned into

a Hollywood movie
but Zuckerberg's has.

This site's life.

You know what? Let's go get
a drink and celebrate.

The truth about Facebook's origins
will always be compared to the
story told in The Social Network.

This movie is,
like it or not, the de facto
myth to how Facebook was created.

I've covered this story for years

and I still have to think,
"Now is this how it happened?

"Or is this how the movie said
it happened?"

And that likely will always be true.

"As of yesterday evening,"
Zuckerberg said,

"over 650 students had
registered to use thefacebook.com."

The movie centres on Zuckerberg's
legal battle with his two fellow
students, the Winklevoss twins.

If I was a drug dealer I couldn't
give free drugs to 650 people
in one day.

This guy doesn't have three
friends to rub together.

In highlighting the Winklevoss case,
the movie underplays the existence at
the time of other social networks.

Even before he went to Harvard,
Zuckerberg had worked on a website

at his school, which included
an online student facebook.

And millions were already signed up
to the social networks Friendster
and Myspace.

In Britain, Friends Reunited had
16 million users - social networks
were a feature of university life.

At campuses across the country
tons of students were
thinking up Facebook.

Maybe they didn't call it Facebook
but at Brown University there was a
site at Columbia University

there was a site, at the
University of Texas there was
a site and on and on and on and on.

The Winklevoss twins really did
dispute ownership of Facebook
and have done for years.

Our idea was stolen

by Mark Zuckerberg and we're
basically trying to retrieve that
back.

Can I get a large coffee, please?

Four years later Facebook settled
with the Winklevoss' for $65 million,
while still denying their claims.

Zuckerberg's former roommate Joe
Green now runs his own online
business but at college he

turned down an offer from Zuckerberg
probably the best business offer ever

made to anyone this century
on parental advice.

There was a moment when
no-one knew what we'd be seeing

seven years down the line and you
were invited to become part of it?

Yeah, I was asked to be a sort of
part of it, cofounder

and I ended up... Zuck likes to
jokingly call the billion dollar
mistake but I,

combination of, erm... We got
into a bit of trouble for Facemash

and my father's a professor
and wasn't super-thrilled
about that.

What was the conversation
you had with your dad?

You know he was just,
"You shouldn't be doing any more of
these Zuckerberg projects."

But it's all good now.

With its Harvard origins,
simple design and Zuckerberg's
determination

never to let it crash,
Facebook became the student network.

Zuckerberg began to wonder
if it could be a real business

and whether he should drop
out of college to find out.

I don't think Mark's family was
hugely resistant to him

dropping out and trying this idea.

Of course any parent wants
their kid to get a college degree

even if they've become a billionaire
probably you know many parents would
say, "It'd be good for you."

But I think that does begin
to wane after the second or third
billion, perhaps.

As the summer vacation arrived,
Zuckerberg moved from east coast

to west swapping university life
for a new one in California at the
heart of the technology business.

There's only so long that you
can build a high-tech company in

a college dorm surrounded by
pizza boxes and piles of laundry.

There comes a time when you
have to move to Silicon Valley

be surrounded by pizza boxes
and piles of laundry here instead.

This is where Zuckerberg ended up,
a small house in Silicon Valley
30 miles south of San Francisco.

He was joined by his Harvard
friends. The students were pleased

to find that this being California,
the new home included a pool.

Go! Go! Ahhhh!

I didn't die. I know.

The Social Network movie shows
how they used it.

OK. Ready...

Zuckerberg was starting
to make media contacts.

So I took a phone call with this
young guy

and there was all this noise

in the background and he told me it
was because he was living in a house
in Palo Alto with his friends

and they were all in the backyard

and he had all kinds of things,
stretched out in the backyard.

He had a zip line across the
backyard and they were
all hanging out.

Those who studied Facebook's history
say this was only part of the story.

DOORBELL RINGS

That's the doorbell. I didn't know
we had a doorbell. Andrew...

The movie's portrayal of Facebook
Palo Alto experiences
is not accurate.

It was a serious bunch of guys
that had a sense of mission
from the beginning.

They worked incredibly hard,
they also partied hard.

Zuckerberg was serious about Facebook
but the tales of poolside parties
weren't pure Hollywood mythology.

The owner's inventory when the
students left lists barbeque ashes
dumped in a flowerpot,

a pool filter shattered by
broken glass, damage to a chimney
from a zip wire.

I think it's probably fair to say
there wasn't all work that summer.

# Disco sounds, it's all
on the west coast... #

By the autumn, Facebook
had reached 200,000 users.

