So, if tripling the size of the social network to 3,000,000,000 users is not going to be enough to justify its valuation with its current revenue per user, there is only one strategic direction for Facebook to go. It needs to generate more revenue per user. A lot more.

Dead-on. By going public, Facebook will be under more pressure to increase the amount of revenue they generate from each user, and for good reason: even if every human being alive used Facebook, they still wouldn’t make very much revenue. They have no choice but to make more money per user.

Madrigal speculates they’ll increase how many adverts users see and push Facebook Payments. I think that’s right, but it’s only a part of it. I think Facebook wants to be the web platform, the platform that the rest of the web (and real-world businesses) are built on top of. By graphing how the world’s social relationships connect, and by allowing/pushing individuals to share more about themselves and what they do, they could be the most important advertising, public relations and consumer research channel for companies that’s ever existed, and the only platform software developers need to be on.

The latter might be a bit surprising, but imagine if a large portion of Facebook’s 850 million users sign up for Facebook Payments. If Facebook built something which allowed their third-party applications to run on actual devices, and not just the web, wouldn’t that be a great platform to develop for (financially)? Apple’s App Store has been successful for developers because Apple built it on top of the iTunes Music Store, which had tens of millions of people’s credit card information already stored, so purchasing a new application was as easy as buying a song. In March, Apple said they had 200 million iTunes customers with credit cards on file. There’s no reason why Facebook couldn’t equal, or surpass, that number.

So, that’s my bet. Facebook will, at some point in the next few years, no longer be just a social network where people also happen to play games. Facebook will instead be an all-encompassing platform where you can purchase (HTML5-based) applications to run on your mobile devices, purchase goods from other companies, and for companies to “connect” with you. They want to be the platform for the web, the utility people, companies and organizations use to find, communicate with and sell to their customers.

(Via Marco Arment.)

“At the time, the company was growing but still acting as a startup,” said Heins. “But startup processes don’t scale. Every company goes through that phase. I had the opportunity to learn about RIM here. I don’t think that there is a drastic change needed. We are evolving our tactics and processes. I don’t feel that I was held back in any way to do what I needed to do.”

I see that re-arranging the deck chairs is a popular pastime at RIM.

As they were hyper-focused on improving and slowly evolving their products, they lost sight of their market as it went through a massive revolution. It doesn’t matter how good you are at evolutionary iteration; no amount of evolution will make up for a revolution.

I don’t think it’s that simple in this case. While Kodak moved slower than other companies on digital cameras, they didn’t move that slow—they introduced their line of point-and-shoot digital cameras in 2001, and became the top-selling brand of digital cameras in the U.S. in 2005.

The problem was that as the camera business shifted from film to digital cameras, it lost what made it a profitable business—film. Companies could sell their cameras at attractive prices and then make a lot of money on higher-margin film. But there is no film for digital cameras, and digital cameras became a commodities business, which meant very low profit margins. Consumer digital cameras simply aren’t a very good business.

But wait! Kodak could have out-innovated their competition, made dramatically better digital cameras, and then charge higher margins. That only works, though, if the other option isn’t already good enough—which digital cameras very quickly became. For most people, the difference between eight and five megapixels or a much better lens were negligible, because all they wanted was an affordable camera that took decent photos.

Kodak’s real problem was not that they didn’t move quickly enough or innovate enough in digital cameras. Their problem was that they were in the digital cameras business, which had little future.

(Via Marcelo Somers.)

To harness the energy that fuels both these drives, we need to move beyond the New Groupthink and embrace a more nuanced approach to creativity and learning. Our offices should encourage casual, cafe-style interactions, but allow people to disappear into personalized, private spaces when they want to be alone. Our schools should teach children to work with others, but also to work on their own for sustained periods of time. And we must recognize that introverts like Steve Wozniak need extra quiet and privacy to do their best work.

She points out that American businesses, classrooms and religious organizations are moving toward open, “collaborative” set-ups, where individuals work in public areas exposed to everyone else, and students work almost entirely in groups. She argues that not only is this ineffective in increasing productivity and creativity, but it’s worse than the much-derided cubicle set-up.

Being exposed to your co-workers and their different ideas certainly is a good thing for creativity, but that doesn’t mean locking everyone up in public is a good idea. In this case, because a little is good doesn’t mean a lot is even better. Cain links introvert personalities to creativity, and argues that introverts need solitude to produce great work, but we all need it. Everyone needs their own space, where they know they’re alone and can focus on what they need to without interruption, a place they can always go to when they need it.

Cain’s suggestion—for private spaces along with public spaces—is precisely right. When Pixar built their new building, they gave ample room for each person to have their own space, that they controlled and could do what they wanted with. But Steve Jobs also insisted that the building be designed in such a way that people have no choice but to bump into each other:

“The philosophy behind this design is that it’s good to put the most important function at the heart of the building,” Catmull said. “Well, what’s our most important function? It’s the interaction of our employees. That’s why Steve put a big empty space there. He wanted to create an open area for people to always be talking to each other.”

