Facebook Story, 2012

Dotcom History: From Netscape to Facebook Netscape, 8/1995, $2B valuation, IE replaced it Yahoo, 4/1996, $848M, struggled recently, holds Alibaba shares, market cap $20M in 2012 Amazon, 5/1997, $562M, market cap $80B in 2012 eBay, 9/1998, $1.9B, market cap $42B in 2012 Google, 8/2004, $27B, market cap $190B in 2012 Other notable failed dotcoms: American Online (1992), GeoCities (1998), The Globe (1998), eToys (1999), WebVan (1999), Pets.com (2000)  bubble burst 2002! New social media dotcoms: LinkedIn (5/2011, $9B), Groupon (11/2011, $16.5B), Zynga (12/2011, $6.6B), Facebook (2/2011, $100B)

Facebook History 2/2004, thefacebook.com founded in Harvard 6/2004, moves to Palo Alto, 1M users 5/2005, $12.7M Accel Partners funding 7/2007, Winklevoss twins lawsuit 8/2007, lunches “Platform” for apps developers (e.g., Zynga); 50M users 10/2007, Microsoft invests $240M for 1.6% equity 3/2008, Sheryl Sandberg joins as COO from Google; 100M users 1/2011, Goldman Sachs leads a $1.5B funding round, $50B valuation 2/2012, announces IPO details, $100B valuation; 845M users

Creating a Business Board control, IPO time, Bill Gates (48%), Page/Brin (16% each) Zukerberg, 28.4% company, 57% of voting rights, 3 out of 5 board seats Early backers, Peter Thiel (PayPal), Red Hoffman (PayPal, LindedIn), Marc Andreeseen (Newtscape, LoudCloud), Sean Parker (Napster) “Try to find the smartest people to give him advice.” Recruited Sheryl Sandberg from Google as COO in 2008 Taken a lead role at Facebook as Steve Jobs at Apple

Facebook Revenues Blue Chips: McDonald’s revenue per employee ($60K), Pepsico ($196K), CISCO ($601K), Facebook ($1.2M) Facebook numbers in 2011: $3.7B revenue, $1B profit, 845M members, 70 languages, 100B Friend connections Facebook revenue: $777M (2009), $1,974M (2010), $3.7B (2011); 95% in Ad US Display/Banner Ad revenue % in 2011: Facebook (19.5%), Yahoo (12.5%), Google (12.3%) US Target/Keyword Ad revenue % in 2011: Google (44.9%), Yahoo (9.7%), Facebook (7.9%), Twitter (0.6%)

Facebook Riches, 2012 Facebook valuation, $100B, $53 per share Zukerberg, 28.4% company, 57% of voting rights Father, initial working capital, 2M shares, $110M Peter Thiel, first outside investor, $500K in 2004, $2.4B Dustin Moskovitz, roommate and co-founder, 133.8M shares, $6.5B Sheryl Sandberg, COO, since 2008, 40M shares, $2B value 250 early employees in 2005 and 2007, each millions of shares David Chow, painter/decorator/graffiti artist, office painting in 2005, $200M value

Facebook Risks Competitors: Google (Google+, Android, Chrome), Twitter, Microsoft Social ad: social marketing unproven as viewed by advertisers; social ad less effective than target/keyword ad (Google); Advertisers use Facebook to build brand management and make sales through Google. New technologies: need continuous improvements, e.g., video chats, games (Google+) Mobile ad: future unclear Privacy concerns: Federal Trade Commission (FTC) charges “unfair and deceptive practices” for private user information