Introduction: CNBC, the US financial and economic media, recently reported the inside story of the departure of Building 8 executives at Facebook Advanced Projects Laboratory. Facebook hopes that the hardware products developed by Building 8 will help the company enter the hardware field, but it has proved that Facebook does not have the ability to develop hardware. In addition, the company faces a series of privacy scandals, which ultimately frustrates Facebook in the hardware field.
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Regina Dugan served as Facebook’s vice president. During her relatively short tenure, Dugan was accustomed to holding group meetings every Monday and working the whole week after the opening. On October 17, 2017, a year and a half after she was in charge of Facebook’s Advanced Project Laboratory, Building 8, she held weekly conventions as usual.
Only this time, she wanted to announce an important news. The Silicon Valley veteran engineer and executive, Dugan, who worked at Google for four years, was tearful, telling dozens of people that she planned to leave the company and explore new ideas alone, recalls a former Building 8 employee.
The news is surprising, not only because Dugan has been in office for only 18 months, but also because Building 8 is the backbone of Facebook’s involvement in hardware. You know, Mark Zuckerberg, CEO of the company, is eager to make a breakthrough in hardware. When he announced Dugan’s appointment in April 2016, Zuckerberg said that Facebook would “invest hundreds of millions of dollars in this new project over the next few years and form a team of hundreds of people.”
Dugan’s resignation is a huge setback for Facebook. Facebook is constantly looking for entry points in the hardware arena, while other technology competitors such as Apple, Google, Amazon and Microsoft have found their own success paths, either through popular consumer electronics products such as the iPhone and Xbox, or through streaming media devices and voice products such as Amazon and Google. Assistant.
In December 2018, just two and a half years after the project was launched, Building 8 was stripped, and its core team is now part of the Portal project. Building 8’s only publicly available product is a video-enabled device, but it has never gained enough momentum in a highly competitive market.
Portal, Facebook Intelligent Hardware Product
Building 8’s experience highlights Facebook’s core dilemma: the company wants to diversify its revenue beyond mobile advertising, which currently accounts for 93% of total revenue, and expand into the expensive business of developing, manufacturing and selling consumer devices. Programming is Facebook’s DNA, but the company’s hacker culture is often hampered by the harsh reality of hardware development. Hardware development requires a long period of return on investment and partnerships with a wide range of manufacturers and retailers, all far beyond the core of Facebook.
In addition, as the company continues to develop Portal vigorously, Facebook has to deal with a series of privacy scandals followed by a collapse of consumer trust, which makes it difficult for the company to convince consumers to buy Facebook-made cameras for their living rooms.
Too many profit opportunities are close but fleeting. According to a January report by Research and Markets, the smart home market, including speakers and entertainment devices, is expected to generate revenue of $151.4 billion by 2024, up from $76.6 billion last year. The analysis lists more than 30 companies as potential key businesses, but Facebook is not among them.
The rise and fall of Building 8 suggests the challenges Facebook faces in hardware. For this report, CNBC interviewed more than a dozen former members of the Building 8 team. Respondents were asked to remain anonymous because they were not allowed to talk openly about their work experience.
Dugan declined to be interviewed for this report.
A leader of vision
Dugan received his PhD in Mechanical Engineering from Caltech, then worked for the Defense Advanced Research Projects Agency (DARPA), and served as director between 2009 and 2012. Her work at DARPA established her position in the technology industry. In 2012, Google hired her to set up and lead an advanced technology and project (ATAP) team within Motorola’s mobile division. When Google sold Motorola assets to Lenovo in 2014, it left the ATAP team alone.
At Google, Dugan reported directly to Sundar Pichai, according to people familiar with the matter. At that time, Pichai was still the product director, but he was already in charge of day-to-day operations and eventually became CEO of Google in August 2015. In April 2016, after Google re-hired Rick Osterloh, the former president of Motorola, as senior vice president of hardware, Dugan’s direct reporting authority to Pichay was affected.
This comes at a time when Zuckerberg wants to invest more in the company’s hardware development. Two years ago, after Facebook acquired Oculus, the maker of virtual reality devices, there was no other breakthrough in hardware development. According to a former Facebook employee, as Amazon’s Echo smart speakers are sweeping the market, Zuckerberg is eager for Facebook to launch its own smart home devices.
Dugan posted a post on Facebook announcing his departure from Google. In the 450-word long post, she wrote that it would be a bittersweet day, but she was excited and expecting the opportunity to do what she liked best.
“The bold avant-garde science has brought about massive and amazing products,” she wrote. “It’s a bit too much, but it’s really wonderful. On Facebook, there’s a lot of work to do, and more importantly, this mission… Especially noticeable.”
The first thing she did when she came to Facebook was to look for early projects with potential for development. She found a prototype called Little Foot, an iPad mounted on a mobile pedestal, that could detect people in the room and move toward them.
In view of Zuckerberg’s request that the company give priority to video side development, Building 8 decided to design a consumer video calling device based on Little Foot. Working with award-winning photographer and documentary producer Lucian Perkins, the team developed a feature that allows the camera of the device to focus the speaker throughout the video lens.
The idea behind this device is to build bridges between relatives — so-called “Portal” — to digitally pull people apart. Building 8 tested the size of the device, and the test version was almost the same size as a large screen TV. According to a former Building 8 executive, the ideal experience is that it will be a product that extends from walls to ceilings. By the end of 2016, the team had assembled a prototype and demonstrated it to Mike Schroepfer, Facebook’s chief technology officer. Scripphy approved the prototype and told Dugan to develop a consumer-oriented product.
