From Dorm Room to Wall Street
Time has passed and the way we connect with our friends and family has changed thanks to Facebook. The company has reached a key milestone of operating for a decade changing many things in the world with its 1.23 billion monthly active user base.
Following is a recap of Facebook’s journey which has become one of the greatest startups of all time.
- Thefacebook days
Facebook was started in February 2004 in a dorm room at Harvard by Mark Zuckerburg and his friends as a tool to find and interact with friends in the university. The innovative concept soon became popular among friends and started to catch on like wild fire. It not only became a buzz in Harvard, but it became popular at other universities and various different social groups.
Initially the network was named “Thefacebook” and after the first year of operations it changed to “Facebook”. Given the value addition it brings to the people on connecting with each other, Facebook had almost 6 Million users at the end of first year.
Since then, the trendsetter expanded in to business pages catering to needs of companies to interact, obtain feedback and provide various other benefits to its customers.
- Reaching the masses
Facebook reached the masses in a very short time since inception and today has become a basic utility for every one of us. As the journey turned out to be a historical one, Mark Zuckerberg and the company had to go through number of great challenges.
Changing the mindsets of traditional thinkers, regulators, governments and security authorities are few of those.
Among many changes that Facebook has done to this world, following are noteworthy.
- Way people interact with each other
This is one of the major changes Facebook initiated through Facebook chat. This change was applicable to all age groups and made life much simpler to people in terms of connecting with friends and family. This overtook traditional SMS and email services and remains as a highly effective way to communicate. Statistics prove that Facebook Chat is the 12th highest downloaded free app on Apple’s App Store placing it even ahead of the Facebook main app itself. This is a clear demonstration of widely embraced success of the concept.
- Giving boost to many industries and giving birth to some
Facebook has made mixed impacts on many industries. Making the users to stay connected online all the time has created an avenue for telecom service providers to shift gears from traditional SMS and other messaging services. Among new industries that Facebook has given birth to, social media marketing takes prominence. Companies around the world started to emerge to facilitate big brands to make their online presence customer friendly.
- Convenience in sharing content
People have forgotten the days where they struggled to share photos and videos via email and therefore using CDs. Thanks to Facebook, people can share photos and videos with their friends in matter of seconds. This has reached a level where about 350 million photos are being uploaded to Facebook every single day.
- How businesses interact with customers
This change availed many opportunities for businesses to get closer to their customers and vice versa. Companies had to pay additional attention on their presence on Facebook as it became the most viral channel to advertise and communicate key messages to intended customer bases. Cola giant Pepsi in 2010 opting to run a campaign on Facebook and other social media channels over a Super Bowl slot demonstrates the strength of this.
- Redefining privacy
As Zuckerberg strongly believes, the world is becoming an open place and new generation’s definition of privacy is very different from the old. Facebook’s contribution to this has been huge. Options such as sharing, life events, feelings, check in and various other features are popular among users which enable them to tell their friends what they are doing or how they are feeling.
Among many other reasons for Facebook to become a success across the world, ability to be relevant to all demographics has been the key. Facebook has demonstrated this through provision of options in terms of privacy settings, business related applications, analytics etc.
Sharing his thoughts with CNBC in a recent interview, CEO Zuckerberg still believes that being relevant to all groups is the top priority of the company and Facebook will continue to facilitate this.
- Performing under the limelight
As Facebook managed to gradually convince the youth and obtain acceptance of majority, critics continued to make the journey even tougher by questioning the suitability of a young dropout as the CEO. Zuckerberg had to go through extremely tough situations when he was publicly interviewed. However, with the support of his management team Zuckerberg managed to steer the company forward.
During the past decade, Facebook has come across ups and downs. Below are some of the notable ones.
- One of the main steps Facebook took in executing the future mobile strategy is acquiring “Instagram” for $1 Billion in April 2012. This acquisition was mainly considered based on the negative developments experienced by the company among teen users. It was later admitted that Facebook is losing its “Coolness” among its teen users which resulted in decline in active usage. Though this acquisition was seen as overpriced by media, increases in user adaptation hold the validity in Zuckerberg’s decision.
- The company considers photo sharing as one of the main avenues to remain “cool” among the core users, it went for another bid last year to acquire “Snapchat” another photo sharing social media tool. The $3 Billion bid was turned down by the 23 year old co-founder Evan Spiegel. Though Snapchat has not revealed the number of users, some reports suggests its users share more photos than Facebook every day.
- Among the ventures which didn’t do well for Facebook was “HTC First” (also known as Facebook phone). This was unofficially declared as a disaster as AT&T had to drop its price from $99 to 99 cents at one point mid last year. Main reason for failure is considered as the feature “Facebook Home” which dominated user experience. In addition, feature failures such as Facebook credits, Poke & Facebook questions were also noteworthy.
Battling through these challenges, Facebook has continuously learned from its mistakes. The willingness of Zuckerberg to learn from mistakes comparing with other social media networks is a lesson for all entrepreneurs. This was validated by Facebook’s former Chief Technology Officer Bret Taylor stating “Mark is very willing to recognize the strengths in other products and the flaws in Facebook”.
- Going public
In May 2012, continuing its success, Facebook decided to hold an Initial Public Offering (IPO). The start was not good as expected by the company. The stock lost about 50% of its value on debut after opening at $38. This being the first social media company to be listed in NASDAQ, Facebook attracted millions of eyeballs in Wall Street as advertising was the only main revenue generator for the company and the predictions were not favorable.
However, since the IPO, Facebook has worked hard to meet and exceed Wall Street targets. Using the IPO date as the starting point, Facebook became the fastest US Company to reach $150 billion in terms of market capitalization. Currently, only 26 US Companies have reached the $150 billion mark in terms of market capitalization.
Analysts comment that growth has been fuelled by the new strategic steps related to “Mobile First” initiative.
- What’s next
At this point of time as Facebook completes 10 years in operation, many question its possibility of surviving another 10 years. However, Zuckerberg believes being relevant to all groups would be the survival strategy for Facebook.
As an outcome of this, Facebook is planning to build apps outside Facebook which can sustain user acceptance and hence would keep the company moving. The recent launch of “Paper” a standalone news aggregation app is a clear evidence for this.
The company has stated that “Paper” would be the first out of a series of apps that would be part of an initiative named “Facebook creative labs”.
In order to drive these new initiatives and be relevant to the upcoming generations, Zuckerberg requests governments to provide higher level of wireless connectivity. He believes in doing so, people in many economies could enjoy the facility and stay connected with the whole world.