Act with Certainty

The ForeSee blog for CX professionals and the Voice of Customer community.

Let Them Eat Newsfeed

So the world is having a meltdown…

Or so it would seem if you live in Silicon Valley, like I do, and have been gawping at stock prices going down faster than a fat kid running from Tony Perkis at Camp Hope (bonus points if you’re a Heavyweights fan).

Zynga is down 40%. Facebook even more so, and continues to plummet. The companies that made us the cool kids on the playground – heroes kicking butt and taking names later while the rest of the country was riding the recession merry-go-round – are FAILING.

It’s BAD.

It’s not quite dot-com-bubble-bursting BAD, but the explosion is not too far off the horizon. The signs have been evident for quite some time that something is rotten in the state of Denmark.

So, where do I start? Where did IT all start?

Let’s see. You can start with the crazy IPOs with disappointing results. Or, the millions of dollars of venture capitalist money pumped into pipe dreams (Color, anyone?). And then there were the parties…oh, the parties.

Take Digg for example. They took a total of $45 million in VC money. Spent it hosting extravagant, wasteful parties (I know, because I went to all of them), turning their offices into a rocking dorm, flying out world famous DJs, and taking expensive company retreats and vacations. Then (wait for it)…sold themselves for $500,000!

The moment when you know something will never be the same . . .

Let’s be frank, here. The Silicon Valley has jumped the shark and this is just the beginning of things to come.


The short answer is hubris.

The longer answer is that no one in Silicon Valley cares about customer satisfaction.

Companies like Facebook, Twitter, and Yelp were created in the image of their users. They gave us a place to share stuff, to feel connected – a sense of belonging. Whether you were trying to be heard, trying to find a job, or trying to find a good Thai restaurant these great companies – these giants of the social media realm – stood on the mountain tops with their arms wide open. And we came running. They broke down social barriers and connected us to communities of people just like us. It was what we WANTED. It was what we NEEDED.

Things seemed to be on the upswing again. Money was flowing into startup after startup, and the word “social” was being uttered in every third sentence. Kids became kings. Twenty-two-year-olds were in charge of businesses, touching more people than any celebrity or politician. Silicon Valley was alive again – resurrected like Dr. Frankenstein’s monster.

With wads of paper money stashed away with promises of much more, the tides turned. The heroes of recess became the bullies – tyrants. Facebook made sweeping changes as if on a whim, completely disregarding its users, its customers. The clean canvas of self-expression was no more. Cluttered with the newsfeed and ads, it is barely recognizable. Product guys add new features just because they can or want to. And now, the brilliant product that drew us in like moths to a flame is an out-of-control monster. Little did we know we’d get so burned.

With inflated wallets came inflated egos and the Silicon Valley has ultimately became the Silicon Versailles. Delusional children throw parties as fast as they can come up with company ideas. Wasting money has become a way to idly past time. Call it what you will. I call it immaturity. Insolence. Even Bravo is turning Silicon Valley into the next Real Housewives of something or other, signifying that we’ve only become caricatures of ourselves.

The kings are at play and the customer is no longer the focus. My question is: where’s the cake? The customers deserve something. After all, it was our personal data that spawned these billion dollar valuations – our willingness to give our lives and time to these giants and share their existence across the world to grandmothers in Japan.

Customer satisfaction is a leading indicator of a company’s financial success. This is fact. What we are seeing today is the proof of it. All these companies we had high hopes for have lost sight of the truth. And it’s such a simple truth – a satisfied customer base is a company’s greatest asset. When making changes to the customer experience, you can’t do whatever YOU want and then pat yourself on the back for your improvements.

For a long time now, customers’ have been frustrated with Facebook in general, and specifically with their security policies. Then there’s Zynga’s lack of improvement in the mobile space, and, believe me, the list goes on. According to our research, Facebook underperforms 95% of the federal websites measured. This didn’t happen overnight; it’s been a steady decline for some time now. Thanks to the inflation created by venture capitalists, investment banks, and hype, Facebook and Zynga have continued to egomaniacally crap on their users. Everyone here worships Eric Ries’ “The Lean Startup.” And it’s wrong. Don’t be so afraid of sitting back on your throne and taking stock of what customers’ actually want instead of continuously throwing change at them, just because you can and want to stay innovative.

Hopefully, these financial failures will be a wakeup call. And maybe, just maybe, the kings will come down from their high perch and institute changes – real changes – to become more customer-centric. All of them need to have a measurement system in place that can capture their visitors’ voices as well as accurately and precisely analyze their satisfaction in a predictive way. These companies need to manage themselves forward with ForeSee before there is a full-on revolution.

If not…off with their heads!

About the Author

Krystel Harvey is ForeSee’s Regional Manager in the San Francisco Bay Area. With seven years of experience in the customer experience space, she has a particular passion for the retail and internet services industries. Krystel holds an undergraduate degree from Brandeis University and a master’s degree from Stanford University.

Read more posts by Krystel Harvey


  1. Bob Trahan

    There’s a classic error here:

    Creating value for users or even simply making users happy does not raise the stock price or make a valuable business in and of itself. Rather, strong business fundamentals do. Simply put, the stock price of Facebook has been going down because the market thinks the price is too forward looking and not justified by the known knowns of the business.

    Additionally, having worked at Facebook for the better part of 6 years, I can tell you that changes are not done on a whim. Rather, they are all aimed at the company’s mission of “making the world more open and connected.”

    1. Krystel Harvey

      Hey there! Bob, you know I love you, but I have to disagree with you. Actually, when you measure the customer experience the right way, there is a strong correlation to stock prices. Claes Fornell, a professor at the University of Michigan and the founder of the American Customer Satisfaction Index (ACSI) has repeatedly shown in published research that the ACSI predicts financial performance. There’s a hedge fund based on the research that has beat the market 14 years in a row. You can read the published studies on the ACSI’s website:

      PS- I miss those flip cup tourneys!