The word “8” in Building 8 represents the number of letters in the word Facebook, which is actually located on the 59th floor of Menlo Park, California, not far from the iconic thumb-point logo. In June 2017, some carefully selected employees were here to participate in b*8 Underground, a quarterly event aimed at showcasing the work scene of Building 8.
The sole invitation is a stainless steel sheet. In order to participate in the event, the participants will hand over their invitation letter to a staff member who places the slate on a machine that cuts the metal plate into a bottle opener, and then the staff will return the bottle opener to the participants, with a bottle of beer attached.
Inside Facebook, employees want to see early versions of Portal and other experimental results, such as a brain-computer interface that allows humans to control their brains, and Project Sequoia, an augmented reality project similar to the hologram computer in Iron Man movies.
But just as employees were amazed at the idea of Building 8, tensions began to brew. Some staff members expressed dissatisfaction with the confidentiality of Building 8, which required escort to enter the space. According to two former executives, the team is expensive, spending more than $100 million annually on suppliers, consultants and various activities.
There are internal fights. People from the hardware industry were shocked by Facebook’s unrealistic production schedule. Several former employees said the company expects Building 8 to launch its first product in a year, a negligible amount of time in terms of the time it takes to develop hardware. A Facebook spokesman questioned the fact and said Building 8 was not expected to ship during that time period.
In addition, the Facebook scandal is now surfacing. Following the company’s revelation that it helped spread false information in the 2016 elections, team members knew they faced enormous public trust and privacy issues.
Hardware is too difficult
Dugan’s speed of progress is the main source of friction between Building 8 and its parent company. She is working on a two-year timetable, but in August 2017, Facebook made the decision to speed up the process.
Schroeder announced that Andrew “Boz” Bosworth, the long-time vice president of the company’s advertising and business team, would manage consumer hardware, including Oculus and Building 8. Bosworth, a loyal supporter of Zuckerberg, joined the company in 2006, but he has no experience in hardware.
This decision proved to be the beginning of the end of Dugan. Less than two months later, she suddenly announced her resignation. Dugan’s former colleagues said it was not clear whether she was fired or resigned on her own, but many of her deputies would follow her out of Facebook in the coming weeks.
Bosworth appointed Rafa Camargo as interim director, who has followed Dugan since the time of ATAP. Former employees say Bosworth offers little guidance in technical decision-making.
In an interview with CNBC, Camago said that Bosworth’s contribution was tremendous. Since Oculus Go went public in May 2018, he has been responsible for the hardware, software, marketing, listing and manufacturing decisions behind all the devices Facebook has released.
“It’s very difficult to start products on time, in good quality and in good quantity according to market demand. He’s the leader in all this,” Kamago said.
In the turbulent period of Building 8, by early 2018, Facebook had a more realistic problem at hand, which deprived the company of a good opportunity to market Portal on an accelerated schedule.
In March of the same year, several media reported that Cambridge Analytica, a London-based political consultancy, had taken improper measures to obtain data for up to 87 million Facebook users. The scandal led to a stock crash in Facebook and eventually led Zuckerberg to focus on creating a “privacy-centric social platform”.
Within a few days, Bosworth informed his team that Facebook’s user trust had dropped to a very low level, noting that it was not the right time to launch Portal. He did not provide the expected start-up date and said the team would reconsider the design.
A Facebook spokesman told CNBC that Portal was due to launch the product in the fall of 2018, as the company’s plan had been to release it. Several former employees of Building 8 said that the first appearance of the product had been delayed many times.
In November, Facebook finally released two Portak video chat devices and added a camera cap that users can use to block the camera.
But Portal immediately fell into a privacy dilemma. Facebook told Recode a week ago that Portal’s data would not be used for directional advertising to users. A week later, it retracted its statement and said that since Portal’s software was based on Facebook Messenger, it would collect the same type of data and possibly be used for notification advertising.
A month after its launch, Camago announced that Building 8 no longer existed and that the original team was now renamed Portal. In early 2018, the remaining research projects were transferred to the Oculus Research Research Laboratory in Redmond, Washington, which has now been renamed the Facebook Reality Laboratory. Here’s where the company develops a brain reading interface. With this non-interventional wearable device, people can print out their ideas.
Portal was so disappointing that it forced Facebook to cut prices several times. According to the International Data Center (IDC), the product has only sold more than 54,000 units since its launch. Michael Levin of Consumer Intelligence Research Partners describes Portal’s market share and consumer awareness as “irrelevant”.
Facebook representatives said that IDC’s data was inaccurate, but it would not provide official data. Portal’s sales and user engagement exceeded Facebook’s expectations, Kamago said.
“We’re very excited about it,” he said.
CNBC confirmed in April that Fcebook is developing a voice AI assistant for future Portal devices, Oculus headphones and other projects. Bosworth said at the June Code Conference that the company planned to launch several new versions of Portal later this year, while Camago told CNBC that Facebook was developing new augmented reality products. He adds that Facebook has learned from the practical experience of Building 8 the essential elements of building complex, high-quality products on a continuous basis.
One of the foreseeable devices is the Ripley project, which was previously reported by Cheddar, an American news website, and confirmed by CNBC with former employees. Ripley is a small device with a built-in camera that can be placed on a TV and converted into a Portal screen.
“Hardware is entering the family,” Bosworth said at the Code Conference. “We want to make sure that people are connected, that is, between two people. This is the first experience that the hardware provides.” (Xiao Baisimei)