Every day it needed to rent

more computing power and that meant
looking for some serious investment.

Facebook had reached
a critical juncture.

How big did Zuckerberg want it to be?

He started making contact
with Silicon Valley's
venture capitalists.

He was in shorts and flip-flops,
I mean there wasn't
anything formal about it.

He got a meeting with
veteran investor, Ron Conway.

I asked him how
big can this company get?

He said, with a 100% conviction,
"We can get to 300 million users."

Zuckerberg landed a first
investment of $500,000.

He hired an office above
a Chinese restaurant.

Within a few months Facebook
reached its first million users.

18 months after the founding
of Facebook a light bulb went on

in Zuck's mind and said,
"Wow! This thing's growing at
thousands of percent a month.

"This is a real company." Partying
wasn't interesting any more.

In 2005, the
year after it was launched,
Facebook hit five million users.

The big investment companies in
Silicon Valley's Sand Hill Road
started paying serious attention.

Are you getting courted by

big companies that what to buy this?

Yeah, a few but it's a lot of work

to maintain it and to grow
and add new stuff so there's not a
lot of time to talk to people.

Soon the very biggest players in
technology didn't just want to invest

in Facebook, they wanted to
buy the entire business.

In 2006, Zuckerberg refused an
offer from Yahoo for $1 billion.

Everyone around the company, a lot
of the investors and the executives
were you know, it was like,

"You could sell this for $1 billion.
What the hell's wrong with you?"

It takes an almost sort
of insane degree of vision

and self-confidence to be able to
sort of weather through that storm.

The next year Zuckerberg took a big
gamble, freeing Facebook from the

world of universities by opening it
up to anyone with an e-mail address.

Suddenly 50,000 new users a day were
joining. Dude, what's up?
Dude, you're on TV?

Facebook was courted by Microsoft
with an offer that made a billion
look like an insult.

When Microsoft in 2007 offered
$15 billion for it, he wasn't
interested in taking that either.

That to me is the most amazing story
because when he was 23 years old
he could have made over $4 billion

personally, by selling it. He didn't
even consider accepting it. I think
that shows what kind of a guy he is.

The kind of offers that were
coming in to you were like

15 billion from Microsoft, how does a
23 year old manage to say no to that?

Well, the hardest one was when Yahoo
offered us a billion dollars

because that was the first
really big offer and at the
time I knew nothing about business.

So I knew nothing about what a
company would be worth and I had to

make this argument to people
that somehow this
was going to be the

right decision and from the people
who weren't in it for the long-term,
I think a lot of them left.

And then we got a new wave of
people who were really committed,

so that by the time that Microsoft
and others tried to buy the company,
we'd already made those decisions.

We knew we weren't going to sell the
company and that we were going to
build it.

It's one thing to run an
insanely successful start-up.

I want to find out how Facebook works
as a big business.

And how it plans to grow even bigger
by using the personal data

its users give it
whilst still retaining their trust?

This is its headquarters south of San
Francisco at the end of a residential
street in Silicon Valley.

Senior Manager Dan Rose
gives me the tour. This is Facebook.

Looking round the office it's hard
to guess who's on work experience
and who's a top exec.

This open kind
of format where people

don't sit in offices really lends
itself to collaboration. Where would
Mark's office be then?

Well, Mark actually sits at
a desk right over here just like
everyone else. What, this is him?

This is him here, yeah.

With the famous hoodie? Yeah, There's
his hoodie and a Mark Zuckerberg
doll on his desk.

So he wants to sit out here,
no office.

Yeah and he collaborates with
everyone just like
the rest of the company.

As Facebook has grown, Zuckerberg's
tried to hang on to the energy
and flexibility of a start-up.

"Move fast and break things"

is its unofficial motto.

Zuckerberg's still
closely involved in the details.

He spends an enormous
amount of time in the office.

One of the ways that he really
operates is to engage with

our engineers and our product
leaders

around the design of the new
products that we're building.

But when he's not in the office,
he's usually at home on Facebook

talking to all of our
employees about different
things that we're working on.

Andrew Bosworth is
Facebook's chief engineer.

he has to run it past the boss.

He's less concerned with the code
He lets us deal with that.

But in terms of the look
and feel and certainly

all the integration of the products

he's a strong voice and when

you're launching a product at
Facebook, the Zucker
view is kind of those things that

you really work towards and your
product is really buttoned up and,

he uses all the products while
you're being developed and gives
notes like very kind of like

lengthy notes over the weekend so
writing four or five paragraphs of
things we need to do differently.

