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When Facebook unveiled its libra cryptocurrency effort last week, I thought two things at once about it:
- That’s got to be its most arrogant move ever, given the annus horribilis for the social networking giant over its mishandling of everything from disinformation to hacking to hate speech to … well, you get the idea.
- That’s got to be one of the most significant moves in its short history, showing that the company’s leadership is willing to bet the bank, literally, that it still has the mojo to launch big and risky ideas into the product space and that it understands that — like the relentless shark Facebook is — it has to keep moving forward or die.
As you might grok by now, I feel a little conflicted and even confused by what to think about Facebook’s latest major foray. I both wouldn’t trust it to hold my house keys and think this is exactly the right move for it to make.
What’s entirely clear, though, is this is a major crossroads for the company and the top management that has remained after the all the rough times over the past few years (among the departed: the heads of Facebook’s Instagram and WhatsApp units, as well as its longtime head of product, head of policy and PR, and more).
Because if it is to swim forward, Facebook has to make big and bold bets like this, which represent the new next and which may help it by leveraging out of and dovetailing into its existing business. Libra does not precisely say that the jig is up on the massively profitable social networking juggernaut (which remains just that), but it does connote the exact turn that other such platforms have had to take.
In fact, there’s not a major tech company that has not had to shift direction like this, some more successfully than others: Enterprise-focused Microsoft toward the consumer internet (and then away from it again); Google toward moonshots and mobile; Apple toward the iPhone; Amazon toward the cloud.
It’s a place where Facebook has been before, too. Sometimes it has worked, such as when it had to move its desktop-based business to mobile. Sometimes it has not, such as when it tried and failed to introduce a mobile device (remember Facebook Home? I don’t!).
One would imagine that this was the mindspace that CEO Mark Zuckerberg was in again, needing a splashy and also a substantive new direction for the company. Entrepreneurs like Zuckerberg are chest-thumpers at heart, needing to show they remain as scrappy as ever despite the vast wealth and gilded life they’ve eased into.
Ignore my luxe private planes and cushy accoutrements and acres and acres of needless vacation properties, the digital age’s Ozymandias is practically screaming at us, as I will render unto you a new economy!
What’s most interesting about the rollout so far is how carefully Facebook is treading. This is not a company known for careful prep when debuting new things (remember Beacon? I do!), and it’s too often heedless of potential consequences (hello, Facebook Live!).
With libra, it’s different. Among other things: Facebook has promised not to link the financial information generated to its social data (i.e. this is not an explicit data play, even if it is implicitly); it has created libra as an independent organization, run by a mostly obvious grab bag of partners (what Uber is doing in there, who knows); Calibra, Facebook’s unit in libra, is run by an experienced and PR-savvy exec, David Marcus; it is linking libra with currencies like the dollar and positioning it as a “stable medium of exchange,” rather than a speculative investment play like bitcoin.
This list goes on, all part of a massive attempt to scrub up the spills and stains that the company has made of late. Thus far, libra means a thoughtful Facebook, an adult Facebook, a Facebook we can trust.
Well, maybe not that, because trust is at the heart of all financial transactions and any snafus here will not be easily forgiven. Already, a number of politicians across the world have expressed fully justified wariness about the scheme — perhaps Facebook’s biggest minefield ever.
To make it a success, regaining trust is the biggest challenge before Facebook and Zuckerberg. It’s one that his mentor Bill Gates surmounted after Microsoft found itself in the crosshairs during its monopoly days. Among the obvious things, such as not losing anyone’s money and not getting hacked, the seamless execution of libra and ability to cooperate with partners will be key.
Libra also represents an attempt to diversify through e-commerce, an arena where its attempts have largely failed. But others in the social media space, most especially China’s WeChat, have shown how successful giving consumers frictionless opportunities to purchase things can be.
And with Facebook’s best product — Instagram — already full of all kinds of effective and really nifty ads, the idea of using libra for buying makes sense. So too does the opportunity to disrupt the remittance space, providing a new and cheaper way for those with a bank account — a large segment of the world — not to be taken advantage of, which has been the most intriguing and honorable promise of cryptocurrency since its inception.
Best of all, there is less competition in this area than you might think. Amazon would have a harder time wading into the space, since it does not have as much of a global footprint; Google does not have nearly the same real relationship with its users; and Apple — which does have all the elements needed — has other things to focus on that are more important to its core businesses.
In other words, this is Facebook’s race to lose, an act it has shown itself all too adept at over the last year. Still, I am rooting for the company to get it right, as the benefits from the success of such a system — and not only to advantage the company — are clear. We need innovation to continue to improve the lives of everyone, and we need Facebook to grow up.
So, in Facebook we trust? Not today and not by a long stretch. But for tomorrow, one can hope.
