Monday, 4 February 2013

Welcome To Facebook - The Truth Behind 'The Social Network'

With the recent flotation and the legal battles of The Social Network movie, it's easy to miss the real story behind Facebook.

Eight years ago, Facebook began as a Harvard campus network but, in 2012, Mark Zuckerberg's website can claim 13% of the world's population as members and he has just launched the company on the Stock Exchange.

But for him, it is clearly about more than the money. He has given everyone a platform to share and follows what he preaches on his own Facebook page. The development of FB is directly related to the growth of people's desire to share, which clearly becomes addictive.

However, people will not keep joining at the same rate forever so now there are apps, games, competitions and business pages to keep people on the site for longer and to encourage them to come back more often.

But there are have also been issues over privacy and so the developers have tried to simplify this complicated area - which caused some mirth over Christmas when even Zuckerberg's sister got caught out by the settings and had a hissy fit over a private family picture that became part of the public domain.

The golden rule of using Facebook - if you don't want it to be public, don't put it on Facebook!

The Origins of Facebook
Whilst he was supposed to be majoring in psychology and computer science during his time at Harvard, Zuckerberg's real desire always lay in the foundation of a social network on the internet, a goal which he talked about extensively but never dreamed that he would actually achieve himself.

In a curious twist of fate, Zuckerberg's professor had also taught Bill Gates and he explained that they were both very similar in their feeling that what they were being taught might not be what they actually needed to be learning.

The original Face Book was like a year book of student details, complete with photos. But, as was described with relish in the movie, Zuckerberg and his room mates devised a website that would see them hack into the college database to produce an album of photographs that could be compared and rated. The Face Mash was a huge success with some but provoked a large number of complaints to the college authorities about privacy issues, who insisted that it was taken down.

After complying with the initial request, Zuckerberg then launched thefacebook and invited people to post their own information rather than populating it himself. Within days, there were calls from other colleges who also wanted their own version of thefacebook.

What made thefacebook different from other successful social networks of the time like friendster and myspace was that mix of psychology and computer science which allowed Zuckerberg to creatively meld technology with social products.

Sadly, creativity is very often linked with disputes over ownership and, whilst he continued to deny their claims, Zuckerberg had to settle with the Winklevoss twins for $65 million.

With its simple design and Zuckerberg's determination never to let it crash, the Facebook became very popular in those early days and in the summer vacation he moved to California, renting a small house in Silicon Valley for himself and some friends and they all hung out and worked on the project and started getting recognition in the media.

Making Money At Facebook

At the start of the next semester, there were over 200,000 users and the Facebook had outgrown its bandwidth again. They were in need of some serious investment so Zuckerberg pitched to local Silicon Valley venture capitalists and won $500k. He set up an office and bought the domain name

In 2005, they had achieved a million users and in 2006, Zuckerberg turned down an offer from Yahoo to sell the network for $1bn. Despite pressure from his friends and colleagues to accept, he declined and, instead, opened Facebook to anyone with an email address, resulting in an additional 50k new users joining every day. 

In 2007 Microsoft offered $15bn and Zuck turned that down as well.

He said it had been harder to turn down the $1bn from Yahoo and lose some of his disappointed team but he continued to grow a dedicated staff with whom to share any profits.

Advertising on Facebook

When the 100 million users mark was reached, he realised that he needed to find a way to make money from the audience he had built. He poached Sheryl Sandberg, a senior advertising executive from Google. She knew Adwords and could show him how to move into this lucrative area.

And so advertising started to appear on Facebook... and the rest, as they say, is history.

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