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FACEBOOK
STANFORD GRADUATE SCHOOL OF
BUSINESS
MAY 22, 2008
By: Bryan Jones
THE
BEGINNING
• Launched in February, 2004
• Created by MARK ZUCKERBERG
• Started in dorm room at Harvard
University
• Took 11 months to reach 1 million users
• Over I billion users in 2013 with 82%
outside of the U.S. and Canada
PICKING UP
STEAM
• Within 2 weeks two-thirds of Harvard
was on Facebook
• Only available to those with .edu emails
• Expanded to Yale, Columbia, and
Stanford and later Dartmouth
• By June 2004, 30 colleges and 150,000
users
• That summer Zuckerberg and Moskovitz
went to Silicon Valley to focus on the
social network
SOCIAL
GRAPH
Ties In personal relationships of
individuals on a social network
SOCIAL
NETWORKS
• Social networks have been around since
the late 1990’s
• Findmail – communication tool
• LinkedIn – business professionals
• Friendster- dating website
• July 2003 – Chris DeWolfe and Tom
Anderson founded MySpace “An online
community that lets you meet your
friends’ friends”
• January 2004- Orkut launched, created
by Turkish born Google software
engineer. Prominent in Brazil
A COMPARISON
MySpace
Facebook
• Known as dating and music
discovery site
• December 2004, raised $11 million
from Redpoint Ventures
• Open forum – no defining
divisions between various
networks
• Some characteristics: Groups,
Invitations, Events, Classifieds,
Forums
• Started as on-line directory for
students
• Network was limited to the
colleges they attended
• Put members in charge of their
own privacy settings
• Only friends and peers can see
your profile
SOCIAL
NETWORK?
• “The use of Facebook is definitely aided
by friends and people around you using
it. But I think that it’s a utility and
something that people use in their daily
lives to look people up and find
information about them… In that way,
maybe there’s some form of networking
going on.”
Mark Zuckerberg
2013
• Countries with most users
•
•
•
•
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United States - 168.8 million
Brazil - 64.6 million
India - 62.6 million
Indonesia - 51.4 million
Mexico - 40.2 million members
FINANCING
• First three months were ran by renting
servers for $85 per month
• 2004- flurry of venture financing around
social networking sites
• Sean Parker, co-founder of Napster,
joins the team
• August 2004 – Peter Thiel, founder of
PayPal, invested $500 thousand into
Facebook
• May, 2005 – Accel Partners out of Palo
Alto, invests $12.5 million at a reported
$100 million valuation for the social
network
GROWTH
• September 2005 – Facebook enters the
U.S. high school markets
• Current college members were asked to
invite high school friends to the website
• High school members reached 1 million
users in only 7 months
• MySpace had already dominated the
high school market at the time
• Privacy settings was a concern
• High school students feared college
admission staffs were monitoring the
site for screening purposes
• Some students left evidence of
underage drinking and illegal drug use
on the site
SECURITY
• Technology used to scan site for fake
profiles
• Authorities warned caution to putting
contact information on the site
• Facebook and Zuckerberg created
search utility that was more useful the
more the user revealed about
themselves
• Facebook wanted to limit censorship to
keep the flow of information freer
MORE
GROWTH
• April, 2006 – Facebook allows limited
corporate networks to join the site
• Accenture, Amazon, Apple, EA, Gap,
Intel, Intuit, Microsoft, Pepsi, PWC,
Teach for America
• Global expansion – Targeted colleges
outside the U.S.
• India - Indian Institute of Technology
(IIT), Indian Institute of Management
(IIM)
• German Universities
• High schools in Israel
COMPETITION
• August 2006 – MySpace had 55 million
users vs. Facebook with only 7.5 million
users
• MySpace was 5th most popular website
visited
• Friendster was loosing members and
had only 1 million members compared
to their 1.75 million in 2003
• Google – Blogger and Google talk and
video
• YAHOO! – del.icio.us, Flickr
• AOL instant messaging
RETENTION
• Facebook measures two-thirds
retention per day
• Other sites measure retention per
month, 25% being good
• Facebook is strong with photos, having
somewhere between 2-3 billion photos
on their website
REVOLT
• September, 2006 – Facebook adds News
Feeds and Mini Feeds
• Facebook users estimated at 9.5 million
• Notifications of friends shows up on
main page
• Tens of thousands of Facebook users
were unhappy about this change
• They felt it violated their privacy to
have all their friends aware of their
updates
• Hundreds of Facebook groups protested
and a boycott was planned
ZUCKERBERG’S
REACTION
• “Calm down. Keep breathing. We hear
you”