Jobs realized, however, that it wasn’t enough to simply create a space: he needed to make people go there. As he saw it, the main challenge for Pixar was getting its different cultures to work together, forcing the computer geeks and cartoonists to collaborate. (John Lasseter, the chief creative officer at Pixar, describes the equation this way: “Technology inspires art, and art challenges the technology.”) In typical fashion, Jobs saw this as a design problem. He began with the mailboxes, which he shifted to the atrium. Then he moved the meeting rooms to the center of the building, followed by the cafeteria and the coffee bar and the gift shop. But that still wasn’t enough; Jobs insisted that the architects locate the only set of bathrooms in the atrium. (He was later forced to compromise on this detail.)

In a 2008 conversation, Brad Bird, the director of “The Incredibles” and “Ratatouille,” said, “The atrium initially might seem like a waste of space…. But Steve realized that when people run into each other, when they make eye contact, things happen.”

That’s the ideal, where people have their own space, but naturally run into different people they would otherwise never talk to.

(Via Tyler Cowen.)

One of the questions most founders always ask is about the key secrets to hiring.  What they need to understand is that there’s a big difference between “hiring” and “talent”.  I’m continually surprised how rarely I see people put down their strategy for talent compared to hiring. It’s so prevalent, in fact, you’ll often see on a company’s priorities a bullet of “hiring”.  And that slight shift in wording fundamentally sets up the wrong dynamics.  Hiring, is a sub-bullet of talent and if you’re focusing on hiring you’ll be quickly setting up a revolving door.

I think that shift of focus changes who you hire, too—because if you’re focused on hiring, or getting the right amount of people to do what you need to do who have a specific skill, you’re focused on the micro rather than the macro. In a company, each new hire is not just an addition. They change the dynamic within the company, and thus what effect they have on the system has to be fully considered. For each potential employee, they cannot be considered in isolation.

(Via Marcelo Somers.)

“Inside our office, I’ve been recently declaring, ‘I’m going to retire, I’m going to retire,’” Miyamoto said through his interpreter. “I’m not saying that I’m going to retire from game development altogether. What I mean by retiring is, retiring from my current position.”

“What I really want to do is be in the forefront of game development once again myself,” Miyamoto said. “Probably working on a smaller project with even younger developers. Or I might be interested in making something that I can make myself, by myself. Something really small.”

His games were a huge part of my childhood. I played Mario on NES when I was three, and loved every Nintendo game system through the N64. Mario, Mario Kart, Star Fox, Goldeneye, Super Smash Bros—if I wasn’t outside screwing around, I was probably playing a Nintendo game system. And many of them were ones Miyamoto was directly involved with.

This feels like an end of an era.

It’s fitting, too, that this comes at a time when Nintendo’s facing a rapidly changing landscape for their games. For two decades, really, you had only one choice for casual gaming: a gaming console. You could choose among different kinds of consoles (and handheld systems, largely from the same makers), but the picture was the same: you bought a console and bought relatively expensive games to play on it, games that were controlled by the console maker.

That’s changing. iOS has become a really good gaming platform, even if it’s for quite different—even more casual—kinds of games, and with Airplay Mirroring, it’s only becoming better. People now have a choice: if they only want to play games every once in a while, while they have some free time, it might make more sense just to buy a few iOS games for the device they already own anyway, rather than purchase a console that requires $50 games to be of any value.

It’s a lot harder to compete with that, and it’s certainly possible that the console market will slow, or even decline in size, at some point in the future. That puts Nintendo in a difficult position, because you never want to be dependent on a declining market, but they are very much defined by the console market. Very much like Apple, Nintendo makes the whole package—the console, the games, the controllers. They control the experience, and that’s a part of who they are. Merely making games—albeit great games—for someone else’s platform would deeply change Nintendo’s nature.

But sticking to the console market and refusing to change could end up being like tethering themselves to a sinking ship. Should they begin developing games for different platforms? Should they develop their own post-PC devices? Or should they stay with consoles and their own mobile gaming devices, bet their company on it, and try to make it so good it stays relevant for another decade?

I don’t know. I don’t think there’s any particularly easy choices, let alone good ones.

This is, though, an excellent example of what disruption looks like. Five years ago, mobile phones had very little relation to the gaming market. Phones were for making calls, and devices like the Nintendo DS or Sony PSP were for playing games while away from home. Mobile phones had too small of screens, too weak of processors, too poor of controls, and no real SDK for writing worthwhile games. And yet here we are, where mobile phones are taking over mobile gaming.

So if history serves as a guide, the displacement of the PC won’t come from a direct substitution but a more sinister and hard-to-predict subversion through new applications and a re-definition of what a PC is. The driving forces are not just volumes but new input methods, new user interfaces, new jobs to be done, new software and many innovative companies working within an ecosystem.

Disruptions first appear to be no threat to the product types they end up upending. The iPhone couldn’t replace the Blackberry initially, because it was not nearly as capable for enterprises—but it didn’t need to be, because it was really, really useful for consumers. A phone which could browse the web, and replace their iPod was huge, and so it took the consumer market.

