Mark Zuckerberg is officially the new Bill Gates — and he could rain on Snap's $3 billion parade (FB, MSFT)
Back in the '90s, before memes were really a thing, it was kind of a meme to pass around pictures of Bill Gates as a Borg — the cyborg baddies of "Star Trek: The Next Generation" fame.
If you're not a "Star Trek," fan, trust me, it's a sick own. Before the Borg attacked, they would issue their famous warning: "Your biological and technological distinctiveness will be added to our own. Resistance is futile."
It was a warning that resonated with the tech industry of the day.
Under Gates' leadership, Microsoft became known as a company that would win at any cost. From productivity apps to web browsers, any competitor Microsoft couldn't simply buy it would crush by making a new, competing product and win by selling to its huge existing customer base.
Now we're starting to see history repeat itself, but Facebook CEO Mark Zuckerberg has stepped in to the role once occupied by Gates.
Consider Facebook's reaction to Snapchat, the upstart social networking app that's competing with Facebook. The prospectus that Snap filed on Thursday for its $3 billion IPO revealed the sheer amount of pressure that Facebook and its Instagram subsidiary are inflicting on Snapchat's business.
Back in August 2016, Facebook launched Instagram Stories essentially a clone of Snapchat's own Stories feature — even the name is the same. Simultaneously, Snapchat's user growth stalled out for the second half of the year, as revealed in the S-1 filing. Snap blames the dip on technical glitches, but there's reason to be skeptical.
Meanwhile, just this January, Facebook started testing Snapchat-style stories in its main app, which could steal away even more users.
This fixation on copying and weaponizing the "Stories" feature wouldn't have been out of place in the Bill Gates era at Microsoft, and it establishes Mark Zuckerberg as the same kind of leader. If you can't beat them or join them, Zuckerberg is saying here, crush them. Zuckerberg has even expressed his childhood admiration for Gates.
Zuckerberg has long suffered from Snapchat envy. In 2013, when Snapchat was still very new, Facebook tried to buy the startup for $3 billion in cash. About a month later, Facebook released Poke, a Snapchat clone.
Poke didn't go anywhere, and neither did its successor, Slingshot, in 2014. But with those apps, the message from Facebook to Snapchat was made clear: There is nothing you can possess that we cannot take away, and there's nothing you can build that we can't build faster.
Snap's IPO filing is showing that while its user growth may be slowing, Snap's revenue is exploding, rising 590% from 2015 to 2016. That's a threat that Zuckerberg and Facebook take very seriously.
The platform advantage
In the days of Gates, Microsoft's killer edge was what's called the "platform advantage." Microsoft's ownership of Windows and Office, the two main ways that people got anything done on a PC in those days, made it really easy to integrate any new product in a deeper and easier-to-use way than any competitor possibly could.
Facebook itself is Facebook's platform advantage. Facebook's messaging app Messenger has thrived as a standalone app because of its ties to Facebook's vast user base. And Instagram has always succeeded where other photo-sharing services struggle because the two products are deeply integrated. It makes Instagram the easy, default option for Facebook users, and it's led the app to 600 million monthly active users.
So by building Stories into Instagram, Facebook is taking a competitor's key feature and bringing it straight to a massive, existing network of users. The specific apps and technologies are different from Microsoft of the '90s, but the playbook is very similar. And Facebook is starting to see real money from this strategy.
This new Facebook Stories test just takes it a step further, potentially bringing it to the 1.23 billion daily active users of the social network.
In the end, though, Gates' aggressive growth tactics and focus on entrenching Windows and Office led to the company being late to the rise of the internet — not to mention the antitrust case brought against Microsoft in the late '90s.
Of course, being like Gates isn't all bad. Like Gates, Zuckerberg has pledged most of his fortune to charity. Still, while the Microsoft of today is a lot friendlier toward the competition than it ever was under Gates, it's the younger and cooler Facebook that sets the pace of innovation in Silicon Valley these days.
And ultimately, it means that startups and tech companies all over should be worried — because Zuckerberg is coming. Your biological and technological distinctiveness will be added to Facebook's own. Resistance is futile.
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