The Facebook mafia is a social network. The band of early Facebook employees who built the online world of friending, liking and poking are starting their own companies, and relying on their real-world connections with each other for advice, investment and collaboration.
Their new ventures vary from a workplace tool to a prescription-drug comparison site, but they all have several things in common, predominantly their appeal to investors, who have so far put tens of millions of dollars into these companies.
“The early team at Facebook, the first 60 to 100 employees, are wicked smart and very entrepreneurial,” says one “angel” investor who has backed two Facebook mafia companies.
They also think big. In their early 20s they built technology that affected hundreds of millions of people. Now, these entrepreneurs have identified new problems to solve.
Taking on challenging data problems when young, and having such immediate impact on people, becomes addictive, according to Doug Hirsch, who worked at both Yahoo and Facebook in their early days. And while success on the scale of Facebook is not guaranteed, they bring from it the confidence to try.
“You know there’s a chance you’ll fail,” says Scott Marlette, who left Facebook in 2010 to start GoodRx, a price comparison site for prescription drugs, with Mr. Hirsch. “What are the chances we’re going to make another product that 850 million people will see? But it also gives you some notion that there is scale out there, and there is a way to build great products that impact many people’s lives.”
The mafia is marked by key partnerships that were born at the social network. Working relationships became friendships and vice versa. These bonds echo those formed at companies such as PayPal, whose former employees still launch and fund start-ups. But few companies began with such unsuspecting engineers, then grew to such game-changing proportions as Facebook, and that sets these young engineers apart, say investors.
Investors are betting on the fact that these programmers defined the social Web and understand it. But many other companies have employed Facebook formulas, such as requiring users to sign up with their real names. And there has been an explosion of social network games or software startups that some early Facebookers warn is creating “a social bubble.”
But investors hope Facebookers have particular advantages which set them apart. “Most social sites are psychological experiments,” says the angel investor. “The Facebook crowd understands the core psychology of what motivates social; the dimensions of that are subtle.”
Technology venture capital funds including Accel, Benchmark, Andreessen Horowitz and Kleiner Perkins are eager to embrace those early members, hoping to achieve even a fraction of Facebook’s success.
“[Social]impacts everything in our society from business to government to education to politics,” says Matt Cohler, a partner at Benchmark Capital, who joined after working at Facebook.
Though money is flowing easily from investors to these entrepreneurs, the bonds that they formed working through the night at Facebook, staving off server crashes and battling user uprisings border on unconditional.
“If somebody from Facebook came to me and asked me for money, I’d give it them in a heartbeat,” GoodRx’s Mr. Marlette says. “I trust the people I worked with.”
NETWORK OF POWER: How Facebook’s pioneers are flexing their digital muscles
Adam D’Angelo and Charlie Cheever are quiet men. One of the key strengths to their working relationship is how little they need to say to understand each other.
Mr. Cheever recalls a meeting with Mr. D’Angelo when they worked at Facebook. Mr. D’Angelo said three words, and he responded: “Yeah, yeah, yeah, I know what you mean.” The third colleague present reeled in confusion.
The partnership began in 2005 when Mr. D’Angelo hired Mr. Cheever from Amazon to join Facebook and now extends to their joint venture as co-founders of Quora, a question and answer website.
“It’s the next step in the evolution of what a library used to be,” Mr. D’Angelo said. “To share knowledge and get knowledge.”
The concept is not new, with other sites like Ask.com and Yahoo! Answers, but Mr. D’Angelo says earlier attempts are decentralized or poorly executed. Just as there were search engines before Google and social networks before Facebook, Quora can do it better, he says.
While Quora is about connecting people to information, it uses key social elements to do so. People must sign up using their real names, so their identity is attached to the questions they ask and answer.
Networks begin to form as people find others who share interests. They can choose to follow particular topics, or particular people who demonstrate creativity in their questions or authority in their answers.
People use Quora to ask specific questions about current events, or cultural questions, such as: “How did orange juice become a standard breakfast drink in the West?” The most popular answer comes from an Indian-born computer engineer, rather than an official economist or anthropologist.
In this sense, Quora is democratic, a quality the former Facebookers say is important.
“If you don’t have a reputation, you can build one up by answering questions on Quora,” Mr. Cheever adds.
Some users – including Silicon Valley engineers and a Dallas-based chef – have found jobs through their activity on Quora, he says.
Quora is counting on such positive user experiences to attract new ones to the site, before worrying about how to make money. As of January, 2012, the site had 1.2 million unique visitors, according to ComScore, a digital analytics and marketing group, up from 147,000 the year before, when Quora launched.
