Bill Gurley, a venture capitalist in Menlo Park, tells what happened when he began working as a Wall Street analyst in Manhattan in 1993, fresh out of business school. A colleague turned his tie over to check the label. “My first day at work,” Mr. Gurley recalled, “I was told to replace all my ties with Hermès and never to wear brown shoes again.”

What is the labour encoded in Instagram? It's easy to see. Every "user" of Instagram is a worker. There are some people who produce photos -- this is valuable, it means there is something for people to look it. There are some people who only produce comments or "likes," the virtual society equivalent of apes picking lice off other apes. This is valuable, because people like recognition and are more likely to produce photos. All workers are also marketers -- some highly effective and some not at all. And there's a general intellect which has been developed, a kind of community expertise and teaching of this expertise to produce photographs which are good at producing the valuable, attractive likes and comments (i.e., photographs which are especially pretty and provocative), and a somewhat competitive culture to become a better marketer.

Then along comes Instagram. Instagram has as many employees as you can count on your fingers (if you have polydactyly) and does a sum total of one thing. It’s beloved and hip, two things Facebook is not, and plus the company is pure nerd candy. It uses open-source software named after a jazz musician (Django!); uses the language Python, which is as beloved as PHP is loathed; and posts about its technical exploits over on Tumblr (which, fun fact, recently announced its 20 billionth blog post — on Twitter). Instagram does everything "right," for a value of right that matters to nerds, and it does it with one product. When it needs to add a million users in a day — as it did with the release of its application for Android — it just brings up a ton of fresh web servers and keeps on trucking. And that's how stuff goes now, in the cloud. If you need a thousand web servers tomorrow I can get them for you, no problem.

Remember what the iPod was to Apple? That’s how Instagram might look to Facebook: an artfully designed product that does one thing perfectly. Sure, you might say, but Instagram doesn’t have any revenue. Have you ever run an ad on Facebook? The ad manager is a revelation — as perfectly organized and tidy as the rest of Facebook is sprawling and messy. Spend $50 and try to sell something — there it is, UX at its most organized and majestic, a key to all of the other products at once.

There's no way to take a time-out from our social life and describe it to a computer without social consequences. At the very least, the fact that I have an exquisitely maintained and categorized contact list telegraphs the fact that I'm the kind of schlub who would spend hours gardening a contact list, instead of going out and being an awesome guy. The social graph wants to turn us back into third graders, laboriously spelling out just who is our fifth-best-friend. But there's a reason we stopped doing that kind of thing in third grade!

You might almost think that the whole scheme had been cooked up by a bunch of hyperintelligent but hopelessly socially naive people, and you would not be wrong. Asking computer nerds to design social software is a little bit like hiring a Mormon bartender. Our industry abounds in people for whom social interaction has always been more of a puzzle to be reverse-engineered than a good time to be had, and the result is these vaguely Martian protocols.

Messaging, so long as the system is not beset by spam, is a profitable way for Facebook to pinpoint high value accounts and more importantly analyse high value links in the social graph. Suddenly Facebook is able to realise that out of the hundreds of so-called Facebook friends, the ones you communicate with over its messaging system are the ones that matter to you. After all, performing the 20th century task of actually writing a message to someone must mean that person has some important relationship with you. Don't be surprised if Facebook offers some sort of voice over IP communication system to further allow it to track phone call interactions in the future - it's the logical progression.

Zuckerberg faced no such barrier. For less than $1,000, he could get his idea onto the Internet. He needed no permission from the network provider. He needed no clearance from Harvard to offer it to Harvard students. Neither with Yale, or Princeton, or Stanford. Nor with every other community he invited in. Because the platform of the Internet is open and free, or in the language of the day, because it is a “neutral network,” a billion Mark Zuckerbergs have the opportunity to invent for the platform. And though there are crucial partners who are essential to bring the product to market, the cost of proving viability on this platform has dropped dramatically. You don’t even have to possess Zuckerberg’s technical genius to develop your own idea for the Internet today. Websites across the developing world deliver high quality coding to complement the very best ideas from anywhere. This is a platform that has made democratic innovation possible...

"On the other hand, we started the company saying there should be another way. If you allow people to share what they want and give them good tools to control what they’re sharing, you can get even more information shared. But think of all the things you share on Facebook that you wouldn’t want to share with everyone, right? You wouldn’t want these things to be crawled or indexed–like pictures from family vacations, your phone number, anything that happens on an intranet inside a company, or any kind of private message or e-mail. So a lot of stuff is getting more and more open, but there’s a lot of stuff that’s not open to everyone."

His Facebook account, which he has had since 2005, is strictly personal. “I don’t want people to know what my movie rentals are,” he said. “If I am sharing something, I want to know what’s being shared with others.”

At this point, I would suggest that Facebook's management and Zuckerberg in particular are not equal to the challenges that confront them, and that even if they get this particular mess behind them, things will start to unwind. Large corporate partners who may have been heading down the road to integrate Facebook into their websites or applications will start to reconsider. Users will opt to spend more time in smaller, more specialized social networks, rather than a single, all-encompassing social context. Application developers will want to create more distance between themselves and Facebook, which increasingly looks like a competitor, not a platform.

the privacy aware, personally controlled, do-it-all distributed open source social network