Zuckerberg: Sometimes Facebook goes through 'painful changes'

SAN FRANCISCO--Two of the most commonly heard words in Facebook founder and CEO Mark Zuckerberg's talk at the Web 2.0 Summit on Thursday were "iteration" and "evolution." Facebook, he repeatedly emphasized, is a company that attributes much of its growth and innovation to going through small changes and expansions.

The site launched in 2004 as a feature-light networking tool for students at Harvard, where Zuckerberg was an undergraduate at the time. It then gradually expanded to other colleges and then corporations before finally opening up to the public. Photo- and video-sharing was added. The "news feed" was incorporated. Then, last year, Facebook kick-started the Silicon Valley developer-platform craze by opening up its site to outside services--and now it's "iterating" again with Facebook Connect, an extension of the platform to allow Facebook credentials to be used on external sites.

"We just announced that anyone can now apply," Zuckerberg said. "We basically had a closed beta, and now we're opening it up."

"Opening it up" is key. Facebook, which is inaccessible without a user account, has come under fire for being too closed-off, as conference organizer John Battelle said as he led the onstage talk with Zuckerberg. The social network has declined to participate in OpenSocial, an open-source developer standard that Google organized and launched last year.

But going from closed to open is just part of the Facebook rollout, Zuckerberg said. "The main thing that I would say is that there's this very clear transition that normally happens from closed systems to open systems," the 24-year-old CEO explained. "In a mature environment, a lot of these technical systems end up being pretty open, but they also need to start somewhere."

One of the key factors driving this evolution, Zuckerberg said--as he's said before--is the fact that Facebook deals with the bleeding edge of information sharing and that the site has had to gradually incorporate new features as its users become more comfortable with making more personal information available on the Web.

"The challenge that we have is to bring people along that whole path, first bring people along to Facebook and make people comfortable with sharing information online," Zuckerberg said. "We got people through this really big hurdle of wanting to put up their full name, picture, mobile phone number, (etc.)"

He added, "There's a rate at which this will happen, and if we aren't on the edge of pushing this out, then we aren't doing our jobs."

Sometimes the iteration process is difficult, Zuckerberg said. When the company first launched Facebook Platform, he said they let it out of the gates very quickly and didn't expect some of the repercussions. The ultra-viral nature of the original platform led to "app spam," something that Facebook curbed in a number of restrictions (and a redesign) that left many members relieved but some developers irked.

Video: Mark Zuckerberg at the Web 2.0 Summit (courtesy of Techweb)

The center of the problem, Zuckerberg said, was that there were a whole lot of static applications that offered no lasting interaction. "You (would) get this dynamic where there would be a lot of applications where people got to add them once and then the box would just be in the profile for a long time, acting as an advertisement for that program forever," he said." Now, applications are incentivized based on how many people are going back and interacting with them again, Zuckerberg explained.

With Facebook Connect, things were different from the start. "The partners that are working with us on Connect are going to be very rich applications. We took a slightly slower wrap-up period with the closed beta just to enforce that," he said. "We learned from (the platform launch) that we want to do stuff in a slightly more controlled way just so we don't have to make those painful changes that often."

Revenue strategy causes some impatience
Many pundits have been getting impatient, though, because Zuckerberg's mantra of slow but continuous evolution has also applied to the company's revenue strategy. Facebook Connect, for example, doesn't make any direct money for the company "in the first version," Zuckerberg said, and its "social ads" are still maturing a year after their debut.

There are success stories: a virtual-gift advertisement created by The New York Times, in which users could "give" one another a digital copy of the newspaper's headline proclaiming Barack Obama's presidential victory, was "gifted" 200,000 times in a single day, Zuckerberg said.

"Advertising on the Web and in social environments is less about just hitting someone with a message and more about a two-way dialogue," he explained.

One awkward subject was particularly unavoidable for Battelle to ask Zuckerberg: Last week, bloggers crunched some numbers and speculated--with varying conclusions--over whether Facebook's growth and hardware demands have thrown the company into financial jeopardy. The site now has about 125 million active users, having grown from 50 million at the beginning of the year. Battelle prodded the young CEO for answers on some of the speculation--is Microsoft regretting its $240 million stake from last year? Is Facebook's chief financial officer really in Dubai trying to drum up more venture funding?

Zuckerberg, an expert in ambiguous answers, dodged the questions.

"Do you need money?" Battelle finally asked.

Zuckerberg responded flatly, "No."