Web 2.0 is a fast and fickle world and the story of Facebook illustrates that more than any other. Smart entrepreneurs will enjoy the glory then exit fast

Just 12 months ago most people had no idea what Facebook even was, yet by the end of the summer almost all ‘young people’ had joined and were singing its praises. Facebook is the big internet story of 2007. But today its founder Mark Zuckerberg is apologising to its users in the face of unprecendented criticism of the site. This follows its decision to use an intrusive ad system, Beacon, to monitor its users' online activity and not give them enough chance to opt out. Beacon allows businesses to use Facebook code on their sites and when users make purchases it publishes those details on their personal news feeds which is visible to all their online friends. This means that all your loved ones will know if you have been to, for instance Blockbuster, and what you’ve bought. Apart from ruining a few Christmas surprises, the Beacon system has led to accusations that Facebook has literally become ‘Big Brother’. What was once a friendly place to chat and publish pictures has now developed Orwellian undertones. Protest groups set up on the site itself have drawn thousands and the backlash is in full sway. Zuckerberg the ‘fresh-faced start-up’ is being tarnished with the same brush that is usually reserved for the ‘old dinosaurs’ of industry. He's apologised and says the system will be changed but his business' reputation has been badly harmed.  

It’s been a whirlwind tour for the 23-year-old, who launched the site in February 2004, and he might be wondering if he should’ve have sold up completely when Microsoft was valuing his business for a reported $15bn. He has had offers galore - Yahoo reportedly offered a £1bn and doubtless there's been others with serious offers for a stake.   

Facebook’s closest rival MySpace of course sold it’s shares to News Corp for a $580M. At the time the deal was seen as a coup for the site but as the ad revenues or Murdoch’s venture into social networking grow it looks like a smart move. British music site Last.fm also sold for £140m to CBS. The figures are astronomical and even more so when you consider the age of these businesses – all less than five years old. But they grow fast and need some wise heads to steer them over the bumps in the road as they develop from websites for friends into real businesses.

Many people are also looking at Michael Birch’s Bebo (launched in 2005) and wondering if it will sell. The British-born entrepreneur told me he had no intentions of selling when I spoke to him in the summer and so far he’s been true to his word – but I wonder if he’ll ever regret it?  It all depends if he can avoid the type of traps that Zuckerberg walked into. Birch is certainly aware of them and knows his users will ‘use the tools of the site’ against him if you displease them as they did against Zuckerberg. He invests a lot in customer service and his team is strong, so perhaps he’s got his model right. Time will tell, but there is still something to be said for enjoying the period when your site reaches critical mass and then cashing in before the backlash occurs.