Over time, it gained the features necessary for enterprise success—Microsoft Exchange support, remote-wipe, et cetera—and now RIM has no growth market. The iPhone and iPhone-like competitors took the consumer market from them and are taking enterprise, too.

That’s how disruption starts: it begins in an area that doesn’t seem connected, but then grows until it encompasses the market it is disrupting, and by that point there’s little the incumbents can do. The rules have changed.

One of the most common comments I heard was that the Apple Store succeeded because it carried Apple products and catered to the brand’s famously passionate customers. Well, yes, Apple products do pull people into stores. But you don’t need to stock iPads to create an irresistible retail environment. You have to create a store that’s more than a store to people.

This short little piece captures what’s different about Apple’s approach as a whole. They don’t make things to make money. They make money so they can keep making great things. They start with the product first—with building the best product possible—rather than how to make money.

And that little thing, which seems so obvious, makes such a huge difference in what kind of company it is and what they do.

That is the question the book left me asking: Who is the person at Apple who will wake up at 3 a.m. and realize that the latest product is all wrong? Will that person have the courage and standing to walk into Apple, announce he “doesn’t love the latest product” and persuade the company to scrap it and start from scratch after months of work? Jobs did that over and over in his career, Isaacson notes, and his charisma and self-confidence made even folks like Ive willing to follow these gut-wrenching U-turns.

I don’t think this issue is settled.

Jobs focused on making sure Apple is not dependent on one person. The first thing he did was make sure that Apple only hires really, really talented people that genuinely care about what the company is doing. Hiring smart people who believe in the company’s goal is the first thing that should be done, and they have no problem there. Second, Apple is organized to make creating great products as much of a reproducible process as possible. Each department isn’t a self-contained unit where they look out for their own interests above the company’s; rather, they’re integrated into a whole. The online store team, for example, doesn’t control the photos used on the store, and Jony Ive’s design team works on the entire company’s products, rather than just for a certain product division. Third, they’ve tried to capture management’s decision-making process into a set of case studies so the company’s next generation of leaders can be systematically exposed to how they think—and the cases are taught by Apple’s executives.

Fourth, and most important, Jobs’s obsession with making the product as perfect as possible and doing truly incredible things permeates the company. That standard of work is expected of everyone not just by each employee’s manager, but by the employee. They expect it of themselves. This, long-term, is what can make Apple successful—this feeling of what Apple stands for and exists to do. Everyone understands it, and everyone wants to honor it.

That’s the common purpose that’s directed Apple since Jobs returned and has made sure everyone is working toward the same goal. It’s a hell of a lot easier to keep egos and the tempting desire to put your own career goals above the company’s in check when everyone has a shared purpose. Jobs perfectly embodied this, because he started the company and embedded it with this obsession with making great things, and also because he unswervingly stuck to it. Jobs rarely wavered from it and thus, as the company’s leader, kept everyone in the company pointed in the same direction and working toward the same goal.

Unfortunately, though that is probably the most important part of what makes Apple such a fabulously great company, it is also the most ephemeral. Apple is at no risk of losing it in the next few years, but as time passes and that direct connection to Jobs passes, too, it will be all too easy for it to begin fading. What happens when Apple’s management is firmly divided over a decision, but there’s no one that holds everyone’s utmost respect to make the final decision while retaining their reverence, and thus their dedication? It’s very easy for someone’s ego to get bruised when they lose a battle they feel very strongly about and decide there’s better opportunities elsewhere. It’s easy to make it about your career, rather than the company’s best interest, when there’s no one that inspires that respect.

Worse, this could result in the organization ossifying into different departments, with their employees loyal to it rather than the company. If that common purpose begins to fade and become more abstract than it is now, that could happen. Why look out for the interests of the company as a whole when your job is tied to the project you work on? This process starts slowly, subtly, and innocuously—but once it’s done, there’s little to be done.

What can be done, though, is to make sure it never starts. This doesn’t mean glorifying Jobs as some sort of god amongst mortals, because that would be just as debilitating. Rather, they have to continue to do justice to the common purpose he built. Take big risks when it means you could do something incredible. Obsess over making products perfect. Only hire the best, and the people that have that same excitement about making great things. Don’t put up with people who are only there to advance their career. And don’t ever waver from this—it has to be instilled in the company, every day, because a company is an ever-changing combination of people, and they constantly need it reinforced.

I don’t know what will happen. I suspect that Apple will be successful for quite a while regardless, but building an organization that can perpetuate its values is very, very hard, and so it is possible Apple will degenerate into a more normal kind of company at some point. But they have the chance to be one of the few organizations that institutionalize excellence and can reproduce it over decades.

And while he has no need to make more money–”Every day is already Christmas anyway,” he says–there is still one thing that bugs him: He’s not a billionaire. Yet. “That’s the thing,” says Nguyen, the American dream sparkling in his eye. “I will outlast everyone else. There is no one in the world who I won’t outlast. There’s no way. There’s no way. There’s no way. I can take so much more punishment than anyone. I totally can. I can last forever. I’m like a roach.”

And that’s about all you need to know about the guy who started Color.