And tries to provide the high-level
direction so we understand

why he's doing things
the way he's doing them.

Everyone at Facebook's
expected to move fast.

New programmers get a chance to write
computer code that contributes to the
site in their first few days at work.

I'm given some tasks to work on
and I've already actually

pushed codes on to Facebook's
website.

Within two weeks of working here.

So I told all my friends and my mum,
"Hey, check out this little piece
of code. It's now mine!"

It was really exciting.
So what would I see if I went
on and I go, "This bit's Eric's!"

I change how some of the text looks
in the top right corner of
one of the boxes.

It's kind of smaller stuff but

it's still seen by like
750 million people, right?

When we push it out
and you see it on the live site,
it's just so rewarding.

It's mind-boggling.

Facebook has the classic Silicon
Valley office style - the food is
free, you can get your washing done,

there are games to give your
brain a rest from programming...

..or you can RipStik and work on
a coding problem at the same time.

Finally, if your keyboard breaks in
the early hours, you don't have to
wait for the IT dept to open.

Useful.

Investors had always fought for
the chance to buy into Facebook,

without worrying too much about
how it was going to make money.

But by 2008,
with more than 100 million users,

it was time to think seriously
about harnessing its huge audience
to a profitable business model.

But how?

Well, there was one company in
Silicon Valley that was legendary
for having built

an audience BEFORE finding a way
to make money on a grand scale.

Google.

Zuckerberg approached one
of its star executives.

Poaching Sheryl Sandberg
is seen as one of his biggest coups.

We had one dinner out at this little
restaurant called Flea Street Cafe.

After
that we just literally had dinner

at my house and Mark would say
sometimes you know,

"I'm so sorry I
can't invite you over for dinner."

But at the time he only had

I think a one... Not even a one
bedroom, like a one-room
apartment.

He didn't have any
furniture, like he had a futon.

He thought that would be
awkward, which it would have been.

We spent hours,
dozens and dozens of hours on,

over weeks, just making sure that
this was the right fit because it...

That's what's important, right?

There was no question about,
"Is she good enough?

"Or is the company good enough?"
It was all like just, "Are we
trying to do the same thing?"

Eventually there was agreement
and Sandberg switched from Google
to Facebook.

Enter Sheryl Sandberg.
Sheryl was necessary at that company

because she knew exactly how to
build a company from start-up phase
to grown-up phase.

She'd done that very effectively
at Google and most important,
Sheryl had chemistry with Mark.

Sandberg knew exactly how Google
had made a fortune from advertising.

On the very day Facebook was launched
at Harvard, Sandberg
was explaining to

BBC viewers why Google's
advertising system works so well.

With Google you on the web searching
for information

and we give you
an ad as part of that search.

So it's integral to what
you're already looking for.

Google offers advertisers the
chance to put their message

in front of people who are
ready to buy at that very moment.

One example - Panama hats. Let's say
I was looking for Panama hats today.

Here I go Panama Hats Direct.
A very specific search looking
for a very specific product

and the advertiser is able to find
me and I'm looking for that product.

Sandberg's challenge was to
come up with Facebook's version
of the Google money machine.

We don't compete
in the search market, we're not
competing for the Google ad dollars

in search marketing in
the sense that when you are looking

for a product, you don't actually
come to Facebook, you go to Google.

According to Sandberg,
Facebook ads like TV or magazine ads

are there to tempt you
with new products and ideas.

Where we are
is actually in demand-generation.

So when you think about your TV ads,
TV ads that are shown to you,

other ads that are shown to you,
you're not in active searching
mode for something to buy.

You're not fulfilling demand -
you're actually generating demand,

something you
didn't know you wanted.

And when you think about what people
are doing on Facebook, they're
much more in discovery mode.

So could the fact that Facebook users
aren't searching for products or
services be an advertising advantage?

Some outsiders are sceptical.

Professor Ben Edelman
studies online businesses.

They're hoping that advertisers will
bet on the future value of a
customer

even if in the short run

the customer actually doesn't buy
much of anything at all.

If one accepts ephemeral value,
value that's hard to measure,
possible future value as reasons

to conduct the advertising, then it
certainly is possible to justify.

Of course that could
justify just about anything.

Advertise on the far side of the
moon and when the aliens
finally get to you,

they'll know
what they need to buy.

In comparison with Google, Facebook
undeniably holds one trump card,
which is already proving profitable.

Facebook is
probably the most valuable

marketing research tool that's ever
existed.

