Answering Question’s about The OpenBook Challenge

The team at The Guardian asked me a couple of questions about the OpenBookChallenge.com, our competition to fund seven social networks with $100,000 each.

The Guardian’s story: https://t.co/9T08M2nKaC

Best, @Jason

jason@calacanis.com  

openbook@launch.co

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Here are the answers:

Why have other attempts at FB replacements (Mastodon etc) not taken off?

There are two reasons why Facebook hasn’t been displaced.

First, Zuckerberg has done an exceptional job of buying competitors. Instagram and WhatsApp were well on their way to disrupting Facebook when Zuck masterfully bought them out, sealing his monopoly position. The data they have across these three platforms builds an unprecedented moat.

Second, Zuckerberg has been unmatched in his ability to quickly steal innovative features from startups that refuse to sell to him, like Snapchat. Zuck’s “sell or die” threat has put a paralysis into the venture and entrepreneurial communities, making both scared to challenge him.

If you look at Snapchat’s three amazing innovations, ephemeral messages, filters and stories, Zuckerberg has copied each one down to the pixel in his arsenal of apps. So, not only does a founder have to face Facebook copying them, they now have to face Messenger, Instagram and WhatsApp trying to kill them.

What are the key obstacles for companies looking to replace Facebook?

The key is Facebook’s ability to copy features, and make unethical decisions around their deployment. We already talked about Zuckerberg’s completely abhorrent copying of every innovation Evan Spiegel has made, but there are many, many more examples.

Another example of these unethical decisions was the rollout of Facebook Groups. The average founder would never consider allowing a group manager to add someone to a group without getting their permission.

Of course, Zuck had no problem allowing folks to add people to groups without their consent, which resulted in gay men being outed. A person with an ethical compass would easily come to the conclusion that you shouldn’t let people invade other people’s privacy, but Zuck’s religion is removing friction.

This amoral approach, combined with Facebook’s monopoly, gives Zuckerberg his insane advantage.

https://www.advocate.com/youth/2012/10/15/two-queer-college-students-outed-facebook

To what extent does the network effect make it extremely difficult for a startup to compete?

See above.

I read a blog post from 2010 where you described a load of companies and people who had been “Zucked” (including Foursquare, Twitter, ConnectU). Who else has been Zucked recently, in your opinion?

How much time do you have?! There is a long list of startups the Zuckerberg has convinced his team to copy, including Periscope, Timehop, Meetup, Houseparty, Path and Snapchat.

What’s particularly nefarious is that Facebook can use their data from the Like button, their ad network and Facebook Connect (“login with Facebook!”), to study which competitors are getting traction and kill them before they hit scale.

Additionally, the WSJ reported on a really dirty trick Zuckerberg pulled: he bought a mobile data company, Onavo, and figured out which startups that weren’t in Facebook’s ecosystem he should kill next.

Candidly, I’m surprised no group of impacted companies has gotten together and sued Facebook collectively. I’m no lawyer, but it certainly feels like this might go beyond just dirty tricks, it might be actionable.

https://www.onavo.com/

https://www.wsj.com/articles/the-new-copycats-how-facebook-squashes-competition-from-startups-1502293444

https://www.wsj.com/articles/facebooks-onavo-gives-social-media-firm-inside-peek-at-rivals-users-1502622003

What do you think of the way that Facebook has handled the fallout from the Cambridge Analytica scandal?

It’s clear that Zuckerberg was able to charm Washington DC and that Facebook will, in all likelihood, not only get away with nothing more than a slap on the wrist, but they will also be getting an even deeper monopolistic position if new regulations are created.

New regulations will only solidify Facebook as the only place with enough scale and data to matter to advertisers. Zuck understands this, which is why he’s been saying “sure, regulate us!” He knows it only cements his position.

What do you see as the worst thing about Facebook/most egregious thing the company has done?

I think if discovery is done on Facebook’s behavior toward partners and competitors, the cut-throat nature of their approach would be 10x more troubling than what we already know.  

What about the positives — what’s the best thing the company has done?

Social networks are amazing at letting families and friends stay in touch with each other, and the filters on instagram make our photos look 100% more beautiful—these are wonderful innovations.

What impact has Facebook had on the “open web”?

Facebook is actively trying to shut down the open web, and that’s an opportunity for clever founders to double down on solutions that Facebook, and Google, do not control. SMS, email, the web, podcasting, RSS and distributed crypto and blockchain solutions, are all amazing examples of platforms that Google and Facebook can’t stop — and they’re actively trying.  

Google wants to kill the open web and email, with AMP pages and Gmail smart folders. Zuckerberg wants to kill SMS with WhatsApp, Messenger and Instagram messenger.

Smart founders should understand that the achilles heals of Google and Facebook are open platforms, and triple down on them. Google and Facebook can’t beat Wikipedia, nor control email and SMS, despite their attempts. We must fight corporate bad actors trying to shut down the open web, an open web that paradoxically created Google and Facebook.

What kind of support will you offer the 7 startups during the 12-week incubation?

The LAUNCH Incubator provides $100,000, 100 hours of my team’s time and the ability to pitch 150 top VCs in silicon valley and the 2,400 angel investors in http://www.jasonssyndicate.com. This gives a startup the ability get known, build a network, refine their skills and get money.

Money, skills, network and attention build startups as best I can tell after 150 investments — and six unicorns.

In 2010 you described Zuckerberg on your blog as “an amoral, Aspergers-like entrepreneur”  and that “Zuckerberg is clearly the worst thing that’s happened to our industry since, well, spam.” Given what’s happened since 2010, how has your opinion of him evolved, if at all?

Zuck is a much better public speaker, but the truth is, his superpower is his amoral approach to stealing innovations and relentlessly removing friction makes him the Borg — he will be unstoppable until he another founder builds a better product and refuses to sell out to him.

It could happen.

Also, I probably shouldn’t have used the “aspergers-like” term, as I’m not a doctor and that’s a too personal jab to make in hindsight. I wouldn’t say that again, even if Saturday Night Live did an entire skit based on that exact observation this month.   

https://www.youtube.com/watch?v=GqRo9xYKnfA

You say you will pick 20 finalists and “communicate with them regularly for 90 days” — can you please elaborate on what you mean by that? Is this to monitor how their business is developing? Will this involve mentorship? Or just a prolonged interview process?

Our plan is to tell folks they’ve made it to the next round, and if they have we will talk to them over email and do a regular video conference, to talk about their progress. Our hope is we can get to know founders during this process, so we can increase our investment from $100,000 to $1,000,000 if they’re crushing it.

A couple more questions. Given the obstacles to displacing Facebook (identified in your responses), what makes you think the Openbook Challenge might deliver a true competitor? What’s different now?

No matter how strong a big company is, there is always a chance that an indefatigable founder with a clever idea and a kick-ass team will be able beat them.

And what happens if Facebook seeks to acquire one of your incubated startups?!

If Facebook wants to buy your company you should do what Evan did: raise lots of money, go public and fight the great fight!

My job as an angel is to give the founder advice, money and options, but ultimately it’s the founder’s decision if they go to the dark side.