Facebook overview & recommendations

facebook past and future

Research Phase I: Phase II: Phase III: Research
Overview Survive Dominate Network Results

2010 Spring | Stern School of Business | Technological Innovation and New Product Development



Phase I: How Did Facebook Survive The Valley Of Death?
Research
Phase II: How Did They Come To Dominate The Social Networks?
Phase III: What Is Driving Growth?

Hypothesis:
Expanding User Base
Keys to Success
Talent Acquisition

Recommendations
Employee Management
User Centric Product Innovation




The Worlds Most
Transitioning from
50 Most
Innovative Companies
a start-up to
Innovative Companies,
2010 (#1)
a proﬁtable
BusinessWeek, 2009
company
Fast Company,
2010




How could
Is facebook really
How did facebook
facebook survive
innovative?
become no. 1 this fast?
“the valley of death”?

Venture capital,
Design dominance…
Increasing returns…
Psychological
Hiring strategy,
positioning…
Corporate culture…




PHASE I:
PHASE II:
PHASE III:
2004~2006
2006~
2007~
RECOMMENDATIONS
SURVIVE
DOMINATE
NETWORK




How could it survive the Valley of Death? 

General Life Cycle of a Venture‐Funded Company 




How could it survive the Valley of Death? 

Venture capital Social capital Psychological positioning

“Zuckerberg said he thought - Why Facebook Went West - - Chatty Zuckerberg Tells
Facebook was worth about “So many of the [its] employees All About Facebook Finances -
$15 million, and was willing to have come from top Internet “For 2008, Zuckerberg projected
accept an investment ranging companies like Yahoo, eBay, revenue to be increased to
from $1 million to $3 million… and Google that the culture $300m-$350m [$150m in ’07]
he struck some partners at built at [it] is fundamentally …investment from MS pegged
the firm as a little too brash.” more Consumer Internet savvy.” the valuation of it at $15B.”




Entry  to the market 

Fast Followers with key points
of differentiation
REPLICATE
Iterative design

Strong management focusing
INNOVATE
ITERATE
on monetization and growth

Access to capital




Design...  …ma=ers! 




MoneGze 

1.  Brand AdverEsing 
2.  MicrosoI AdverEsing 
3.  Virtual Goods 
4.  Performance Ads 

Fiscal Year  Annual Revenue ($MM) 
2008  $280 
2009  $635 
2010*  $1100 
*projected 

Source: insidefacebook.com



Research Phase !: Phase II: Phase III: Research

How did facebook become no. 1 this fast? 

Y! 
M 
e  G 




Rapid Growth Over Time 

Started as exclusive to students of Harvard University 

Spread across 30 college networks in next four months 

By Fall 2007, adding million users a week 

Rapidly spread across the world by introducing new languages 

Currently is the world’s largest social network – over 400 million users 




Strategies for Rapid Growth 




Ma=hew Eﬀect 

MoEvate developers – open code framework 

MoEvate exisEng users to linger – applicaEons 

Increase users’ touch points for interacEng with facebook ‐ Mobile 

Encourage users and apps to invite addiEonal parEcipants  

Proliferate the Internet with the new ‘Like’ and ‘Recommend’ buons 




Detailed Code DocumentaGon for Developers 




Increasing consumer touch points – Mobiles and Smart phones 




Encouraging Users To Stay 




IntegraGng with other networks to increase Network Eﬀects 




CollaboraGve Strategy 




Overlapping With The Real World 

The Facebook Window SGcker 
encourages businesses to put up the 
sEcker and remind them that 
“businesses that promote their Page 
on Facebook tend to see a 20% 
greater increase in connects. 

Possibly could encroach upon 
FourSquare’s “check‐in” strategy for 
businesses in the next phase. 




