Facebook's Road to Redemption Runs Straight Down Main Street -- Update

By John D. Stoll 

No company has experienced growing pains as severe as Facebook Inc. The company's past failures to ensure privacy, protect data and police content have left its executives confronting a simple question: Can we trust you?

Right now, we have little choice, though. We rely on it in this weird time of disease-enforced isolation, its virtual society being one of our few ways to safely close the distance the pandemic has forced upon us.

The new question: Will the era represent this social network's coming of age?

On Saturday morning, I talked with the company's chief operating officer, Sheryl Sandberg. The company sees small business as an area where Facebook can prove itself to us again. She acknowledged the company's missteps.

"I actually think that some of the mistakes we've made and the work we've done to try to fix those mistakes is serving us right now."

As stores and services shut in response to mandates designed to prevent the spread of the new coronavirus, they use social media as a way to claw for survival.

"I think, at least for now, it is the new Main Street," Ms. Sandberg said. Facebook Live, Instagram and Facebook Business are among the heavily utilized services.

One-third of small businesses in America don't have a formal web presence at all, according to Ms. Sandberg, but many of those businesses have long had a Facebook page. It can cost owners as little as $5 to promote a post. Of the 140 million small businesses using Facebook globally, 90% use only free services.

In the past, research has suggested Facebook offers these operators a lot of eyeballs for little money. But ads placed on the platform often miss their intended audience. A couple of years ago, the platform changed rules for its newsfeed to make users' experiences more personal, filtering out the posts of many small businesses. Big-company CEOs have also pointed to its limitations.

There are plenty of other tools that small businesses can use, but mom-and-pop businesses still depend on Facebook, attracted by the reach and familiarity of the world's most popular social-media website. Facebook relies on small businesses for a substantial chunk of ad sales. By providing help, the company can fortify an important source of revenue.

"Facebook's allowed us to keep the business going," John Dudas, co-owner of Carol & John's Comic Book Shop in Cleveland, told me Saturday evening. "It's been a godsend."

Mr. Dudas, also a full-time firefighter, closed the store in March but kept two full-time employees on the payroll. They deliver materials the shop sells to people's homes, including books home-schooling parents are giving to their children. And they are helping manage inventory, which was freshly stocked in the days before business was locked down.

Many comic-book sellers use eBay for online sales, but Mr. Dudas's approach is mostly centered on real-life transactions and in-person experiences. New comics come out on Wednesdays, for instance, and that's a big day to welcome customers into the store on Lorain Avenue.

Carol & John's has long used Facebook to promote products and events. Last week it hosted a Facebook Live gathering to sell discounted comic books as a way to raise much-needed cash. Mr. Dudas told a story with each comic, selling 90% of available books and pulling in $3,000.

"If you bought a book, it was a donation, kind of like at a telethon," he said. Within about an hour-and-a-half, he earned enough to pay those two staffers for weeks to come.

This story reflects other tales I've encountered in recent weeks editing the Journal's "Making It Work" series.

I'm working on stories about small auto suppliers using a private Facebook group to collaborate on ventilator production; a cabaret dancer taking her stage show to Instagram Stories. Last week, we told how a British businesswoman used her page to show parents how to use the cloth diapers she produces. Yoga instructors, guitar teachers and hair stylists have said Facebook is helping them make money.

Ms. Sandberg called me primarily to discuss a $100 million rescue fund Facebook will be doling out to small businesses all over the world in coming weeks, mostly in the form of no-strings cash grants. The company has created a new fundraising tool for small businesses, which operates much like a GoFundMe campaign, and made a way for companies to sell digital gift cards. Its new "Business Resource Hub" is far more used than Facebook's traditional business home page.

The $100 million grant pales in comparison to a government stimulus plan, but dwarfs some of the relief efforts set up by other tech companies and many cities. Facebook will spend $40 million of that in the U.S., focused on small businesses located near 34 cities where it has operations.

"We have a huge responsibility," Ms. Sandberg said. I asked her why the company doesn't just offer lower advertising rates for small businesses, and she said such an offer wouldn't most effectively meet a business owner's needs.

"They need money," she said, adding that reduced ad rates would certainly be less expensive for the company. More than a half-million business owners have sent inquiries since Facebook announced the program last month. Applications will be accepted starting this week.

In our odd cloistered existence, businesses large and small are searching for answers. For small businesspeople like Mr. Dudas, the question is decidedly existential.

"No one's worried right now about Walmart or Target," he said. "They're worried about us."

So, for now, desperate to connect, small business trusts in Facebook.

Write to John D. Stoll at [e-mail]

(END) Dow Jones Newswires

April 05, 2020 16:39 ET (20:39 GMT)

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