The Slow Death Of Club Facebook

By the time Goldman Sachs shows up at a party, it's not cool anymore.

Recently, Goldman Sachs is investing heavily into Facebook . They seem to think the company is worth about 50 billion dollars.

Whether or not Facebook is making much, if any money, right now is not clearly known. However, what Goldman, and all investors previous to them, are buying into is the idea that at some point, in some way, this whole Facebook thing and it's hundreds of millions of users has got to turn a corner one day and it's going to just be crazy profitable.

I mean, how can you have so many users in one place and not find a way to make some crazy money?

I'll tell you exactly how.

Since the start of this year, I've had many conversations with different people about how Facebook has become lame. It seems to have come up a lot because around that time people were making new years resolutions, and a few of those resolutions were for less Facebook, or no Facebook at all.

Contrast this to a couple of years ago when I was hearing how Facebook was so convenient, and helping people reconnect, and all sorts of good stuff. I bumped into a woman I knew outside a coffee shop one time who positively raved to me about it. I have not heard anyone rave about it in a long time.

Sure, but people would be right to point out that as any organization gets big enough, there will be complainers. How can we tell the usual grumbling about a big company or service apart from an actual change in the marketplace? Or that my anecdotal experience says more about people I know than it does about Facebook?

Well, I can't do that objectively. In the future can we look back, and, depending on whatever became of Facebook, will we be able to see if grumblings were the start of a downward trend or merely the friction that comes with growing even bigger.

However, one mistake would be to think that this whole Facebook thing is a whole new paradigm of human interaction in the world. We've seen this before, and I'm not talking about Friendster or MySpace.

The evolution of Facebook is a process that has existed for a long time in the real world.

It's like night clubs, to pick one example. Every club that I have ever known in every city that I have ever been to follows the same pattern.

First, it's in it's opening days, the hip crowd, the celebrities, the hot women, and whoever else is on the initial invitation list go. When a new club opens, they target people who are market leaders and make a point of getting them in the door. And there are people who probably make it a lifestyle choice to watch out for new club openings, who may or may not be that cool themselves, but they're probably cooler than me, since they knew about the new club opening.

Then for a little while, there's a golden age. The club has great music, it's got lots of cool people, but not so crowded on the dance floor that you're bumping into them. I've never been part of the hip elite who knows which clubs are ascending and which are descending, but now and again I stumble into a club during this phase and it's really awesome. You meet cool people, hook up with attractive women (or attractive guys - adjust your perspective for gender and/or orientation as needed). It's all good.

I would return to these clubs later, and be surprised to discover that they now sucked. What happened to that cool place I enjoyed before? It's too crowded now, and you can't even tell which clump of people is in the line for the bar, so you can spend a third of the night waiting in uncertain lines just to get a drink. It's full of those guys that aggressively hit on every woman in the place, and women who are either really uncomfortable because of them, or too comfortable with that kind of attention.

Eventually the people who lack the self awareness to see how it's their own presence that makes the club suck stop going too. Clubs die out in a variety of ways, sometimes quietly shutting their doors one day, sometimes continuing on as some kind of husk of a social scene. You know the places, clubs that have been around forever and become your city's archetypical bottom of the barrel nightlife experience. Here in Tokyo, among people I know, it's called "Gas Panic" . Ick.

There are all sorts of other ways clubs die out, but the point is that every club ascends and descends, over some amount of time that can be a few months to many years. Eventually, though, they all fall. They become uncool.

Club owners have been trying to solve this problem for years. Some clubs reopen the same venue over and over, promising a new style, a new crowd, new music, something, anything, to make the old seem new again. There are a lot of strategies, but I have yet to hear of one that works. I think maybe the best chance for a club is to be in a place like Goa or Ibiza where the clientele is almost entirely of tourists who aren't as tuned in to local reputations. However, I doubt they are entirely immune from the notion that the better, cooler clubs are the ones that are "underground," where "underground" is another way of saying "the uncool people don't know about it."

In those places like everywhere else, there is an inverse relationship between how cool a place is and how popular a place is. Unfortunately, cool and exclusive is very hard to make profitable. As operating businesses, clubs want to get bigger and more profitable. The recipe for their downfall is built into the business model. They strive to become more popular, robbing themselves of the very thing that makes them appealing and valuable.

Why should that be, though?

It seems tempting to put the blame on other people. We all think that we are cool, and it's other, stupid people, who ruin things.

Uncool people might be part of the problem. In any given collection of people, there is likely to be a certain percentage of annoying uncool losers. As the size of the group goes up, so does the number of uncool losers, increasing the odds that you're going to encounter one. So as a club increases in popularity, the odds of you encountering some tool who ruins your night approach certainty.

However, that's not what really kills clubs.

When choosing which club to go to, why pick one over another? They're all just dark rooms with black paint, flashing lights, and loud music. Ostensibly, they're supposed to be differentiated by the music they play. However, I can guarantee that in any city of reasonable size, even within one music genre, you'll have multiple choices and have to decide using different metrics.

