GeoCities' Fate Offers Lesson for Facebook

Warning signs found in an earlier deal for a once-hot site
By Kevin Spak,  Newser Staff
Posted Sep 25, 2007 11:56 AM CDT's mastermind, Mark Zuckerberg smiles at his office in Palo Alto, Calif., in this Monday, Feb. 5, 2007 file photo. The owners of a rival social networking Web site are trying to shut down...   (Associated Press)
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(Newser) – As Facebook founder Mark Zuckerberg contemplates a big Microsoft deal, the Wall Street Journal’s Dennis K. Berman has a cautionary tale for him: GeoCities. The web community, once the third-most-visited site on the internet, fell into obscurity after Yahoo's huge buyout stymied its innovation. That’s relevant for Zuckerberg, who has already spurned one major, though smaller, buyout offer.

“Had they done things right with GeoCities, there would be no Facebook, YouTube or MySpace,” says an insider. Instead, Yahoo focused on building traffic rather than improving the user experience. Even if Facebook is currently valued at around $10 billion, it needs capital and faces big monetization challenges. Berman suggests Zuckerberg take the private investment but maintain creative freedom.