Facebook can learn from Pointcast

While Facebook is the media flavor of the week here’s some mustard I’d like to add to the works. Having been in the web industry since before there were any web ads (just text!) and before there were any Internet millionaires, and advised many startups and ventures, and invested in many more, I have a couple words of advice for Facebook and its
investors:

Remember PointCast. Don’t bother with the current pointcast.com it is NOT the same company and nothing like PointCast the application.

From 1995 to 1996 the Google AND Facebook of the day was PointCast. Everybody used it. What did PointCast do?
PointCast streamed news to your desktop all day long, like a soda fountain trickling Coca Cola to your muzzle effortlessly. The news popped up when your PC went into screensaver mode.

At its first media party in San Francisco in 1996 the room at the hotel was standing room only. There was an energy in the room similar to hormones raging. Sort of like The Beatles meets Elvis and Marilyn Monroe (happy birthday mr. president, indeed).

A few weeks later PointCast had a launch party media conference in Monterey, California and the company invited me to say a few words about the opportunity and company from a bird’s eye perspective. I mentioned at the event that PointCast should address IT manager concerns and CFO concerns about corporate bandwidth being hogged by the constant streaming to user desktops. PointCast had no answers.

Growth continued and PointCast’s revolutionary service forced Microsoft into creating what it called ‘Active Desktop.’ Active Desktop turned the desktop into ‘channels’ that you could subscribe to. Microsoft’s partners included all the major news and media companies. Soon, all major web and media wanted PointCast or to clone it.

News Corp. made a $450 million offer in 1996 which PointCast rebuked, thinking it could do a billion-plus IPO instead. At its peak, PointCast had basically every business person with an Internet connection (and these were 14.4k modems!) hooked up, some 1.5 million users, 6 million users in its email database and more than 700 advertisers. About 25% of
all Internet users used PointCast. Those assets alone were worth quite a bit but its venture backers couldn’t see that at the time. Management and venture backers put PointCast into the veg-a-matic and hit the “puree” button, brought in a new CEO who knew nothing about the Internet or media.

All value was squandered as a little later PointCast was sold for $6 million, after $48 million had been invested.

Lessons for Facebook:

-You are nowhere near the level of “utility” that PointCast was. PointCast was like Google, everybody used it. Not everybody uses Facebook or even has a need for it.
-Your position is not guaranteed.
-Your users are not as loyal as you think.
-Your offers are not “bound” to go higher.
-Your prospect for IPO is not guaranteed.
-Your venture backers can replace management and founder any time (look what happened to PointCast AND your kissing cousin Friendster). And they will if you don’t command a multi-billion value based on revenue and earnings.
-Most Americans and even more of the rest of the world, don’t use Facebook, and probably never will.

Facebook has built a remarkable service. Nothing truly innovative (it’s like MySpace for college) but it is a factor for college students in the US. It’s getting developer attention and becoming more useful. It could have a very bright future. But it is important to put some reality checks on the media hype and remind everyone that one wrong executive decision, one offer spurned, one too many advertising deals to pimp out its users, or a sexier, cooler service comes along, and the audience is gone.