Silicon Valley has a Facebook hangover. Five days after the company’s giant IPO, the social network’s stock is slumping, and there are rumblings that it will sink further still. But it’s not just the share price that’s got the tech industry in the doldrums. Over the last few days—and in some ways even longer, ever since Facebook began its incredible rise—smart people here have been predicting that the social-networking boom would ruin the culture of Silicon Valley.
This used to be a place that made things—microprocessors, the graphical PC, websites that allow you to trade goods and money with strangers around the world, and on and on. Google, the last huge tech IPO, was not just financially successful. It continues to be ferociously inventive, bent on making massive, important changes to our lives. Among other things, it wants to digitize every book in every library and teach our cars how to drive for themselves.
But Facebook? Zynga? LinkedIn? Groupon? Do we really want America’s hotbed of innovation to be known for these frivolous timewasters? Not according to many around here. “Facebook isn’t bad,” writes Alexander Haislip, an executive at a cloud-based server company. “It is just a low-value use of time that doesn’t contribute much to the economy beyond enriching the rich.” (But it’s still not bad?) And here’s Steve Blank, an entrepreneur and professor at Stanford and Berkeley, in an interview with the Atlantic: “Facebook's success has the unintended consequence of leading to the demise of Silicon Valley as a place where investors take big risks on advanced science and tech that helps the world,” he says. Then he adds—because why beat around the bush?—“The golden age of Silicon valley is over and we're dancing on its grave.” Finally, let’s hear from Jeff Hammerbacher, a former Facebook employee who quit because he couldn’t stand the idea of all of the company’s highly educated engineers spending their time on something so meaningless. "The best minds of my generation are thinking about how to make people click ads," Hammerbacher told Bloomberg Businessweek last year. "That sucks."
Ignore the handwringing, because a lot of it is bogus. Whatever Facebook’s future on the stock market, it’s ridiculous to argue that it’s not having a profound, positive impact on the world that goes beyond getting you to click on ads while you stalk your high-school classmates. The fundamental mission of social networks is to connect people who wouldn’t meet otherwise. These connections can be extremely valuable, enabling new, world-changing business ideas. For instance, the fact that you can now look up real folks online is essential for startups that want us to share resources—services like Airbnb, which allows you to rent out your apartment to strangers, or the peer-to-peer car-sharing site RelayRides.
Facebook is also instrumental in jump-starting brand new services that depend on critical mass for their utility. Take KurbKarma, a fantastic new app that lets people who are leaving parking spaces earn a kind of virtual currency when they alert the world to their spot. Technically you don’t need Facebook to use KurbKarma. (The system does not depend on real-world identity to work.) But the app—like pretty much every app nowadays—lets you sign up through Facebook, which eliminates the pain of creating a new account. Facebook is also a crucial marketing platform for this sort of novel, peer-to-peer marketplace; because it only works if lots of people are on the service, you’ve got an incentive to tell your friends about it, creating a viral boost that would have been much more difficult in the pre-Facebook era. If you believe that the world’s resources are strapped, you should be cheering these services on. According to one study, drivers around Columbus Avenue in New York spend 50,000 hours a year, emitting 325 tons of greenhouse gasses, looking for parking. If social networking can help cut that down, wouldn’t it be a big deal?
Sure, a lot of people just waste time on Facebook. But a lot of people wasted time before Facebook, too, and I haven’t seen any evidence that suggests Facebook has caused a net increase in worldwide slackerdom. Moreover, there’s pretty good evidence that many technological advances are mainly used for less-than-noble ends. (About 30 percent of Web traffic is for porn sites.) That’s how it goes with human advances—new tools can do lots of great things, but they can easily not, too. Facebook is no different. You can squander your workday on it, but that doesn’t make it any less effective as a tool for dissidents in Egypt and Libya who want to overthrow their regimes.
But even if you disagree about the utility of Facebook, there’s still a good case to be made for the tech boom it’s helping to inspire. Facebook’s IPO—like that of LinkedIn and Zynga—represents a massive transfer of wealth from Wall Street to the Valley. In my book, the money’s better off here than there. Yes, there’s a good chance that all this wealth will inflate a bubble in tech, leading to the funding of many less-than-stellar startups that wouldn’t have been created in leaner times.
So what, though? You don’t get advances without a lot of failures, and in general, the winners will beat the losers. The last tech bubble produced Pets.com, but it also gave us Amazon, eBay, and PayPal. What’s more, people who made their money in those companies went on to fund the Valley’s latest crop of pioneering firms. Peter Thiel, one of the co-founders of PayPal, was instrumental in the founding of Facebook. And Elon Musk, another PayPal guy, went on to co-found the private space company SpaceX and the electric-car maker Tesla Motors—two firms that could radically alter transportation on the planet and beyond.
This pattern tends to repeat itself in the Valley—each boom creates wealth that advances the next big thing. We can expect that to happen with Facebook, too. The company’s IPO has just created a handful of new billionaires, and more than a thousand millionaires. They’re some of the smartest, most inventive people in America. If you think they’re wasting their time at Facebook, just wait. They’ll atone for their sins by inventing the future.