The growing company needed talents, a lot of them (from big companies) 

Top 10 past companies of Facebook’s current employees  
* San Francisco Bay Area only, total 877 

Source: linkedin.com





Top 10 past companies of Google’s current employees  
* San Francisco Bay Area only, total 8,115 

MicrosoI 
Yahoo!  
IBM 
Oracle America, Inc. 
Oracle 
Cisco Systems 
Hewle‐Packard 
Intel 
eBay 
Stanford University  
Others 






Top 10 past companies of eBay’s current employees  
* San Francisco Bay Area only, total 3,147 

Cisco Systems 
Yahoo! 
Oracle America, Inc 
Accenture 
Hewle‐Packard 
Oracle 
MicrosoI 
PayPal 
IBM 
Intel 
Others 






Top 10 past companies of MySpace’s current employees  
* San Francisco Bay Area only, total 91 

AOL 
Yahoo! 
Organic 
LinkedIn 
Fox InteracEve Media 
Netscape 
Cisco Systems 
Google 
Adobe Systems 
eBay 
Others 





However… Facebookers joined ambiGously, leaving more ambiGously 

A couple of months ago, after three years as a Google product manager, I decided to leave for Facebook.
I am writing this note to spread Good News to all the friends I haven't already overwhelmed with my enthusiasm:
Facebook really is That company.
Which company? That one. That company that shows up once in a very long while -- the Google of yesterday,
the Microsoft of long ago. That company where large numbers of stunningly-brilliant people congregate and
feed off each other's genius…
- June 2007, A note of an ex-Googler and new Facebooker, Justin Rosenstein

But something else exciting happened in the year and a half since I joined Facebook. I started spending
a lot of time after work talking to Dustin [the co-founder of Facebook]…
We see this new venture as very complimentary to Facebook. Our software will use Facebook Connect
as the default option for identity and authentication. Our user interface will adopt many of Facebook’s conventions,
creating a seamless and familiar experience for current Facebook users. And if our new development tools turn out
to be useful, we hope the Facebook engineering team will come to adopt them.
-  October 2008, A note of an ex-Facebooker and now co-founder of Asana, Justin Rosenstein




Top ExecuGves “unfriending” facebook  ‐ Facebook’s organizaEonal chart (Aug. 2009, unoﬃcial) 

Mark Zuckerberg 
CEO 

SVP Sales &  Director of 
General  Technical  Director of  Director of  Director of 
Strategic  CFO  COO  Business 
Counsel  OperaEons  Engineering  MarkeEng  Product 
MarkeEng  Development 

VP of Product 
Co‐founder and   VP of CommunicaEons  VP Strategy & 
Privacy  VP of Sales  Treasurer  MarkeEng and 
VP of Engineering  and Public Policy  Bus OPs 
OperaEons 

“The departed include:
Facebook Director of Business Development Netanel Net Jacobsson , Developer Charlie Cheever, Cofounder Dustin Moskovitz,
Platform director Ben Ling, Designer Katie Geminder, Designer Eston Bond, Data guru Jeff Hammerbacher,
Marketing VP Matt Cohler, Top Engineeer Justin Rosenstein, Sandberg's Executive Assistant, Camille Hart,
CTO Adam D'Angelo, Cofounder Chris Hughes, COO Owen Van Natta, President Sean Parker, CFO Mike Sheridan,
Controller Catherine Chang, VP of Product Doug Hirsch, Cofounder Andrew McCollum, Cofounder Eduardo Saverin,
first VP of Sales Tricia Black, VP of engineering TS Ramakrishnan, Director of Operations Nick Heyman …”
- March 2009, gawker.com tipster’s report




RecommendaGon I: Respect home‐grown stars 

Leaders role: more about NOT to DEmotivate people Stars who’ll remain for long

“…Now, in 2009, it's become a company of close to 1,000 “…why you’re usually better
employees where more and more, people are eyeing the exits, off growing stars than buying
wondering how they can escape the tyrannical whims of 24-year- them. If companies want to,
old CEO Mark Zuckerberg and his tormented lieutenants.” they can develop stars.”




RecommendaGon: II: Respect User Privacy 

Facebook started a Site 
Governance Page to gather 
comments about their policy 
changes. 
But is that enough?  

Lawsuits against facebook have been 
ﬁled as users think their privacy was 
violated. 




QuesGons? 

               ? 

Jeehyun Moon 
Thomas Li=le 
Chris Fischer 
Soumitra Dasnurkar 
Kwasi Frye 


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