There is no disputing the fact that Facebook is quite a phenomenon. It has now overtaken MySpace and has 120MM active user accounts. ComScore reports that Facebook attracted 132.1 million unique visitors in June 2008, compared to MySpace, which attracted a paltry 117.6 million. Here are some other numbers that make one take pause: Facebook is in the process of increasing the number of servers from current estimates of about 10,000 servers to over 50,000 servers in order to keep up with its growth.

But what is Facebook trying to become? And do its core users want it to become that? How badly are some of the negatives about Facebook hurting it? 

To understand (which we won’t completely because even they do not know) what Facebook is trying to become, first we must quickly remind ourselves where they came from. Mark Zuckerberg founded “The Facebook”, originally located at thefacebook.com, in early 2004 while attending Harvard University as a sophomore. The company dropped The from its name after purchasing the domain name facebook.com in 2005. Actually, Facebook originally started out as a “Hot or Not”-esque project called FaceSmash a site to rate women like a diving competition on a scale of 1 to 10. They changed the name and dropped that focus and became the place on campus to keep in touch with each other. Membership was initially restricted to students of Harvard, and within the first month, more than half the undergraduate population at Harvard were registered on the service (just the guys?). They expanded beyond Harvard when it opened to all Ivy League schools and gradually most universities in Canada and the United States. For a long time you had to have an .edu email address to register. Facebook later expanded membership eligibility to employees of several companies including Apple Inc. and Microsoft and they then opened to everyone with a valid e-mail address in late 2006.

My kids are Millennials who were in college during the perfect time when Facebook was open to all .edu addresses but still closed to the rest of the world. They shifted from almost total dependence on instant messaging to keep in touch with each other to Facebook. That is worth noting: they dropped IM like a hot potato and they have never gone back. IM worked well for them in high school because they and all their friends were on precisely the same schedule and so they knew the other person would be on-line and ready to IM when they were. College didn’t work so well for IM so Facebook took its place nicely to deal with their out-of-sync new lifestyles. They liked the fact that Facebook was closed and only college kids were in it. They felt safe and private from the prying eyes of creeps and parents. And frankly, while not many of them were thinking ahead about this, they were safe from a graduate school admissions person or a hiring manager for a job from seeing any of their profiles. By the way, Millennials are a really big deal: there are 75MM of them and they are the best group of any for advertisers.

What did Facebook do for these Millennials? They used it instead of email to communicate directly with someone. In fact, email seemed very formal to them: it’s what parents used for their work. They used the Facebook Wall feature to send broadcast messages to a bunch of people. They posted pictures for fun to share with their friends. My observation is that most of those pictures somehow always seemed to involve drinking. Once in a while they used Facebook to expand their network by finding some high school friend who went to a different college but this was pretty rare. That’s it. And that’s all they really needed during college. 

When they graduated, their use of Facebook dropped dramatically. They went from being on it for long periods of time six times per day to checking in once a day or even just every few days. They still felt drawn to it because they did not want to lose touch with important people with whom they had established a Facebook relationship. But right about then Facebook opened up to the whole world. Suddenly they started to hear about friends who were rejected for a job that looked good for them only to find out that it was because of some of those Facebook debauched party pictures that seemed so innocent at the time.

They froze. And they have started to rebel. But you see, Facebook won’t notice any more than Microsoft noticed that every single person on the plane with you is grumbling how much they hate Microsoft (and it will take a while but we are seeing the beginning of the demise of Microsoft). What happens to companies like this sneaks up on them. They have lost touch with the real customer and they are just focused on the numbers. Facebook thinks they are masters of the universe because of their growth. What’s strange is that they still don’t have a business model that works (at least Microsoft has had that for 20 years). To wit. 

Chief Executive Mark Zuckerberg insists that his company remains more focused on expanding its user base than its revenues. The right business model for the site will emerge over time, he has said. — WSJ

Look at this. MySpace makes $6-7 per user per year. FaceBook will make less than $3 per user in 2008. They are losing money at a monumental pace.

So what is turning the Millennials — Facebook’s original and core constituency — away in droves? Creepiness, complexity, and lack of privacy.

As soon as the floodgates opened up, Facebook’s safe collegial walls came down and let the creeps in. My daughter was even outraged that I could come in and join. She did not want me in there. She did not want me seeing what was arguably her private place. I am not a creep but creeps came in as well. They used to laugh derisively about how creepy MySpace was and now Facebook to them is the same kind of place. And wake up Facebook: THEY ARE LEAVING as soon as they can.

To Facebook, the news feed and the apps and all the other things are either experiments to try to find something that works or they are the coolest new platform for Web 2.0 stuff but to the core audience they are just noise. These people are not buying it. And guess what, even though the Millennials used to say email was for the old-foggies, they now use it as they have become professionals themselves. And now the way Facebook makes you come to their site to see your inbox and answer messages is just a pain in the ass. It gets worse. 

“Slide, the hot Widget start-up, has arranged for video from Hulu, CBS and Warner Brothers on Facebook. It is part of a new Facebook application the company is working on FunSpace Channels. Facebook is all about person-to-person and person-to-small group communications. It is using your social connections to improve e-mail, not to improve television.” — NYT

I firmly believe, as soon as someone let’s the Millennials have what they still want from Facebook and avoids the noise and clutter they are gone.

But the biggest issue for these kids is the lack of privacy. You have so little control over your profile on Facebook. Look what kind of horrible things happen all the time. A recent survey by Kaplan Test Prep indicates that roughly 1 out of 10 admissions offices check out prospective applicants on Facebook. Ouch.

Virgin Atlantic recently sacked 13 of its cabin staff after they criticised the airline and some of its passengers on social networking website Facebook. — The Independent

Giving millennials a chance to get off of Facebook onto a secure network was helping them get rid of their ‘Facebook tattoo’. -Former Telecoms exec now at a Silicon Valley startus

We at Rocketvox have done some initial surveys with over 100 Millennials to examine what they like and don’t like about social networks like Facebook. What they told us about what they did not like included

“Can’t opt out of things like the newsfeed.”

“It’s really ugly now.”

“Can’t remove things from your page.”

“You are stuck with things that are useless to you.”

“It’s getting creepy.”

What they really want is simple: a way to find and connect with friends and friends of friends. They understand that especially when you are starting out a lot of your opportunities are based on who you know and who will help you. So they fully understand and appreciate the importance of building and maintaining a good solid network of contacts for business as well as for social activities. Fun is important too but that fun has to be carefully kept private from any prying inappropriate eyes.

We believe Facebook has lost its way and just like Instant Messaging, this generation will drop it so fast Facebook will not know what to do with their 50,000 servers. It’s just about the upteenth time the lesson will have had to be learned that you are doomed if you do not carefully listen to your core customers and give them what they really want.