Free advice to anybody wishing to start another Facebook

This is the kind of business about which people dream and fantasise. Facebook was launched in February 2004. In November 2007 it was reported that Microsoft bought a 1,6% share of the company for $240-million. You can do the sums to check out how much the market seems to think Facebook is worth now, in just under four years.

So you think you might want to do something similar. There is even software available, called Ning, that can get you started. You won’t need to employ a galaxy of developers to set it up, which would mean that you wouldn’t need to go cap in hand and find some venture capital. But if you did want your own developers and the whole story to go with it, about $50-million would do nicely.

Of course by now there are hundreds of competitors out there. But that’s no problem. With the masses of people on the internet and the numbers increasing rapidly, there will be some interest group out there in cyberspace who could be served by setting up an online community. Do remember that clever thinking by Chris Anderson on the Long Tail Theory.

A quick think, and here’s one for you, free to use. A social-network site that caters to people who love dressing up as pirates and speaking the pirate lingo. This group would like to live pirate lives for more than just one day a year, on international Talk Like a Pirate Day (September 19). You are sure to think of many yourself.

By now you will be impatiently tapping your fingers on the desk. Where is this free advice? So here it is, and you can thank me later, once you have made your mega-millions. Once your social-network site is up and it has a few thousand members, open it up to outside developers.

Is that it? I can hear the chorus. This hardly sounds like a magic formula. But it is. The business giants of this century, present and future, will be the ones who open up their business to outside participants. It really makes sense, and in any case why do it all yourself when there are so many willing participants out there?

For some light-hearted fun, watch this video on YouTube where you will find Steve Ballmer making that precise point. He just went a bit overboard! Ballmer is CEO of Microsoft and his little dance-and-scream routine was all about celebrating developers.

External developers in this context are individuals or companies who develop products to run with, or enhance, one’s core products. Developers do this at risk to themselves, investing their resources into projects that they hope will be popular with the same clients that, as an example, Microsoft’s products serve.

Facebook has done just that by launching an API this year. It certainly made me sit up and think that social networking could be around much longer than I originally had thought. The purpose of social networking had evaded me. After all, I have been a Facebook member since the beginning of the year and have, so far, accumulated all of 17 friends, of which only one is a proper friend! Hardly a peak user.

In techie terms, an API — the acronym stands for “application programming interface” — is a source-code interface. For us amateurs it means that it provides the parameter to allow other developers to write little applications that can run on the mother ship, so to speak. As an example, a developer has written a software application that allows one Facebook user to play Scrabble with another Facebook member. This application plugs into Facebook’s software.

This kind of participation creates, in the case of Facebook, a bigger buzz, more fun things to do, greater interactivity with your friends — in other words, a whole new fun time to be had. And all this at no major development cost to Facebook; that is, at no more than it has spent to develop its own bits and pieces.

Microsoft, for instance, does the same in providing the API for developers to write their software to run on MS Windows. This means that companies such as Adobe will develop their Flash software to run on Vista. And this doesn’t cost Microsoft anything. At the same time it adds immense value to the operating system.

This sounds so logical, one would think. However, have a look at some industries and instances where this is not happening. The cellphone industry is particularly locked up to outsiders. This has meant that the development of the phone technology and services offered to users has crept along very slowly.

With the huge number of users worldwide, the cellphone market is certainly large enough to make it worthwhile to develop large number of additional products. But what is available? Nice little pouches, fancy earphones? Even Apple, which knows the value of external developers, has buttoned down its iPhone.

The music, film and broadcast industries are similarly insulating themselves from anybody who is encroaching on their turf. Jealously they protect their industries and their intellectual property. In this way it will surely contribute to their demise. Protecting what you have rather than encouraging people to develop for it, and in this way finding new ways to do business, will be a business killer in this society where the digital revolution has allowed the sharing of everything.

Watch the excellent TED talk by Larry Lessig, Stanford professor and foremost authority on copyright issues. While the entertainment industry tries to rein in the likes of Napster and YouTube, are they not missing the boat? Instead of seeing what the digital era can do to enhance their business, they are trying to erect barriers.

So if you are considering setting up a social-networking site, or in fact are considering any business venture, keep it open to everybody. Sure, some people will try to take you for a ride. But the benefit of having many brains and energies participate in your venture will far outweigh any little bits of theft perpetrated by the trolls out there.