“We’re still in the growth phase,” Mr. D’Angelo says.
The Asana team of about 20 stands in a circle, most in jeans and trainers, a few shuffling in their socks, discussing the latest updates to the work-collaboration tool they are building.
Unlike typical staff meetings elsewhere, this one is quick and painless. The report from team heads is over in a few sentences and the gathering concludes after 15 minutes with group applause, and a “Yay!” from Asana’s co-founder Justin Rosenstein.
Similar to yoga, he says mindfulness and balance are central to the company’s philosophy of work. Asana, which means “pose” in Sanskrit, also holds yoga classes for staff.
“[Yoga]is about finding comfort and ease in the face of stretching yourself to your limits, which is what work is about,” Mr. Rosenstein says.
He and Dustin Moskovitz, Asana’s other co-founder, expect the technology and design of their task-management system to create simplicity – and painless staff meetings – for clients. It aims to streamline workflow, allowing colleagues to manage projects, assign tasks, and track progress according to what is most important, instead of having to track chronological e-mail conversations.
Mr. Moskovitz recruited Mr. Rosenstein from Google to Facebook in 2007. Mr. Moskovitz had been at the social network since its conception in 2004, sharing a dorm room with Mark Zuckerberg at Harvard University.
“We want people to stop referring to their organization as dysfunctional,” says Mr. Moskovitz.
In 2008, Mr. Moskovitz and Mr. Rosenstein left Facebook. They launched Asana in 2009. “We have a very yin-yang relationship,” Mr. Moskovitz says. “I track the detailed things, making sure [things]get done. Justin is good at ideating and staying passionate.” The software is free for companies with 30 employees or fewer. It will soon offer a product for larger companies, charging a monthly fee. Asana is not profitable yet. The market is also competitive.
Though Asana puts tasks at the centre of its tool rather than people, the Web application takes several cues from Facebook, including a newsfeed-type activity feed, the ability to follow certain tasks and, importantly, a shared philosophy of streamlining communication.
“Before Asana, managers would have one-on-one meetings and spend the entire time getting up to speed on things. Then there’s no time for the fun stuff – the mentoring and the strategizing,” Mr. Rosenstein said. “Asana ends up being this collective memory.”
When Doug Hirsch needed to get a prescription antibiotic, he went to his local pharmacy where his bill would have been $642 (U.S.).
That was too expensive for him so he went to rival chemist CVS, stood in line for half an hour, and got a quote for $410 for the same drug. At a third pharmacy the staff failed to give him even a price check.
“It seemed like a lot of overhead to figure out a price comparison,” said Mr. Hirsch, a former engineer at Yahoo and Facebook.
He partnered with Scott Marlette, with whom he worked at Facebook to build the social network’s photo sharing features, and Trevor Bezdek, a technology entrepreneur, to build a website where people could compare drug prices online and in their locality with a few keyboard strokes and a mouse click.
They launched GoodRx from their Santa Monica, Calif., headquarters a few weeks ago. Entering the name of a drug and a zip code into the site returns a list of prices for that medication at nearby and online pharmacies.
As health care costs in the U.S. soar, and employers and insurance companies push more of the cost burden on to patients. In many cases, a 20-milligram dose of a drug is the same price as the 100-mg dose, so GoodRx includes links to advice on how to split pills and save money.
GoodRx aims to bring transparency to drug prices, as other sites have made online price comparison the norm for TVs and cars.
“Once you start to inform people and start to empower people to make decisions, you both start to change the market that exists and perhaps affect some costs,” Mr. Marlette says.
GoodRx is tackling the problem of reducing drug prices that lawmakers have debated for years. But they say it is a common trait among Facebook alumni to take on huge problems. Connecting friends and guiding people to affordable medicine are not that different in computer code, they say.
“Both Facebook and GoodRx are in the business of taking tons of data and trying to dumb it down so the average American can consume it quickly,” Mr. Hirsch says.
GoodRx is considering different business models, from pharmacy-sponsored coupons to complex deals with insurance agencies that will lead patients to buy from less-expensive sources.
The introduction of health care reforms in the U.S. is expected to generate higher sales of generic drugs, and that is where GoodRx has found the most price discrepancies, as local pharmacies have more flexibility to mark up the price due to low manufacturing costs.
“It seems like people are way overpaying,” Mr. Hirsch says. “We just thought the time was right for something like GoodRx.”
Copyright The Financial Times Ltd. All rights reserved.