Seeking Alpha
( followers)  
My Net Sense column that's running today is on Facebook's evolution from a company that was worth $100 million last year to one that received an offer by Yahoo (NASDAQ:YHOO) this summer for $1 billion. I hope you read the column - read it here at But here's the CliffsNotes version:

In the coming weeks, the Palo Alto, Calif.-based company will allow anyone with an e-mail address to register to a regional network. It's quite a departure from the very exclusive origins of Facebook, which prided itself on the ability to authenticate each member through a valid school e-mail address.

Facebook CEO and founder Mark Zuckerberg told me last week that the decision is aligned with his long-held mission statement at Facebook. "We're a company trying to help people understand their world," he said, suggesting that the word "people" is broad, comprising more than just those who are in colleges, high school and at work (except for those under 13 years of age, for now).

Such a decision to open up, however, may have unintended negative consequences, much like last week's community uprising over a new service that cast personal information as essentially news bulletins. If Facebook eases this new service across its 9-million member society without a glitch, it will mark a right of passage into the big leagues, to some extent. You see, Facebook -- though only two years old -- is on the fast track to being perceived and valued as a grown up. As such, every major decision is a test of its will to fit into such mature billion-dollar shoes.

This summer, Yahoo offered $1 billion for Facebook, but rescinded the offer after its shares tanked 22%, following the company's disappointing earnings. Viacom (NASDAQ:VIA) made a $750 million offer for Facebook in the spring. As it stands, Facebook is valued at north of $500 million. The fact that Facebook's price tag could jump 10-fold in a year underscores the cutthroat competition for eyeballs, growth and ad dollars, not only by Internet companies, but by established media. It also reflects the growing envy, or admiration, for News Corp's (NASDAQ:NWS) purchase of MySpace.

Notwithstanding that Zuckerberg is all of 22 years old, frequent overtures (with an additional zero added after each one) would be major distractions for any CEO operating a company. That's especially true for someone gearing up and steering through hyper-growth mode. Such affection has a way of making the receiver of such attention overly confident. The result is a sense of pride that makes the CEO's already difficult job of balancing conflicting interests even harder.

Perhaps Zuckerberg caught the arrogant bug (everyone catches it at some point). Perhaps he became overconfident about his ability to understand his kingdom that he thought he could easily dictate what was best for the people. And, they'd not only accept it, they'd like it. Whatever he caught, however, he's treating it. Zuckerberg apologized profusely to Facebook members on his blog. His first line was, "We really messed this one up."

Then, rather than launching the open-registration early this week, the company decided to postpone the official launch for a couple weeks. At the moment, staffers are likely pacifying any rabble-rousers, deft in the virtual ways of igniting grass-roots protests. But controlling these lynch mobs will be an ongoing challenge, as I wrote in a blog post earlier this year, titled: "Managing the mob"

It's not at all surprising that users would try to control their environment. After all, in the Web 2.0 world, users expect to create their own entertainment, and to do so on their own time and dime. One cannot impart some control, and expect the receiver of that privilege to remain content, and not want more. We're all human after all.

EBay (NASDAQ:EBAY) -- the quintessential example of community in the early Internet days -- experienced customer uprisings in the last couple years, that underscore just how much control Internet communities have these days. Publishers and Internet companies are increasingly becoming the governing platforms.

Source: Facebook's User Experience Error, and Why Yahoo and Viacom Tried to Acquire It