Facebook was founded in 2004 by Mark Zuckerberg as a social networking site for Harvard students. It quickly expanded to other universities and later to high schools and the general public. By 2006 it had over 7.5 million users but faced competition from MySpace which had over 55 million users. Facebook introduced new features like News Feed that caused a user revolt but the issues were addressed. It continued expanding by opening to more schools and countries. Major acquisitions and events included Instagram in 2012, WhatsApp in 2014, and the Cambridge Analytica data breach scandal in 2018. By 2017 Facebook had over 2 billion monthly active users, cementing its position as one of the largest and most popular social media platforms in the world.
How Software Developers Destroy Business Value.pptx
Facebook - case study
1. 1
FACEBOOK INC.
Facebook Inc., A Top 100 Company
PRESENTED BY:
Furqan Rafique
C M S – 3 0 1 P O M
B S ( C I S ) 2 0 1 5 - 1 9
D C I S , P I E A S
1
2. Table
Of
Contents
2
1. The Beginning Of Facebook & Early Idea
2. Early Financing
3. Growing Beyond College Students
4. Facebook & Its Competition As Of 2006
5. The Users’ Revolt Of 2006 And
Facebook’s Response
6. Continued Expansion And New Features
7. Major Events Farther From 2008
8. General Statistics
4. Beginning
4
• Facebooks were initiated on college
campuses for years.
• In January 2004, Harvard had Facebooks
for different residential houses, but
students could only search those to
which they belonged.
• Typically it was an inventory of basic
information about every student on the
campus.
Zuckerberg’s Idea
• Zuckerberg’s idea was to create a
college-wide Facebook online, where
students could access others regardless
of where they lived.
5. 5
• In a couple of weeks, he had coded the
original version of thefacebook.com and,
on February 4, 2004, it became available
for his classmates.
• Encouraged students to create a
personal profile, including contact
information.
• By late-February, 10,000 users had
registered to the website.
“During my sophomore
year, I decided that
Harvard needed a
Facebook. It didn’t have
one, so I made it.”
- Mark Zuckerberg
6. 6
• By early-March 2004, Facebook had launched at
Yale, Columbia, and Stanford.
• At Stanford, half or two-thirds of the school
joined Facebook in the first week or two, similar
story at Yale.
• Columbia’s community, however, was a little
more penetrated by an existing application, and
Facebook didn’t pick up right away. A little later,
when launched at Dartmouth, half the school
signed up in one night.
“Within two weeks, two-
thirds of Harvard was
using it. Then, we started
getting e-mails from other
schools asking, ‘How do we
get Facebook? Could you
license us the code so we
could run a version of it for
our school?’ But back then,
I had no idea of having
Facebook across schools.”
- Mark Zuckerberg
7. 7
• By June 2004, Facebook was serving about 30
colleges and had about 150,000 registered users.
• Mark was so busy maintaining the website that
he could not keep up with his studies, so he called
upon his two roommates, Dustin Moskovitz and
Chris Hughes for help.
• Together the trio spent the rest of the 2004
trying to respond to the flood of demand for the
service from students on college campuses
nationwide.
“Early on, we weren’t
intending this to be a
company. We had no cash
to run it. We actually
operated it for the first
three months for $85 a
month—the cost of renting
one server. We had a
network of banner ads, but
it’s not like we were
making money.”
- Mark Zuckerberg
9. Kick-Start
9
• During the summer of 2004, Zuckerberg
and his friends were living in a rented
house in Palo Alto, CA, Working on
Facebook and Wirehog (file sharing
system).
• Meanwhile, Zuckerberg developed
friendship with the co-founder of
Napster and the online contacts
management service Plaxo, Sean Parker.
• Parker began advising the company
informally and, by the end of the
summer, he had signed on to become the
president of Facebook.
First Investor
• Due to Parker, In late-August 2004,
Peter Thiel (founder of PayPal), became
the company’s first major investor with a
$500,000 cash infusion into Facebook.
• Only seven months old, Facebook had
become something more than just
another Zuckerberg lark.
• The company now had a widely known
entrepreneur on the team and a deep
pocketed and well connected investor.
10. 10
• Less than one year later, in May 2005, Facebook
had attracted 2.8 million registered users at more
than 800 college campuses, meaning that 80
percent of undergraduate students were
registered to the website.
• A bidding war had broken out among various top-
tier venture capital firms for a piece of the
company.
• The winner: Accel Partners, a Palo Alto-based
venture firm, announced a $12.7 million
investment in Facebook at a reported $100
million valuation.
“It was probably the most
competitive financing I've
ever been involved in. I
think we had 30 VCs who
had expressed an interest
in the deal.”
- Sean Parker
12. 12
• In September 2005 Facebook decided to enter
the U.S. high school market.
• Overall high school market was slightly smaller
than the overall college market.
• However, most users were under the age of 30.
• In the under 30 age bracket, there were more
high schoolers than college students.
• In 2004, there were 16.6 million students in high
schools under the age of 30 compared to only
13.2 million in college.
“The high school network
reached a million users
way faster than the college
network did. The college
network took almost 11
months to reach a million,
and the high school took
only six or seven months.”
