Facebook’s Cautionary Tale: Growth vs Innovation

Two weeks ago, I finally watched 2010’s The Social Network. I know, I know — I’m about ten years late to the party, but still, I couldn’t help but be awestruck as I witnessed Mark Zuckerberg (or rather, Jesse Eisenberg’s expert rendition of Zuckerberg) execute the early stages of the global conglomerate known today, of course, as Facebook. Even within the film, which spans over the course of six years until 2009, the differences between Facebook (originally called TheFacebook) in its infancy and in succeeding years is stark. What began as an exclusive, online social club for Harvard students quickly exploded to a user base over 1 million in less than a year, and continued to release feature after feature that markedly paved the way for every social media platform since. A “Like” button to act as a public display of your social capital? Facebook did that. A News Feed that shows what all of your friends are doing? Allll Facebook.

Watching the movie in 2020, the difference between the Facebook of yore and the Facebook of today is even more palpable. The company may be worth over $650 billion, but as a social media platform, it’s decidedly lost that evasive cool factor that Mark Zuckerberg was so adamant about holding onto in its early days. Case in point, how many times have you heard Facebook being referred to as the platform of choice for middle-aged relatives and baby photos? Don’t get me wrong, I love my relatives, but my Uncle Dale from Seattle isn’t exactly the spitting image of what’s cutting-edge and hip (ditto for the baby pictures). These days, it feels like most of the major news involving Facebook is something negative, whether it be a data privacy scandal or fake news propagation.

What exactly happened to Facebook? One answer: it simply grew too big. It’s a commonly-accepted principle in the startup world that the more a company grows in team size, the more innovation — well, stops growing. Though it’s not necessarily the case that bigger companies have less creative employees, it is the case that the greater levels of bureaucracy and decision control that characterize larger corporations can inhibit that creativity from getting implemented. There’s a reason why 2004 Facebook, the scrappy newcomer, runs circles around 2020 Facebook, the aging veteran, when it comes to innovation. The main draw of smaller companies is their ability to adapt quickly to new situations without getting bogged down by their heft. This adaptability is what leads many to success, but in a funny twist of fate, the resultant growth is also what contributes to stagnation and eventual downfall.

So how can companies prevent themselves from getting trapped in this procession of innovation stagnation? To be honest, I don’t have a conclusive answer. But it should give any entrepreneur pause the next time they use growth as the sole metric of success.

Written by: Rurie Yi | IQ Associate

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