• News Feed was not taken down but
modifications were put in place to allow
users control of went into News Feed
OPEN TO THE
PUBLIC
• September 26, 2006 – Facebook
removes restrictions on registration
• Anyone can now become a member by
joining a geographic network
• New privacy controls were added a
week earlier
• Gave users more control of who could
find and interact with them: blocking
controls, hiding profiles and pictures,
prevent messaging, poking and other
operations
NO THANK YOU
• Facebook turns down offer after offer
• Friendster, Google, Viacom, MySpace,
NewsCorp (now owns MySpace), NBC, AOL,
Microsoft
• YAHOO! offers $1 billion for Facebook in
September 2006
• Zuckerberg and Thiel announced that
Facebook was not for sale, December 2006
• Focus was to continue growth
NEW FEATURES
• October 2006 – Social Bookmarking introduced
in Facebook
• Users could share interests by posting to their
profile or send to a friend
• January 2007 – launches Facebook mobile page
• Users can upload photos and notes via mobile
devices
• February 2007 – Facebook introduces Virtual
Gifts – small icons users can send to one another
• First one free, $1 per icon afterwards
EXPANDING
•
•
•
•
May 2007 – Facebook has 24 million users
150,000 new users a day
6th most visited website in the world
Website attracts older demographics
F8 PLATFORM
•
•
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ANNOUNCED MAY 24, 2007
OPEN TO ALL DEVELOPERS
ENABLING THEM TO MAKE MONEY
WITHIN THEIR PAGE AND LEGALLY
In addition to Facebook’s six main
applications; photos, events, groups,
gifts, birthdays, marketplace, users can
add and delete as many apps as
independent developers could make
• Today F8 is a annual Facebook
conference to discuss upcoming new
products
TIMELINE
• September 22, 2011 – Timeline is
unveiled at the F8 conference in San
Francisco
THE
PLATFORM
• Since the launch of F8, developers were
promised that their apps would have as
much priority as original apps
• Facebook’s apps are not privileged
• Within months of launch, over 1,500
apps were created
IPO
• Facebook filed for their initial public
offering on February 1, 2012
• Stock was valued at $38 per share,
pricing the company at $104 billion
• Record for trading of IPO at 460 million
shares traded
• Stock price dropped to half of IPO
• Since then it’s up 50% to $26.85 per
share
REVENUE
• The majority of Facebook’s revenue
comes from advertising
• Just like Google, Facebook is an
advertising company
• Source: ZDNet
HOW DOES
ADVERTISING
WORK ON
FACEBOOK?
• Let’s say you change your profile to
engaged, you will start seeing
advertisements for wedding rings and
dresses.
• If one of your interests is tennis, then
tennis advertisements will start
popping up on your timeline.
• Personalized advertising, same as
Google or Amazon
Source: ZDNet
WHAT IS
OTHER
REVENUE?
•
•
•
•
A. Payment from developers
B. Virtual Icons
C. Facebook credits
D. Music downloads
WHAT IS
OTHER
REVENUE?
• A. Payment from developers
• C. Facebook credits
• Other = Payments and other
fees (Facebook credits – 30%)
FACEBOOK
LEADS IN
MOBILE APPS
Source: Comscore.com
TOP TEN APPS
OF 2012
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Mafia Wars
SurveyMonkey
Words with Friends
Spotify
Draw Something
Scramble with Friends
ChefVille
SongPop
RSS Graffiti
Pinterest
– (Source: Powtoon)
TOP APP OF
2012?
TOP APP OF
2012?
• Spotify – 24.4 million users per month
TOP APP OF
2012?
• Spotify – 24.4 million users per month
• ChefVille – 21.9 million users per month
TOP APP OF
2012?
• Spotify – 24.4 million users per month
• ChefVille – 21.9 million users per month
• Pinterest – 20.5 million users per month
HOW MUCH IS
FACEBOOK
WORTH?
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A. $9.5 billion
B. $101 billion
C. $65 Billion
D. $250 Billion
HOW MUCH IS
FACEBOOK
WORTH?
• C.
$65 Billion
HOW MUCH IS MARK ZUCKERBERG
WORTH?
HOW MUCH IS MARK ZUCKERBERG
WORTH?
$14 billion
Annual salary of $1 per year
HOW MUCH IS MARK ZUCKERBERG
WORTH?
$14 billion
Annual salary of $1 per year
Is he worth it?
Discussion
MOST POPULAR
DEVELOPER FOR
FACEBOOK
APPS?
MOST POPULAR
DEVELOPER FOR
FACEBOOK
APPS?
Zynga
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Bubble Safari
Castleville
Hidden Chronicles
CityVille
Empires and Aliens
FarmVille
Pioneer Trail
Zynga Poker
Words With Friends
Mafia Wars
TOP WEBSITE
VISITED IN
2012?
•
•
•
•
A. You Tube
B. Facebook
C. Google
D. Yahoo!
TOP WEBSITE
VISITED IN
2012?
•
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•
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A. You Tube
B. Facebook
C. Google
D. Yahoo!
3rd
2nd
1st
4th
WHAT IS THE VALUE
OF FACEBOOK?
Discuss
CAN FACEBOOK KEEP
GROWING?
Discuss
F-commerce
Integration
Ticket buying
One stop shop
THANK YOU