In a way, it's the most valuable
research tool for anything about
people that has ever existed.

Facebook lets advertisers
reach large numbers of just
the kind of people they want

by tapping into the information
they've revealed about themselves
whilst they're using the site.

When you place an ad on Facebook,
which anyone can do
from a normal laptop,

you get the chance to narrow down
the whole of the Facebook population

and target just the people you think
will be interested in your product.

So supposing you run a beauty salon
and you've got a special offer
for brides.

Facebook offers you access
in the UK to 30 million people.

Now we're going to narrow it down
and say, we're looking for the women.

Estimated reach is now telling me
it's 15 million, about half of that.

So then we're trying to find the word
that will target the right people,

so we're going to type in,
in interests, the word 'beauty.'

And that's now brought the number
down to just under half a million.

And now, because I'm targeting
brides, I can be even more specific,

I can go down to the
relationship status box

and here I target those women
who are 'engaged.'

And suddenly we've brought that
number right down to 27,000 people.

And that is the way that the adverts
can be targeted precisely to the
core demographic you want to reach.

The advertisers don't know who you
are, doesn't know what your name is

or where you live,
but it knows you as a number

and it can use that number.

Although anyone at home
can place an ad on Facebook,

there's a new kind of agency
turning out Facebook ads
on an industrial scale.

TBG is a London company
specialising in Facebook ads.

Its boss, Simon Mansell,

believes he's part of a big change
in advertising.

It's turned much more from
an art form to more of a science

and that's sometimes where some big
traditional companies have struggled

because they were artists and now
they have to try and be scientists.

TBG doesn't rely on creatives to
guess what people will respond to,

instead its software runs mass
experiments on many possible versions
of a Facebook ad.

Even though the ads are small,

there's three different parts
of the ad -

the headline, the image
and the little piece of copy
for most Facebook ads

and there's 12 different
targeting criteria.

Age, gender, relationship status,
that kind of thing.

So once you've multiplied those up,
there's thousands of
different permutations.

TBG typically tries
27,000 variants on an ad.

Charlotte Knights is working on a
campaign for Heineken, promoting a
sponsored music festival in Poland.

Initially, we can see this image
here is outperforming this image.

Then TBG decides who should be shown
which version of the ad.

What our software does is it
would work out which ad variant
works best for which audience.

So it might be that a 25-year-old
in New York City who likes cats

responds differently
to a 33-year-old male in London
who likes dogs.

Facebook knows about its users
from what they have done on the site.

So your ad can specifically go
towards this specific age group,
this specific gender,

this kind of person and if you say,
"I like Heineken, oh, I had a really
nice Heineken earlier,"

then it will take it from that.

Facebook's advertising revenue's
expected to top $3 billion this year,

but there are still some in the ad
business who question Facebook

as a new advertising medium.

The primary interaction here
is the social interactions,

it's a social network,
it's not a commercial network

and therefore I think you use it
commercially at your peril.

The potential of Facebook
is more, in my mind,
as a public relations medium

than it is as an in-your-face
advertising medium.

Elliot Schrage deals with
public policy for Facebook.

I asked him what he made of
Sir Martin Sorrell's point

that people come to Facebook for
social and not commercial messages.

I think we're well on our way
to finding a very protective balance

of providing people with information
they want to receive from friends,

recognising that most people,
when they're in their course
of the Facebook experience,

are not focused
on purely commercial activities.

Indeed, if you compare us to any
online service, any newspaper,

I think the percentage of space
devoted to commercially related

or commercially orientated messages
is tiny.

Now, if the first part of
Facebook's strategy is to sell
ads using its targeting ability,

the second it to invite
businesses themselves on to Facebook

and they can set up their own pages.

Pages act pretty much like people
on Facebook,

but instead of being friends with a
business you can choose to 'like' it.

When you say you 'like' it,
you're allowing it to send you
messages, as you would a friend.

And if it strikes you as an odd thing
to do, well, have a look at this.

Nearly 35 million people have pressed
the 'like' button for Coca-Cola.

Rather than being
the passive recipients of ads,

when people connect to Facebook
pages, they're choosing to link
themselves to brands and products.

Managing those relationships
is a new kind of marketing.

Here in New York, Buddy Media helps
big businesses talk to millions of
people who 'like' them on Facebook.

If you're one of the top advertisers
in the world,

we work with eight out of the
top ten global advertisers.

You may have 400 brands

and you may do business in every
country in every language

so what you need is the ability to
really manage all this content
globally.

