In Facebook, Investing in a Theory
The Facebook frenzy is spreading. — Thousands of software developers are creating features for Facebook, the rapidly growing social network, many hoping to strike it rich alongside Facebook's own employees. — Facebook, based in Palo Alto, Calif. …
Context & Ripple Effects
A month after the Wall Street Journal asked why so many want to create Facebook applications, the Times reframes the same rush as an investment thesis: thousands of developers building on the Palo Alto network, many explicitly hoping to profit alongside Facebook's own employees. The story traveled widely enough that Bits picked it up the same day, pairing it with a second piece asking whether Facebook's developers might defect to other platforms.
That defection question remains unconfirmed speculation, but its presence in the same news cycle matters: the value of the developer bet rests entirely on Facebook keeping both its user growth and its role as the default distribution channel. The corpus also shows the audience side of the ledger — surging international interest, including rapid uptake in France despite an English-only interface, and a how-to guide for deleting accounts circulating among dissatisfied users.
First-order effects
- Thousands of developers are directing their own time and money toward Facebook's platform, handing the company features and engagement at near-zero marginal cost while the builders absorb the development risk.
- Investors are underwriting individual application makers whose entire distribution runs through one company, effectively making Facebook's growth rate the collateral behind a new class of bets.
Second-order effects
- Rival social networks face pressure to open their own third-party platforms and monetization terms, since the unconfirmed defection talk signals that the same developer labor pool could be bid for elsewhere.
- Distribution inside Facebook becomes a scarce channel, pushing app makers toward competition for visibility and giving Facebook leverage over which applications reach users.
Third-order effects
- If the pattern holds, social platforms consolidate into ecosystems where a single gatekeeper controls distribution for thousands of dependent startups — concentrating both the upside and the platform risk in one company's policy decisions.
The trend: Social networking is shifting from closed destinations to open application platforms, with developer attention emerging as the resource competitors compete to attract and retain.