- Mark Zuckerberg
13. Privacy
Concerns
&
Risks
13
• However, there were two complications.
• First, entering the high school market
elevated the stakes surrounding the
security and privacy issues.
• Second, MySpace (social networking site)
had beaten them to the high school
market and was rapidly gaining a strong
foothold in schools around the country.
• During 2005, various media outlets
offered condemning reports on social
networking sites on a variety of privacy
and security topics.
14. Beyond
Students
14
• In April 2006, Facebook started allowing new
users from corporate networks to join the site.
• New users would register using their corporate
email addresses. Only a limited number of
corporations were supported at the beginning,
including Accenture, Amazon, Apple, EA, Gap,
Intel, Intuit, Microsoft, Pepsi, PWC and Teach
for America.
• The company also started expanding
internationally by targeting colleges outside of
the US Like IIT and IIM.
• Later in August, expansion continued to
German Universities and high schools in Israel.
16. Social Ranking
16
• By August 2006, Facebook become the
second biggest social networking site
after Myspace.
• Facebook had 7.5 million users. MySpace
had reached 55 million users in the US.
• According to comScore Media Metrix,
MySpace.com had become the fifth most
popular website.
• Friendster had only 1 million unique
visitors down from a high of 1.75 million
in October 2003.
Other Competitors
• Terms “social software” and “web 2.0”
were used to describe a flood of venture
funded start-ups.
• Google included Blogger, Google Talk and
Video; Yahoo! had del.icio.us and flickr;
and AOL was enhancing its popular
instant messaging service.
• Facebook-like directory utilities were
popping up worldwide, such as Bebo in
the U.K. and Ireland, Tagged.com for
teens in the U.S., and Xuqa in the college
market.
17. “
“On a normal day, about two-thirds of our total user base comes
back to the site. A lot of sites measure monthly retention, and if
you have 25 percent (monthly retention), you are doing really
well. I don’t know any other site that measures their retention in
daily retention. Facebook is a clearly different type of application.
Perhaps, e-mail—among people who use computers a lot — has
that amount of retention or frequency of use.”
- Mark Zuckerberg
17
“Social Graph” Reference For Comparison
Of Facebook And Other Sites
19. Edition
Of
News
Feed
&
Users’
Response
19
• By August 2006, Facebook had 6.5 billion page views
compared to 5.5 billion page views in February.
• MySpace grew from 23.6 billion to 33 billion page
views.
• In September 2006, Facebook added two new
features that resulted in tremendous users’ reaction –
News Feeds and Mini Feeds.
• Tens of thousands of Facebook users were not happy
with the changes. Hundreds of Facebook groups like
“Students Against Facebook Newsfeed” called for the
removal of the new features and there was a boycott
planned for September 12, 2006.
• “You went a bit too far this time Facebook. Very few
of us want everyone automatically knowing what we
update.” - One group’s mission statement.
20. 20
• Zuckerberg’s initial reaction was: “Calm down.
Keep breathing. We hear you”
• Issued a public apology three days later
acknowledging that Facebook had made a mistake.
• Although, the features were not removed.
• Within two days, Facebook introduced
modifications to the website that gave users more
control over what would go into news and mini
feeds.
• At the time of this incident the number of
registered users was estimated at 9.5 million up
from 7.4 million in February.
“Even though I wish I
hadn't made so many of
you angry, I am glad we
got to hear you. And I am
also glad that News Feed
highlighted all these
groups so people could
find them and share their
opinions with each other
as well.”
- Mark Zuckerberg
Facebook’s Response
21. Network
Opening
For
Public
21
• On September 26, 2006, Facebook removed
the restrictions on registration and anyone
could become a member.
• New privacy controls were put in place a week
before registration opened, to give users
additional say over who could find and interact
with them.
• A user had the control to block other users
from specific networks from searching his or
her name etc.
22. 22
• By the end of September 2006, Facebook
appeared to have recovered from the News Feed-
Mini Feed problem and started to see accelerating
growth as a result of opening its network.
• Rumors about Yahoo! And other companies to
acquire Facebook.
• In December 2006, CEO Mark Zuckerberg and
board member Peter Thiel announced that the
company was not for sale and that their focus was
to continue to grow the company.
“We are not necessarily
focused on what the exit is
going to be - whether it’s
selling the company or an
IPO or when that’s going
to be. But we obviously
think that there’s a lot of
potential to keep
growing.”
- Mark Zuckerberg
Acquisitions Attempts
24. Earlier
In
2007
24
• In October 2006, Facebook added Social
Bookmarking.
• It was the first new feature to be introduced in
Facebook after the users’ revolt.
• First introduced as a beta in Berkeley to make sure
it worked well, and then was rolled out to all
Facebook users.
• In January 2007, Facebook mobile page
“m.Facebook.com” was launched.
• In February 2007, Facebook introduced Virtual Gifts.
• By May 2007, Facebook had 24 million users.
Growing by 150,000 users a day, it had become the
sixth most trafficked site on earth.
25. The Facebook Platform
25
• On May 24 2007, Facebook launched
“F8” platform that would allow
developers to build applications that
could run inside of Facebook pages.