And you cannot do it
without software and then on top of
that we tell them what's working,

what's not working. How do you
really optimise what's going on?

How you get the right content
to the right people?

Companies try to get chatting
to their Facebook fans
because when anyone responds,

what they've said and the company's
name will automatically spread
to all their Facebook friends.

So now Pretzel Crisps
is doing things like

posting the recipes
of ways to eat pretzels

and asking questions and asking
people to comment on these recipes.

You can see people are starting to
engage, in this case 174 people
have actually engaged,

in this conversation
about these recipes.

Which you'd never be able to do
anywhere else.

Marketing people call it
'word of mouth at scale.'

Social media for the last million
years has been about just
word of mouth

so even when the wheel
was created, people said,

"Wow, the wheel is here,
you've got to check this thing out!"

And so that obviously spread
like wildfire,

but it took time to go, you know,
within a community and then
to another community.

With Facebook,
it spreads instantaneously.

You don't have to be a multinational
to want to communicate
to your customers on Facebook.

Representing small enterprises
on Facebook has become
a new cottage industry.

You do guitar lessons? We'll do
repairs and obviously sell...

Beverley Ames-Rookes runs
Facebook pages for small businesses.

What's really nice with Facebook
is you can listen to what people
say about your business

and then you can interact with them.

Today she's trying to sign up
new clients in her Surrey village.

I can do it all,
your Facebook banner,

I create your albums,
update your albums for you.

Beverley, hi, hello. Emily.
How was it? How did it go in there?

'Beverley creates a page for each
client and then posts news
and comments as that business

'to Facebook users
and on other social networks.'

She can find herself communicating
as a shop, a pub,

or even an exotic holiday resort in
Asia, which she has at least visited.

I felt the atmosphere,
I know when the DJs are playing,
I know when there's live music.

I know the local beers so I can talk
easily on behalf of those venues.

In the last couple of days, take us
through what you've actually said.

All right. "Banana Tempura
Caramel Toffee Ice Cream!

"Who's feeling naughty?"
As you can see,

it pushes for a response and
what you're trying to do is to
get people to interact with you.

OK, so Helga says, "Sounds yummy,
hope I can try it in August."

Suzee Jones says, "September for
me!!" And Kitty White, "Original!!!"

With lots of exclamation marks.
I don't know what Kitty
is making of that one.

'Each time someone comments,
the resort's mentioned
to that person's friends.'

That will show up that
they've commented on a page

so all of a sudden we've got a bit
of exposure on somebody's profile.

Facebook claims that when a business
is brought to someone's attention
by a friend,

it's a much more powerful
form of recommendation than
an ordinary advert. But is it?

You're similar to your friends and
the ads that your friends respond
to, you respond to also, so yes,

people come in clusters,

yes, what your friends bought,
you might buy,

but you might have bought it anyway.

To what extent can Facebook
truly take credit for that?

After targeted advertising
in Facebook pages,

the next part of Facebook's business
armoury is its amazing ability
to keep users glued to the site.

Facebook sessions
typically last around half an hour
and most users come back often.

I probably spend about half an hour
a day on Facebook.

Everyday, a few times a day.
Not more than an hour total a day.

I spend two hours on Facebook a day.

Probably about three hours a day.
About three-and-a-half hours a day.

Three, four hours during the day.

I don't think I have it that bad, I
know people who go on it every hour.

At Facebook, we're pushing to make
the world a more open place.

Facebook users are kept hooked partly
as a result of a decision Zuckerberg
made four years ago

to open the site up
to other software developers.

This year, there are more people
than ever at Facebook's
developer conference.

Facebook isn't just a website,
it's also what's known in techy
circles as 'a platform.'

This means that software developers
from other companies

can write programmes
which then run on Facebook.

Apps, in other words, and the reason
Facebook likes that is because
it provides more to do,

but also because these apps create
a kind of technology eco-system

with Facebook right at the core.

Now there are more than a million
different developers who build
things on top of Facebook

and are trying to bring these
great experiences to people.

And, you know, we think to ourselves
we're just a small company
and we have, I'm sure,

all these people who are using our
products but we have 500, 600
engineers building all this stuff.

Companies like Microsoft or Google
have tens of thousands of engineers.
We're tiny compared to that.

So how can we ever possibly build
all the stuff that we want
to see get out there

and the answer is build an
eco-system and make it so that

all these developers, whether it's
a student in a dorm room who
hasn't had a job yet

or a big company or a company that
we've never heard of in some other
country can build this stuff.

And that's the part
that's so cool about it.