I think the main reason you go to one club over another is the people. If a club played the music you loved most but was filled with people you disdained, you wouldn't go, or if you did, it would be grudgingly. The opposite situation, though, where the music sucked but the people were great, would be a no-brainer. Though, of course, most situations aren't that extreme.

The point is, ask yourself this: if someone told you that right now there was a club you could go to where all the guys were cool, all the women were hot, it wasn't too crowded, and the atmosphere was right for meeting people, do you need to know more to be convinced to go?

Other factors, like where in the city the club is, what the cover charge is, the layout of the venue, and other things will probably factor in your decision, but what do all those things really tell you? They are all hints about what kind of people will be there. After all you already know the constants, that the club will have dark light, flashing lights, and loud music.

What I'm driving at is that you're hoping that the qualities that define the club will act as a filter to help you finding the social scene you want.

That filter only works if all the qualities of the club effectively exclude the people you don't want to hang out with.

When the club becomes popular, by definition, the filters are less effective in imposing restrictions. In a popular club, it is no better than walking down the street and meeting people completely at random. It's up to you now to start filtering people on your own, without any help from the club, and so why bother paying the cover charge?

Now, after all that talk about clubs, we can evaluate Facebook.

Like a popular club, everyone is there, and you are on your own to try and work through the crowd to try and manage your social scene.

Which is no different than what you have to do in every other venue of your life, so as Facebook becomes more popular, it is no more or less useful than anything else you do in life where you interact with people.

I have about two hundred "friends" on Facebook, a hodgepodge of people I am in touch with on a daily basis in my life, and people I have not spoken to since elementary school except for that one Facebook exchange where we say "wow, I haven't heard from you since elementary school."

There are features like putting people into groups, applications that let you compare your interests with people, show and hide features that control who you see messages from, and other varied techniques. They are so varied and numerous though, that using them isn't any more efficient than just making up your own mind about what to do with the information you get.

Not only that, but all the features of the Facebook interface help to create new kinds of social interactions that can be just as annoying as helpful. Invites to games I never want to play , vague and desperate-for-attention status updates , friend requests from people I don't know and don't know if I want to know... Facebook, and social networking sites in general, create as many new social problems to solve as they solve social problems.

In other words, it hasn't created a social scene that represents a new ideal of what we could achieve. It's just created another version of the social life we already have.

Recently I saw "The Social Network" , the movie about the creation of Facebook. Of course, most of it is dramatized to the point where it is almost certainly not an accurate representation of what happened. However, I was amused by the scene where Zuckerberg , in the lobby of an exclusive club house, hears of the idea of a social network site from the three frat boys who eventually sue him, and Zuckerberg off-hand comments that what will make it work is the exclusivity.

He's right, as being in the right club means the right filters are in place for you to potentially be with the people you want to be with.

The fact that by the end of the movie that exclusivity is gone is never mentioned.

Friendster , Facebook, MySpace ... clubs that come and go. Friendster is the club that shut its doors. MySpace is the club that became the stereotype for where the dregs of humanity hang out. Facebook is currently the club that people suggest first, that usual hang out, but it's hardly special to go there.

There are plenty of entrepreneurs and investors that are chasing the dragon's tail of a social networking site that will somehow have the ability to filter a social scene so that everyone feels they're with the group the want to be with, while at the same time being able to accept everyone in the world onto the site.

Is that possible? I don't know. I have my doubts, because humans are really sneaky and have ways of conveying what they want to say and being who they want to be regardless of whatever restrictions that are imposed on them. They have a way of getting their personal message, regardless of how clever or banal it is, through the filters, defeating the purpose of a site that hopes to bring you only the messages you want to hear.

What I do know is that Facebook isn't it. I haven't made any resolutions to get off of Facebook like some of my friends, but for me Facebook is now just another messaging system, no better, and in some ways worse, than email. Possibly the one upside is that I have connected with a few people I otherwise wouldn't be in touch with. The cost of that benefit, though, has been a lot of chattering noise that is not effectively handled in any way by Facebook so that I'm left to filter it the way humans have for a long, long time - reading it and wondering if I care.

So are the guys at Goldman Sachs total idiots for buying into the dream of the never-ending nightclub? I don't think so, because Goldman Sachs is just a middleman between Facebook and investors. What Goldman Sachs is right about is that there are enough investors who believe that Facebook might be that magical club that never closes. All Goldman Sachs has to do to make a profit is be the go-between. By the time the dust settles and a bunch of investors are holding onto worthless Facebook stock, the Goldman Sachs guys will have already paid for their trip to Tahiti with last year's bonuses.

What Facebook does have going for it is momentum. Like the club that closes its doors and reopens under a different name, promising better music and a cooler scene, Facebook has enough people backing it that it might be able to reinvent itself in ways that keep it going.

But it's a constant uphill fight, one that requires lots of energy and resources just to hang onto where it has already got to . For that reason, most organizations can't survive too many reinventions.

That's Facebook's problem, though, not ours. For us, the only challenge is the same as deciding which club to go to next.

If we're lucky, we'll get in on the action while it's still cool, before everyone shows up.

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