Facebook has billions of people who have a username and password, and about each one of these people Facebook knows a lot. How much? Well, probably more than your mother knows about you. What you think, how you think, when you think it, who you like, who you don’t, what triggers you, what your politics are, what makes you warm and fuzzy, and so on. They promise not to use that in this new venture, they really do. At least they promise not to use too much of it. They swear.
I am not one of those people who hate Facebook and neither do I think that Zuckerberg is satan. I quite like Facebook. I get value from it in numerous ways. I know the trade I am making – my privacy for an easy-to-use social platform where I can connect with the world in ways that I couldn’t previously do. The trade works for me.
But let’s imagine the conversation that went on in a non-smokey and gilded backroom of Facebook. It might have gone like this:
Mark: How many people we got?
Flunky: Um, billions.
Mark: How many advertisers, you know, people selling stuff on our platform?
Flunky: Um, millions.
Mark: So why can’t we get a piece of the action between our users and advertisers?
Flunky: Because that is not our business model.
Mark: F*ck our business model. Let’s get in the middle of the transactions.
Mark: How the hell would I know? What do I pay you for?
Flunky: Well, we could become a bank.
Mark: Not interested unless we become the biggest bank in the world.
Flunky: You will. Overnight.
Flunky: Have you heard of Bitcoin?
Mark: Are you kidding?
Flunky. Well, we will offer something similar. I don’t know. ZuckerCoin or something.
Mark: I’m listening.
Flunky: People give us cash, we give them MarkCoins, they buy from our advertisers direct from their FB pages.
Mark: How do we make money?
Flunky: We keep the interest on the cash they gave us.
Mark: How much would that be?
Flunky: No idea. Interest on hundreds of millions of customers’ cash accounts is going to add up to, oh, let me see now. Billions? Tens of billions?
Flunky: Yup. Pretty cool. And we will tie the coin value to a basket of currencies so it doesn’t jump around like Bitcoin. Nobody can accuse us of being a pump and dump outfit.
Mark: Won’t the do-gooders complain that we are too powerful?
Flunky: Yeah, probably.
Mark: What if we do a partnership with some powerful companies and NGOs and trustworthy folks. We will give them a bit of the interest. We’ll even let them run some of the computers. Then no one can point fingers only at us.
Flunky: Yes! You genius!
Mark: Wait, wait, we’ll do it as a non-profit! We’ll call it the Libra Association.
Flunky: Har har har (snort)
Mark: And we can use our data scientists to sell targeted and profitable stuff to our user base. Maximise the transaction.
Flunky: Hmm. Let’s keep that quiet for now.
Mark: I will go to Washington, talk to the government. I managed to snooker them last time. They are really stupid.
Flunky: Har har har (snort)
Mark: I’ll call Uber and Vodafone and PayPal and Andreesen and others. You get working on the rest.
Yes, well. A bit more complicated than that, and I am probably being very unfair to Mr Zuckerberg for the sake of a cheap laugh. But this scheme is very, very clever. More than that, it is cunning, even Machiavellian. If it works out then goodbye Visa and Mastercard. Goodbye many banks. Goodbye usurious bank fees. Goodbye clunky forex procedures. And hello hundreds of millions of previously unbanked customers.
There is lots of trouble and strife on the horizon; the banks and their barkers and enablers in government will turn a shade of apoplectic puce. Perhaps, depending on where you sit in this value chain, it’s manna from heaven. But the vision and scale of this is indeed the great financial disruptor, the one the pundits have been promising for decades.
And the irony? I am not sure I want Mark to win this one. And, given how much I dislike my bank, I am not sure I want him to lose this one either. DM
A groundhog is actually a type of squirrel.