When Zuckerberg opened Facebook
to developers,

nobody guessed that the runaway
success would be Facebook
based games.

London is home to the world's
second biggest social gaming company.

Kristian Sergestrale, the co-founder
of Playfish, employs 350 people

to make games for his 100 million
regular players.

Facebook has created the level
of infrastructure

which means you can visit
your real friends' houses,

interact with your
real friends' characters,

give them gifts and so on.

And you can work on things together

which simply brings an entirely
new dimension to computer games.

And in some ways almost takes
games back to where they came from.

So it's as much about
interaction as it is about
what's going on in the screen.

In the company's San Francisco
office, two of its customers

have come in to show how they play
a couple of the most popular games.

Michelle Maruyama is a violinist
and has been playing Restaurant City
for two years.

I sometimes really enjoy playing
right after I come home from work,

if there's a conductor
I don't like or something.

But if I'm just home
all day practising,

you can just stop once an hour
and check on your restaurant.

The games are designed to keep
you hooked with timed penalties
if you don't keep checking in.

It's definitely a chore and it
definitely cuts into
your spare time.

I know that I used to read
the New Yorker pretty much
cover to cover every single week

and I know that I absolutely
do not do that any more.

John House plays Pet Society,
which has attracted up to
21 million users a month.

You have a virtual home

and you have your one virtual pet

and you have a bunch of friends
that you can visit.

Playfish pets have their own
peculiar biological functions.

They poop, and they poop
different types of poop
so there is the carrot cake poo.

There's the creme egg poo.

There is the snake poo
from the wizards' school.

These kinds of special items are
the key to a new revenue stream
for Facebook

because game players can pay
real money for virtual goods.

They pay by sending money
to Facebook to buy credits.

It's already a business worth
hundreds of millions of dollars.

John was so pleased with his
special duck poo that he paid a pound
for a virtual case to display it in.

And Facebook takes a third of that,
but John has no complaints.

You know what? For that
giant duck poo, it's worth it.

Facebook's strategy, including games
and Facebook pages, has attracted
ever-growing numbers to the site,

but the company has an even bigger
ambition on the wider web.

Today, millions of websites
have links to Facebook on them

and if you use these links
with your Facebook identity,

you can communicate with your
friends on Facebook even if you're
on an entirely different site.

For Mark Zuckerberg, it's the
fulfilment of a grand ambition

to provide the pipes through which
the world's social connections
can start to flow

and in the process,
Facebook's beginning to colonise
the whole of the web.

Zuckerberg's dorm project has come
a long way in seven years,

not just as a piece of technology,
but as a change to the way many
people relate to each other.

It's easier to communicate
with people,

but it also makes communicating
less personal.

Let's say I was with my boyfriend,
instead of paying attention to him,
I'm on my Facebook.

It's an idyllic representation
of who you are which I think can get
misinterpreted by yourself even.

Probably 80% is the real me on
there, the rest of it's just
what I want people to see.

My dad posts on my wall sometimes.
I have to delete that. He will
just post "I love you sweetie!"

I'm like "Dad!" But that's sweet.
It's nice but it's a little
too much.

Today, Facebook seems unstoppable.
A huge social world online that runs
in parallel with the real world.

Many Facebook users already spend
more time with their Facebook friends

than meeting real friends,
but do their personas on Facebook
reflect their real selves?

Jaron Lanier is one of the pioneer
inventors of virtual reality.

He says Facebook's version
of our lives is too rigid
and one dimensional.

What's happened with Facebook
in particular

is this sort of flattening where
everybody's stuff looks the same,

everybody's just filling out a form.

It's so strange. It used to be
that when you filled out forms,

it was acknowledged that that
was the fake aspect of your life.

You fill out forms to apply
for school

and you fill out forms
at the doctor's office,

but nobody would say,
"This is who I really am,

"if you want to know me,
know my forms."

There are signs of a backlash
against the assumptions of Facebook.

So how much is the attraction
of Facebook an escape?

We're in terrible economic times,

terribly reduced prospects
and you see a lot of young people

investing tremendous pride in
their online personas or their
online lives

and yeah, you have to wonder
if Facebook, Twitter and the rest

are serving as a sort of bread
and circuses, as a distraction,

as a way to ignore the real world
in front of one's nose.

BJ Fogg is a psychologist
who studies online behaviour.

A lot of people stay in touch
on Facebook that wouldn't have
stayed in touch otherwise.

It's giving us a lot more
relationships that are weaker

and it's taking our strongest
relationships

and it's weakening those.

