Facebook Comprehensive Study Notes

Anniversary and Users: February 2014, Facebook celebrated its 10-year anniversary with over 1 billion active users globally.
- Key Statistics:
- Over 240 billion photos uploaded.
- Facebook became the largest online social network worldwide.
- 80% of users were outside the U.S. and Canada.
Profiles for Companies: Free profile pages available for companies to share product information and engage fans.
Facebook Platform: Enabled third-party developers to create applications (notably games), which attracted over 40% of users by 2011.
Financial Performance in 2011:
- Revenue: $3.7 billion
- Profit: $1 billion
- Revenue Breakdown:
- 85% from advertising (alongside user content)
- 15% from virtual goods sold by developers.
IPO and Stock Market Performance:
- In February 2012, Facebook filed for IPO at a valuation of $104 billion (third largest IPO in U.S. history).
- Post-IPO stock price initially declined but eventually rose to a $150 billion valuation due to successful mobile advertising strategies.

Future Growth Options:
- Invest in new advertising products (success uncertain in mobile market, comprising only 3.7% of 2013 ad spend).
- Develop the Platform to help companies create apps, claiming a share of the value created for third-party apps (e.g., TripAdvisor, Spotify).

Evolution:
- 1997: SixDegrees founded, 3 million users but shut down in 2000.
- 2002: Friendster launched, quickly attracting 7 million users but faced technical challenges.
- 2003 - 2005: MySpace emerged, allowing all profiles to be public.
- Acquired by News Corp. for $580 million in 2005.
- By September 2006, it had 56 million U.S. visitors (32% of all U.S. Internet users).
LinkedIn: Emerged as the leader in professional networking during this period.

Foundation: February 2004 by Mark Zuckerberg and college roommates.
- Initially a Harvard-specific network requiring an “.edu” email.
- Focused on real-world relationships; profile visibility restricted to members of the same university.
- Quick adoption: 75% of Harvard students registered within a month; expanded to 30 college networks by June 2004.
Expansion:
- Facebook branched out to 800 college networks in the U.S.
- 85% of students in supported colleges using it, with 60% logging in daily.

2005: Added photo sharing and expanded to high schools, reaching 5.5 million users by the end of the year.
Funding:
- Initial funding of $500,000 from Peter Thiel; followed by $12.7 million from Accel and Thiel at a $100 million valuation in May 2005.
- Another $27.5 million raised in 2006 with a reported valuation of $500 million.
2006: Rejected a $1 billion acquisition offer from Yahoo!.
Feature Rollouts:
- Registration expanded to workplaces and also opened to everyone.
- Introduced features like messaging, groups, events, and video sharing.

Launch and Concept:
- Introduced in 2006 to display activities of friends (status updates, photo uploads, new friendships).
- Algorithm called EdgeRank selected which content appeared in the feed.
- Initial backlash from users citing privacy violations (e.g. easy visibility of shared updates).
- Total increase in engagement by nearly 30% within four months post-launch, after addressing privacy concerns.

Launch: Introduced in 2011 (redesign) that displayed user activities chronologically.
- Met with resistance due to its request for more detailed personal information.
- By 2012, most users transitioned to Timeline format despite initial complaints.

Privacy Tools:
- Allowed users to control visibility of updates and photos; initially easy but became convoluted over time (50 settings with over 170 privacy options).
Low Action: Less than 30% of users adjusted default settings.
FTC Investigation: In December 2009, changed privacy policies prompting public backlash, leading to scrutiny by the FTC, which demanded better user consent before exposing private information.

Launch: In fall 2007, introduced advertising initiative consisting of Display Ads and Facebook Pages specific to demographic targeting.
Ad Performance:
- Ads showed low engagement rates (5 clicks per 10,000 displayed).
- Developed Social Ads by leveraging social connections among users.

Platform Introduction:
- Launched in 2007, enabling developers to create apps integrated with Facebook data.
Initial Growth: Over 3,000 apps launched within three months.
- By January 2008, over 13,000 apps with 100,000 developers involved.
Social Gaming: Led by Zynga; popular games like FarmVille became viral, merging social networking with gaming experiences.
- Revenue from virtual goods sales (Facebook took a 30% cut).
- In early 2012, Zynga faced financial issues as Facebook adjusted its algorithms affecting gaming visibility.

Second-Generation Platform: Introduced in 2008, integrating social functionalities into third-party sites, allowing for easy account creation and friend interactions.
Open Graph Launch:
- In 2009, Open Stream API enabled user activity sharing on third-party sites.
- The “Like” button introduced, quickly adopted by various websites, enhancing Facebook traffic.

Acquisition of Instagram: In 2012, Facebook acquired Instagram for $1 billion, which grew rapidly post-acquisition.
New Mobile Apps: Launched mobile versions and integrated services targeting app downloads.
- Facebook Graph Search unveiled in 2013 for content discovery within the platform.
- Designed to enhance user engagement by creating visible social links between interactions.

Twitter: Launched in 2006 allowed users to post updates in real-time; Facebook integrated similar features over time.
Google: Developed Orkut and attempted to enter social network space with Google+ but failed to compete effectively with Facebook.
Snapchat: Emerged in 2011 with a different model (disappearing messages) and declined Facebook’s buyout offer.

IPO Challenges: Facebook's IPO in May 2012 had mixed success; initial downturn due to high valuation and lost advertising partners.
Current Focus: Need for sustainable revenue growth through advertising and engaging app ecosystem.