Bloomberg West got two Facebook investors on camera this past Friday: Sean Parker and Yuri Milner. Both addressed the same issue independently: Facebook has a product issue!

Sean Parker said that there is “remaining work around the product” especially “evolving the product and keeping up with the other competitive products in the market place”. Interesting what other “competitive products in the market place” he meant keeping in mind that Facebook is by far the market leader in Social Networks with around 800 million users worldwide. In the interview Sean Parker made it clear that Facebook is competing for the leisure time of its users. So in this case all media would be the competition? Or did he mean other companies that are using social interaction (and potentially by-passing Facebook)?

Yuri Milner in the light of the Facebook IPO said that every day challenges on “the product side are far more serious than the IPO challenges”. Unfortunately he did not specify what he meant by that.
But even today Facebook is evolving the product to an extend that people might abandon it, as the product itself got more complex, more functionalities are integrated, more ways  to generate money are pushed ….

So yes, Facebook has to stay competitive but at the same time reduce the complexity and increase the user experience.  A challenge -  interesting to watch.

Sean Parker on Bloomberg West on Facebook @ 4:40

Yuri Milner on Bloomberg West on Facebook @ 5:30

Looking back the past year gave birth to a very interesting idea, coined by Google’s Eric Schmidt at D9 in May in an interview with Walter Mossberg and Kara Swisher: The Gang of Four.

Schmidt told Mossberg that Google, Amazon, Apple and Facebook are dominating consumer technology today. And true, the majority of people who are online in one way or the other (mobile, from home, from work etc.) have relationships with at least one or more of these 4 companies. These companies are driving today’s consumer technology and how people perceive and use it. For instance Apple’s ultra-thin MacBook Air, although launched some months ago, is still dominating customer’s portable computer perception and forces other companies to launch also ultra-thin notebooks, as seen this month at CES in Las Vegas.

While each of these companies are leading in one or more sectors – Google in search, Facebook in social, Apple in portable music with iTunes, Amazon in e-commerce – this is not set in stone. They can not take this current success for granted AND they need to move on. This is why none of these companies has the strategy to just focus on one area, where the company is the leader in the category, but each of them wants to establish an eco-system to draw people in a walled community so that people stay longer.

The more time you spend in one of these communities the less you can spend somewhere else. More time spend equals more eyeball time equals more time for revenue generation, either through sales or advertising. This need, to attract and keep the audience happy, puts them in direct competition with one another at they enlarge the circle of emerging opportunities in their walled gardens: Google + vs. Facebook, Amazon’s Kindle Fire vs. Apple’s iPad, Google TV vs. Apple TV …..

Nevertheless this is risky business for all 4 of these companies, as they need to re-assess their core strategies and change the direction of their business, often to enlarge it to a point where one could question if the core is diluted or not. For instance, the more stuff and functionalities you put on Facebook the more overcrowded the user interface gets and the more people will skip it. This could be one reason for shrinking Facebook usage in the US that we witness today.

In a nutshell: “The Gang of Four” is real, but at the same time all four are in equilibrium so that the consumer will benefit from this behavior. So there is no need to fear that one will dominate the others at the end of the day. It is as ever: Competition is good, as this drives the whole world forward.