      1. Bob Trahan

        I believe that once the price normalizes, customer satisfaction will have extremely strong correlation. I think this mainly because its a good proxy for engagement metrics which aren’t always accessible to the public, as well as a strong factor in projection of future engagement metrics. I also think its somewhat intuitive that if people are highly satisfied with a company, unless its run ridiculously inefficiently it should prosper over time. :)

        However, the article argues that the recent crash from the high IPO price is from poor customer satisfaction. I still think its not and rather its from business fundamentals not justifying the price without forecasting significant future success. Or said differently, the price was way too high at the IPO relative to these business fundamentals and the market is responding. This is true for both Facebook and Zynga in my opinion.

        So, I think you’re basically right in the long term, but this article seems laser focused on the short term, which I think is wrong. Prices were just too high at the onset relative to the business fundamentals and now stuff is “normalizing”. Said normalization is going to keep happening as the supply of stock increases relative to the demand as lockups expire. After all that, then satisfaction will better correlate to future direction of the now-normalized price.

        One other thought for you about satisfaction versus engagement is that satisfaction may be low (“I hate this site”) while engagement is really high (“…and I can’t stop using it.”) Facebook is a fun example here because I think it suffers from this particular “I hate this and can’t stop using it” sort of feel for many users. Even more interestingly, this is not a new feeling, and yet engagement remains very strong across the user base. Its possible if users were reporting high satisfaction they’d be even more engaged or engaged in ways that monetize better. Thus far though it hasn’t really lead to lower engagement over time.

        (I too miss flip cup. Good times! :D)

  2. Krystel Harvey

    Bob, I agree with you that there was a fundamental issue with the valuation and the market response is further proof of this. Although my post focuses on stock prices, the reality is that customer satisfaction is a leading indicator of financial performance, be that revenue, stock, etc. Facebook is lucky for now, because there really isn’t a better place available. Also, switching costs are high. Facebook has 1,117 pictures of mine as well as 1,351 friends of mine (I also led my mom, my dad, and 8 family members from Belgium there). To leave means that I have to basically manually take all that with me and it’s just not going to happen…for now. We see this all the time with particular retailers when they have the advantage of being the only ones in a particular location or first to market. We see it in the financial industry, where it’s just not a feasible option to switch your mortgage over to another bank. The danger in this scenario comes from something better coming on the scene and over time those switching costs lowering. Our CEO, Larry Freed, wrote a post about exactly this:

    In Facebook’s case, there are the Paths or Google+ of the world. Personally, I was not into Path at first (Danny Trinh knows the original 50 person thing pissed me off to no end), but they evolved and the experience is getting better. Path has invested in improving the mobile customer experience, where Facebook is clearly underperforming. Google+ may not feel like that much of a threat to Facebook on the market penetration front, but it is continuously attracting users at a fast pace and handily beats Facebook at customer satisfaction. Facebook scores a 61 and Google+ scores a 78. When Google+ hits critical mass, it will be too late. Why not measure satisfaction now to avoid a potential future mass exodus and protect the audience you already have? Also, in the meantime, improving satisfaction can only mean good things for Facebook in terms of revenue, loyalty, and yes, engagement.

    Satisfaction is not the same as happiness. Satisfaction is a scientific metric that drives future behavior in a quantifiable way. Engagement is not the best KPI for long term success and is not a replacement for scientific customer satisfaction measurement. By using engagement as your KPI here you’re missing a crucial piece of the customer experience analytics ecosystem: the qualitative and forward looking piece of the puzzle. Just because I’m posting on Facebook now, doesn’t mean that I will continue to do so in the future when something better comes along. Coming full circle now, if you satisfy your customers, they may actually want to invest in your success (buy your stock/believe in your valuation). You said yourself that Facebook’s mission is “making the world more open and connected.” That wasn’t the original mission (exclusivity/college networks) and if it is indeed Facebook’s goal today, well then according to whom? Facebook? Is there such a thing as connection exhaustion? Given users’ dissatisfaction with the newsfeed, the data points to yes.

    1. Bob Trahan

      Well, as long you’re past saying satisfaction is the cause of the ongoing market corrections of the IPO price, I’m happy. :)

      I think you have one important insight of your own — “When Google+ hits critical mass, it will be too late.” — perhaps long term social network success isn’t driven as much by satisfaction as much as by saturation (density of the network itself) or other factors? There have always been alternatives to Facebook and my basic point is even if the score is lower than normal its always been relatively lower than alternatives and yet it has always dominated in the end. I think it might just be that while people aren’t as satisfied as they are with competitors, they also aren’t dissatisfied enough to leave the service. Further, Facebook is amazingly good at winning the market penetration they need for critical mass.

      One small factual correction is that Facebook’s mission has always been (loosely, wordsmiths have taken a crack at it now and again) to “make the world more open and connected”. I think you were probably an early user (when it was college-only) and thus have the misconception that it’s original mission was something about exclusivity or serving just the college community. The whole college network thing was really just a clever growth tactic to tip relatively isolated social networks one by one and was never the end game. (See my previous paragraph about Facebook always winning somehow – these growth tactics are the real secret sauce and they’ll be hard to replicate now that folks are “locked in” as you describe it.) You can see the mission here — — and it used to be on the homepage when you weren’t logged in for years and years. Nowadays looks like the homepage has a slightly more user-focused message, good news perhaps to your points about satisfying users. :)

Write a comment

Leave a Reply

Your email address will not be published. Required fields are marked *