Last Thursday, Facebook (NASDAQ:FB) CEO Mark Zuckerberg sat down with Bloomberg's Emily Chang to discuss his mission to connect the world through Facebook's Internet.org initiative. While the interview contained a number of interesting nuggets for those following the social network's story, Zuckerberg's thoughts on how the project could eventually pay off for the social network economically were particularly noteworthy.
Internet.org may be a nonprofit, but it is also an investment
What is Facebook doing building a nonprofit anyway? Isn't Facebook a for-profit company? And making matters more confusing, Internet.org's mission is -- by no means -- a small endeavor. The purpose of the Facebook-led initiative, Internet.org's site says, is to bring together "technology leaders, nonprofits, and local communities to connect the two thirds of the world that doesn't have Internet access." This is huge. And it's going to take lots of time, energy, and resources.
Zuckerberg admits that, in the near-term, Facebook shareholders likely won't be benefiting.
If we were primarily focused on profits, the reasonable thing for us to do would really just be to focus on the first billion people using our products. The world isn't set up equally, and the first billion people using Facebook have way more money than the rest of the world combined. So from a biz perspective, it doesn't make a whole lot of sense for us to put the emphasis into this that we are right now.
But over the long haul, Zuckerberg contends that there may be a payoff.
In the long term, I do think it could be good for our company, as well, if you look at it in a 10-, 20-, 30-year time horizon because a lot of these countries and economies will develop, and over time will be important. But most people who are running businesses don't make investments for 30 years down the line in terms of products that they are going to build.
To understand his line of thinking, consider several studies he cited in a different part of the interview, saying that the Internet is responsible for more than 20% of GDP growth and that more than 100 million jobs would be created by connecting a billion more people. Over time, Zuckerberg predicts, connecting the world will play a huge role in driving global economic growth. In turn, Facebook's Internet.org could eventually be viewed as one of the key drivers of advertising revenue growth in developing markets.
The bold steps in Internet.org's mission
At the end of the interview, Zuckerberg laid out some simple steps showing how Internet.org is likely to go about achieving its mission. While the steps are incredibly vague, they highlight just how bold Facebook's goals are with Internet.org.
First, Zuckerberg wants to make it possible for anyone in a developing country to walk into a store and buy an affordable phone with "access to some free basic Internet service."
Next, with basic Internet services on hand to educate new Internet users about the phone's uses and services, make it possible for people to actually use the phone. Zuckerberg says this will be "its own multiyear challenge."
From there, Zuckerberg hopes that Internet.org ends up being a profitable endeavor for the international operators, "because that's how you make this sustainable."
"This will work if providing free basic services actually ends up being a way for them to get more paying customers and more people online, and then they spend more money to invest and build faster networks and reach more people," Zuckerberg said.
Zuckerberg says he will consider Internet.org a huge win if it can help "make it so more free basic services are available in a hundred or more countries and a billion or more people can get connected."
Facebook isn't alone in its efforts to help connect the world. Other notable tech giant's with their own similar ventures include Google's Project Loon and Tesla Motors and SpaceX CEO Elon Musk's recently announced plans to launch 700 micro-satellites for low cost Internet.
While the payoff -- both near- and long-term -- for any individual company involved in this mission to connect the rest of the world to the Internet is not guaranteed, investors can at least applaud leadership in these companies for thinking so far into the future. It's this sort of out-of-the-box, long-term thinking that buy-and-hold investors should want to see from the leaders running the companies in their portfolios.