FACEBOOK STANFORD GRADUATE SCHOOL OF BUSINESSMAY 22, 2008

By: Bryan Jones

• 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

THE BEGINNING

• 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

PICKING UP STEAM

SOCIAL GRAPH Ties In personal relationships of individuals on a social network

• 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

SOCIAL NETWORKS

A COMPARISON

MySpace

• 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

Facebook

• 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

• “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

SOCIAL NETWORK?

• Countries with most users• United States - 168.8 million• Brazil - 64.6 million • India - 62.6 million• Indonesia - 51.4 million • Mexico - 40.2 million members

2013

• 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

FINANCING

• 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

GROWTH

• 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

SECURITY

• 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

MORE GROWTH

• 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

COMPETITION

• 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

RETENTION

• 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

REVOLT

• “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

ZUCKERBERG’S REACTION

• 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

OPEN TO THE PUBLIC

• 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

NO THANK YOU

• 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

NEW FEATURES

• May 2007 – Facebook has 24 million users

• 150,000 new users a day• 6th most visited website in the

world• Website attracts older

demographics

EXPANDING

• 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

F8 PLATFORM

• September 22, 2011 – Timeline is unveiled at the F8 conference in San Francisco

TIMELINE

• 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

THE PLATFORM

• 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

IPO

• The majority of Facebook’s revenue comes from advertising

• Just like Google, Facebook is an advertising company

• Source: ZDNet

REVENUE

• 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

HOW DOES ADVERTISING WORK ON FACEBOOK?

Click icon to add picture

Source: ZDNet

• 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%)

WHAT IS OTHER REVENUE?

FACEBOOK LEADS IN MOBILE APPS

Source: Comscore.com

• Mafia Wars • SurveyMonkey • Words with Friends • Spotify • Draw Something• Scramble with Friends • ChefVille • SongPop • RSS Graffiti• Pinterest

– (Source: Powtoon)

TOP TEN APPS 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

TOP APP OF 2012?

• A. $9.5 billion• B. $101 billion• C. $65 Billion• D. $250 Billion

HOW MUCH IS FACEBOOK WORTH?

• C. $65 BillionHOW MUCH IS FACEBOOK WORTH?

HOW MUCH IS MARK ZUCKERBERG WORTH?

HOW MUCH IS MARK ZUCKERBERG WORTH?

$14 billionAnnual salary of $1 per year

HOW MUCH IS MARK ZUCKERBERG WORTH?

$14 billionAnnual salary of $1 per year

Is he worth it? Discussion

MOST POPULAR DEVELOPER FOR FACEBOOK APPS?

Zynga

• Bubble Safari• Castleville• Hidden Chronicles• CityVille• Empires and Aliens• FarmVille• Pioneer Trail• Zynga Poker• Words With Friends• Mafia Wars

MOST POPULAR DEVELOPER FOR FACEBOOK APPS?

• A. You Tube• B. Facebook• C. Google• D. Yahoo!

TOP WEBSITE VISITED IN 2012?

• A. You Tube 3rd• B. Facebook 2nd• C. Google 1st• D. Yahoo! 4th

TOP WEBSITE VISITED IN 2012?

WHAT IS THE VALUE OF FACEBOOK?

Discuss

CAN FACEBOOK KEEP GROWING?

Discuss

F-commerceIntegrationTicket buyingOne stop shop

THANK YOU