Because if you have 800 friends
on Facebook, you're not going to

have time to put the energy into
the most important relationships.

Facebook wants its world to be like
our real social world,
but the Facebook world

now includes brands and businesses
as part of the conversations.

Facebook says that just makes it
more like real life, but are those

commercial messages a part of life
that users want to find on Facebook?

Mark's vision of the world

is one where we're better if we
are more open and connected.

My life is improved
by knowing what you're doing,

if I care what you're doing and if
I've chosen to connect
to a Starbucks,

I want their announcements,
just like I friend someone,
I've chosen this.

We have social ads
and we have non-social ads, right,

and so you can either for example
see an ad from Coca-Cola

that is just Coca-Cola
saying drink Coca-Cola.

Or you can see an ad where
your friend who likes Coca-Cola,

the ad is just
this person likes Coca-Cola

and which one do you think people
who use Facebook prefer?

They want to see something about
their friends, they want to learn
about what their friends are doing.

But when Facebook has tried to mix
social messages with advertising in
the past, it's run into trouble.

We've built a little product called
'Beacon' that's going to allow you
to do this from your own website.

Beacon told people's friends
what they were buying.

There were furious complaints
and Zuckerberg withdrew it
with apologies.

We really think about
the trust issues.

A lot of people right now are upset
with us over these changes
and I take that really seriously.

After a series of such controversies,
a pattern has emerged.

Facebook tends to do a three steps
forward, one step back
launch approach.

It often launches products that
really push us, tests the water,

so to speak, and then Facebook
pulls back and begins to roll it out
again more slowly.

So if you look, for example,
at the products

that caused the most tension
say three or four years ago,

all of those products exist in
various facets of Facebook today
and nobody's talking about them

because at this point culturally
we're all comfortable with them.

Today there's another Facebook
idea that users might be
uncomfortable with.

If you click a like button on
a business' Facebook page,
that business can pay Facebook

to display a little box in the right
hand column of your friends' pages

with your picture and the logo
of the business, telling them
you've liked it.

Facebook calls it a sponsored story
and you can't opt out.

So if you found your name and face in
a sponsored story would you say,
"Harmless enough?"

Or would you feel you'd been
used in an ad without
anyone asking your permission?

If I press a like button
on a brand, that could pop up
as a sponsored story.

I might not know about it,
I certainly wouldn't necessarily
agree to it.

But when you press a like button
on a brand or on an ad

or on a page,
you're saying "I like this".

I'm not saying I advertise this.

Well, I suppose when you...
So let's pause.

It's an interesting...

I mean, you're asking a profound
question - what's advertising?

When I press a like button on an ad,
I'm trying,

on the Facebook system,
I'm affirmatively communicating
that I'm associating myself

with whatever I'm liking and what
that does is it creates a story.

But you can call it a story,
many people would call it
an advertisement

and Facebook is getting paid
for those by the companies.

I think... I...I...I...

It's a ranking mechanism, I don't
know if I would call it
an advertisement.

Sponsored stories highlight the
critical dilemma for Facebook.

How far can it go in using
personal information without
its users feeling exploited?

It says it gives users full control
over their privacy,

but it also believes a more
open world would be better.

Do you fundamentally believe that
people will gradually become
more open,

that they'll regard privacy
with less concern?

No, I don't think that... It's not
that people won't care
about privacy.

I think privacy is a really
fundamental thing and I think
everyone cares about it.

I think the big cultural change is
that now more and more people
are finding that

they can build a reputation,
they can help discover stuff,
get credit for that,

they can be part of discovering
other people's stuff.

And I just think that people
are seeing every day
that that's awesome.

And that's why I think the world
is moving in that direction.

But people every day also
wake up and I think are like,

"What stuff do I want to have
out there and what don't I?"
I don't think that will change.

But how much do Facebook's business
needs create a tension between
privacy and sharing?

They've chosen terminology
and at least as important,

they've chosen a user interface
design that encourages sharing.

They've set their defaults in a way
that makes it seem like this is

the right and normal
and natural thing to do.

I'm not so sure it really is,
I'm not so sure that it's been

the way of things or needs to be
the way of things

for every picture you take to be
distributed to hundreds or thousands
or tens of thousands of people.

And yet they've tried to convince
us that's the new normal
and that's the way it should be.

They've always said,
"Facebook's about helping you share,
with the people around you".

So if my privacy settings
are set to open,

Facebook as a company,
as a business model, will do better?

Oh, yeah, absolutely, and
if you were an investor in
Facebook, you would insist on that.

