from Hacker News

How Facebook’s Oracular Algorithm Determines the Fates of Startups

by SoftwarePatent on 11/7/17, 5:41 PM with 75 comments

• by ballenf on 11/7/17, 8:44 PM

  How Facebook determines ad placement in news feeds:

  > Millions of auctions take place every minute as users across Facebook load their feeds. ... The algorithm is constantly learning, using past results to inform how it weighs bids in the next auction. The intent, Facebook says, is to maximize value for everybody: to pair the advertiser with its likeliest customers, and to show ads that users want to see. And, of course, to make money for Facebook. [emphasis mine]

  So FB wants:

  1. advertisers to be successful so that they come back and attract others;

  2. users to remain sticky and not be turned off or too distracted by an ad; and

  3. sell each ad space at the highest price, so long as 1 and 2 remain true.

  Interesting business they're in and an incredibly challenging (and fun/rewarding) algorithm to code.

• by AndrewKemendo on 11/7/17, 7:29 PM

  I think most people overlook the intelligence value that GAFAM + Tencent have over nearly every other company on the planet. I don't know of any company out there that doesn't use one or more services from these companies which means you're giving them business intelligence about your activities even if you never talk with one of their BD/CD people.

  And make no mistake that business intelligence is absolutely one of the most important things a big company (or nation) can have from a defensibly perspective.

  Speaking as a former spy it's a spy agency's dream to have the kind of data on possible competitors and collaborators that these groups have. Individually they can see every threat coming a mile away and then decide to ignore, buy, invest.

  This is why I think "this time is different" from a disruption cycle perspective. Never in history have companies had so much intelligence on their competitors and collaborators and actively used it to disrupt themselves - multiple times. Don't get me wrong, companies have always done this, but never at this level of granularity and specificity so quickly.

• by daveid on 11/8/17, 12:47 AM

  About a year ago I wrote an essay with this idea [1]. You really don't want your company to be at the behest of facebook/twitter, they can pull the plug on you, change their algorithms, change their rules, force you to pay up, since they control the audience. This is why a platform like Mastodon [2] is attractive (or should be attractive!) to businesses. If you host your own instance of Mastodon, you have full control over your own megaphone.

  And that's just the basic principle. Given that Mastodon does not attempt to mess with people's feeds using clever algorithms, instead accepting that when people follow someone they want to see those posts in chronological order, it should be even more attractive to companies used to facebook hiding their posts from their own fans unless they pay up.

  [1]: https://medium.com/@Gargron/two-reasons-why-organizations-sh... [2]: https://joinmastodon.org/

• by tw1010 on 11/7/17, 7:40 PM

  One day there will be a cottage industry focused specifically on exploiting the edge-case behaviour of these algorithms. It doesn't matter that the specifics of the algorithms are secret, there are always ways of reverse engineering them. That's the whole point of statistical inference.

• by sparkzilla on 11/7/17, 8:53 PM

  I'm surprised the author didn't mention that Facebook has a history of screwing small business owners.

  A few years ago I spent more than $4000 on Facebook to build up about 4000 fans for a karaoke venue I ran at the time. I'd put some news out, and reach most of the fans. Then Facebook told me that to reach all of my fans I would now have to "boost" my posts, while the company simultaneously cut the organic reach to the fans I had paid them for.

  They used the excuse that "people have to much stuff on their feed" but we all know that is BS. If I had known they would have done that I would never have bothered in the first place. Why help a company build its audience for you to be treated poorly? I suspect many many small business people feel that same way, and will abandon Facebook as soon as a less greedy alternative comes along.

• by forkLding on 11/7/17, 9:06 PM

  I've used FB ads before for business purposes and I feel its a lot more accessible to SMBs than your standard advertising agency or news media group where you have to phone up, wait for a quote and then have not-so-transparent results where you have to be constantly in touch with the news media group/agency.

  FB ads is definitely improvement in terms of the time spent and approachability, cost on the other hand depends on how effective your marketing is so its definitely more variable.

• by meterplech on 11/7/17, 11:23 PM

  One interesting thing to think about is how reliant Facebook is on startups. If there is a wider reduction in VC investment, Facebook may be dramatically affected (like Yahoo in early 2000s).

• by denzil_correa on 11/7/17, 10:03 PM

  > And Facebook has even been taking steps to influence offline sales, in order to bring traditional retailers into its orbit. In September, the social network introduced a tool that lets businesses with physical stores show ads to shoppers and their Lookalikes even if they visit the store but don’t buy anything.

  Does anyone know how this works?

• by pcmaffey on 11/7/17, 9:02 PM

  tldr; Outsource your relationship with your customers / audience at your own peril.

• by Maro on 11/8/17, 1:15 AM

  Sounds like FB is using a multi-armed bandit approach:

  https://en.m.wikipedia.org/wiki/Multi-armed_bandit

  This appears to be non-news:

  https://teak.io/blog/2014/03/10/facebook-ad-campaigns/