By Tetyana Samoylenko
BUS 550
Professor Minder Chen

From Its Dorm-room Days:
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Simple, clean, and uncluttered
Elegant interface design
Zuckerberg’s preference for minimalism
New sort of communication based on real relationship
“Improve people’s lives, especially socially”

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Revenues – non-existent in its first 2 weeks
June: $10 million offer at 20 y.o.
Saverin and $10,000
Y2M – ads for college newspaper websites. 30% comission.
Sceptical Mastercard
Y2m wants to invest

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Zuckeberg’s vision – “We are going to change the world”
Zuckerberg’s terms – “We don’t like these either but they pay the bills”
Serious business – must keep growth
Obsession with technology – decide when to turn on new schools
Open-source software – key factor in early success.
Exponential growth in the next few years
2007- more than half the site’s users were outside the United States
Universal appeal – all text is in English

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Providing service to people all over the world was expensive
No revenue from more than half its users
Advertising deal with Microsoft – applied only in the US
Microsoft is interested in becoming a partner to advertise outside the US
Microsoft had exclusive right to sell banner advertising

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Facebook needed its own self-managed streams of revenue
Time to raise capital
Google is interested
Microsoft - $240 million at a $15 billion valuation at 1.6 % of the company
Li Ka-Shing – “Asia’s Warren Buffet” - $60 million for 0.4% of the company
Perfect timing- 2008 recession

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In addition to the initial $300 million - Asia’s
Warren Buffet invested $60 million more several months later
Three Munich-based venture capitalists invested $15 million
Total raised in the series D round - $375 million

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Microsoft – no longer an obstacle
New sort of advertising
Any commercial entity could create a “page” for free. It had an individual’s model including ability to host applications
The strategy – get as many companies into its systems as possible
A user can become a fan rather than a friend
Activities would be broadcast to their friends’
News Feeds

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Poorly designed alert device
Intended for playing games, adding a recipe, and announce purchases you made on partner sites
Major design flaw
“Who is this ring for?’’
Disrupted relationships
Christmas surprise
Redesigned Beacon with opt-in system

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Senior executive at Google
Perfect candidate for COO
Company’s top advertising champion and sales person
Immense experience with advertisers from
Google
How to social success into a lasting moneymaking business?
Series of meetings to clarify the business strategy

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Things people had already decided they wanted to buy
Response to the word you typed in to the search box: fulfills demand
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Help people decide what they wanted
Generate demand
Implant a new idea into your brain – you should want to spend money on this thing

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Solution for large brand advertisers
Brand Lift enables large brand to test effectiveness of their advertising campaign almost immediately
Users can interact with advertisers
First year – close to $100 million in revenue
$5 per thousand views for these adds

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Smaller advertisers with a credit card
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Ads are displayed in the side bar of most pages of the site including user profile, events, groups, and the third-party application
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Small businesses – doctors, lawyers, restaurants
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Estimated revenue in 2010 $450 million

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Send virtual gifts to one another
$1 per gift - $30 million 2009
Third-party developers to increase variety of products sold
Discontinued in August, 2010

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Credits are used to buy virtual goods
FarmVille, CityVille, CafeWorld
150 developers in more than 350 applications
Developers must pay a 30% cut whenever online game players use the virtual money
Sandberg: 20-30% of revenue will come from the sale of virtual good or operations of an onsite currency

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Prior to becoming COO at Facebook Sheryl
Sandberg worked for which search engine giant?

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1. Should Facebook go public? Why?
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2. What would happen when individuals and companies become more comfortable with the idea of accepting virtual currencies in exchange for various types of interactions, goods or services.