You would insist on that. It's like,
we become a bigger company, faster,

wealthier faster the more people
share and the more they share
openly.

So as a business strategy,
as your investor, I insist this is
how you design the interface.

Facebook insists
its advertising model

does not depend on its users
agreeing to be less private.

Our goal is to make it so that
people share what they want to.

And we believe that over time,
people are going to want to share
more things.

That's a big trend that we see
happening in the world, but we don't
benefit from being ahead of it.

If we have people share things
that they don't want to,

they'll stop using our service
and not like us.

Facebook's revenue is expected
to more than double this year,

to $4 billion.

If its challenge was to come up
with a way of making money

that played to its strengths,
well, it's done a pretty good job.

Is it now set to rival Google?

Well, earlier this year, Google
responded with the most sincere

form of flattery, launching its own
social network, Google +.

We are pretty excited about
the capability of Google +.

We think we can make sharing
even easier than it is today.

I think you're going to see
a much better experience
as we continue to innovate.

Google + already has 40 million
users and the means to recruit more.

You now have effectively
a two-horse race.

Google is a very rich, very global
company that has a number of engines
to drive traffic

into its social network, notably
Gmail, YouTube and Google
search products.

And all three of those tools can be
used by Google to drive people
toward Google +.

Is that a threat for you now,
Google +? Do you take that seriously?

Yeah, Google's a great company
and I think we want to look at
and learn from

everything that they do,
but at the same time, you know,

people have shared a lot on Facebook
and they already have told a lot
of their life story on Facebook.

And we think that we have by far
the better tools for doing that.

This year, we're taking
the next step.

We're going to make it so you can
connect to anything you want
in any way you want.

Facebook is widely expected to float
on the stock market next year

as the biggest tech business
to do so since Google.

If it is worth $100 billion, that
would make it bigger than McDonald's
or Amazon and twice as big as Tesco.

This is a very young company,
it's just starting to figure out

strategies for making money
and I think advertising is only
one component of that.

So if this company were to truly
want to start monetising

I think that $100 billion
may start to feel tiny.

Facebook's long-term value may depend
on users' concerns about privacy

and whether they feel comfortable
sending Facebook their information.

The big issue is privacy.

I just have an inkling that closed
networks, networks that are more
private,

that are more restricted
ultimately actually become...

may become more interesting.

My advice to Facebook would be
you've got to maintain the trust
of your users,

that's the number one asset.
If you lose that,

you're vulnerable to Google
and others winning this game.

And that's where Zuckerberg himself
is vital to Facebook.

He could be worth $17 billion
after a stock market floatation,

but as long as most users
believe in his sincerity,

they'll probably accept whatever
changes Facebook throws at them

because by all accounts
he hasn't changed much.

Mark drives the same
four-year-old Acura

that I recommended that he get
a few years ago.

Like, you know,
and still lives, you know...

He's finally bought a house,
but it's not like he bought
some crazy mansion.

He bought a house in Palo Alto.

But, you know, really being,
you know, one of Mark's stated
interests on Facebook is minimalism.

He doesn't care for material
possessions at all.

He actually wears the same jeans
and the same t-shirt and jacket
everyday.

In fact, one of the things I first
did when I came to the company

is told a lot of people, "He has a
lot of those jackets, don't worry,
he's not wearing the same jacket

"every single day, it's just many
versions of the same jacket.

Zuckerberg just wants to keep
a low profile

and get on with what he loves -
designing new features for the site.

But even inside Facebook,
people can't help treating him
like something of a celebrity.

It's really cool when I see Zuck
eating in the same cafeteria as us.

Does he queue?

I stood behind him in line once
and... Did you chat?

I was scared, I was nervous.
I wanted to say, "Hey, Zuck!"
But it didn't come out.

I've seen him in his conference
room. The first day I came in there
I got to see him

and then I had some friends come
for lunch yesterday and I took them
by the conference room

and I was like "That's Mark
Zuckerberg! I get to look, he saw
me!" So it's amazing.

Zuckerberg will have to learn
to accept the world's attention.

His very lack of showmanship
could be an asset,

reassuring users of Facebook's good
faith as it grows in influence
and income.

Half of Britain
already uses Facebook,

but can Mark Zuckerberg keep making
us share intimate details

about our life whilst driving
Facebook forward as a business?

It's a difficult balancing act
and if he gets it wrong,

more of us will be asking not
what Facebook can do for us,
but what we are doing for Facebook.

Subtitles by Red Bee Media Ltd

E-mail subtitling@bbc.co.uk