• Users would be able to add and remove
as many applications as independent
developers could create.
• Along with this, Facebook released two
new languages, FQL and FBML.
• On launch day, 65 partners unveiled
more than 85 applications.
• Facebook envisioned the move as
making them the “Microsoft of Social
Networking”.
Other Competitors
• The hottest application on Facebook was
iLike with15 million users, of which
300,000 were active daily. iLike let users
add music and videos to their profile.
• Within 2 months of the platform launch,
Facebook hit 30 million active users.
• Some popular applications went from
zero to 850,000 users in three days.
• On August 21 2007, eBay released its
eBay Marketplace on Facebook
Application.
• Investors were attracted to fund for
Facebook’s applications as start-ups.
26. Facebook
Social
Ads’
Strategy
26
• First Cost-per-Click (CPC) ads model which was
introduced in September 14, 2007, was auction
based (to know maximum price paying willingness).
• In 2007, adopted SocialAds, already in-use system
by MySpace, allowing more in-app ads in Facebook.
• later on, introduced another ad system known as
beacon.
• A user could select to remove any participating
Beacon site from ever sending any information to
Facebook to share with their friends.
• It got hugely negative reviews by users as for by
default sharing of user’s activity from his timeline.
• By December 2007, Facebook found it necessary to
temper Beacon, and Zuckerberg publicly apologized.
27. Facebook’s
Clones
&
Google’s
OpenSocial
27
• Major social networks like MySpace, Bebo, Tagged,
Hi5 and LinkedIn announced that they were working
on APIs for developer platforms similar to Facebook.
• On December 2007, Bebo announced a clone of the
Facebook platform called the “Open Application”.
• Google announced its new social networking
initiative, called “OpenSocial”.
• Google managed to attract some of the Facebook’s
key developers.
• OpenSocial intensified on March 25, 2008, when
Yahoo! joined.
• Yahoo!, Myspace and Google formed a non-profit
organization to continue the development of
OpenSocial. Meanwhile, Facebook did not
participated in OpenSocial.
28. F8
Applications
&
Public
Chat
Features
28
• In January 2008, after launching its F8, Facebook also
allowed developers to develop applications outside of
Facebook and then deploy on Facebook.
• The result was that, by end of April, 4000 developers
had created over 25,000 applications for the Facebook
Platform, 200 having over 1 million installations and 46
with more than 100,000 active users.
• An additional 140 new applications were being added
per day.
• “Facebook Chat” launched at the beginning of April 2008,
which allowed users to chat in real time with their
friends.
• On the end of May 2008, “Facebook connect” was
launched, which allowed users to connect their Facebook
identity, friends and privacy to any website.
30. Instagram
Acquisition
2012
30
• A photo and video-sharing social networking
service launched in October 2010.
• After its launch, Instagram rapidly gained
popularity, with one million registered users in
two months, 10 million in a year, and
ultimately 800 million as of September 2017.
• In April 2012, Facebook acquired the service
for approximately US$1 billion in cash and
stock.
31. WhatsApp
Acquisition
2014
31
• founded in 2009 by Brian Acton and Jan
Koum, both former employees of Yahoo!.
• By December 2013, WhatsApp had about 400
million active users which were using the
service each month.
• On February 19, 2014, Facebook acquired
WhatsApp for US$19 billion.
• At the time, the acquisition was the largest
purchase of a venture-backed company in
history.
32. Data
Breach
By
Cambridge
Analytica
2017-18
32
• In March 2018, multiple media outlets reported
that Cambridge Analytica had acquired and
used personal data about Facebook users from
an external researcher who had told Facebook
he was collecting it for academic purposes.
• The personal data of approximately 87 million
Facebook users were acquired by the company
and used it for political purposes.
• Facebook CEO Zuckerberg himself testified in
front of congress, apologized publicly and took
proactive measures (10 hours long session and
600 question asked by US congress).
• After testimony, Cambridge Analytica was
forced to shut down and close operations
completely.
36. Monthly
Active
Users
A timeline with the
worldwide number of
monthly active Facebook
users from 2004 to 2017. As
of the second quarter of
2018, Facebook had 2.23
billion monthly active users.
3636
38. Major
Competitors
38
Google
• Currently 73,000 fulltime employees.
• Search share of 78.65% of traffic in the US alone as of
October 2017.
Twitter
• Generated a global revenue of $2.53 billion and an annual
advertising revenue worth $2.25 billion as of 2017.
Snapchat
• One of the fastest growing social platforms recording a
global revenue of $935 million in 2017.
39. References
39
• Facebook Case Study Case: e-220 Stanford Graduate
School of Business.
• https://www.socialbakers.com/statistics/facebook/
• https://newsroom.fb.com/company-info/
• https://en.wikipedia.org/wiki/List_of_mergers_and_acq
uisitions_by_Facebook
• https://en.wikipedia.org/wiki/Facebook–
Cambridge_Analytica_data_scandal
• https://www.bbc.com/news/topics/.../facebook-
cambridge-analytica-data-scandal
• www.orgcharting.com/facebook-organizational-
structure/
