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5 Key Milestones in Facebook's History

February 4, 2014
URL: http://www.entrepreneur.com/article/231262

Facebook founder and CEO Mark Zuckerberg told NBC's Today the company is concentrating on "serving all the different groups that use" the service, including "every demographic in every country."

In response to a question about whether he's concerned teenagers are using Facebook less, Zuckerberg didn't directly answer the question but did say, "We're going to focus on building things that teens are going to like and we're also going to focus on building things that other folks are going to like in different countries around the world, and that's just what we need to do to serve all the people who rely on us."

The interview marked Facebook's 10th birthday. Over the last decade the website has gone from a Harvard dorm room to more than a billion active users. Here we highlight five key dates in the company's history, and look at their significance in the formation of the world's biggest social network.

February 4, 2004: Facebook launch

Mark Zuckerberg and co-founders Dustin Moskovitz, Chris Hughes and Eduardo Saverin launched Facebook from a Harvard dorm room in 2004.

At the beginning, users could only join "the facebook" if they were at Harvard university, but that wasn't the case for long. Just one year after it was founded, Facebook had dropped its "the" and had 6 million users.

Ian Maude, digital media analyst at Enders Analysis, said there were two key aspects to Facebook that set it apart from rivals like Myspace and Friendster.

"Initially Facebook was aspirational - its use was restricted to those who attended Ivy League schools and as a result it had been getting a lot of press in the U.S. When it finally let anyone join, it absolutely exploded," he told CNBC.

"Also, unlike some of its rivals, Facebook was based on real names. This was incredibly important because it meant people could search for and find their friends. People were forced to use their actual identity and this really drove the adoption through the roof."

July 10, 2008: iPhone app launched

The launch of Apple's App Store in the summer of 2008 was critical in the history of Facebook's mobile presence. It was one of the first 500-or-so apps available to download from the store.

"What was crucial here was the launch of the iPhone itself," said Maude. "It changed the way we used phones. All of sudden, people were checking their smartphones all the time - at the bus stop; walking down the street - and that's when people started connecting to social websites and particularly Facebook."

But Facebook's foray into mobile wasn't always so successful.

"They had a few mobile ventures that didn't work out so well," Bridget Carey, tech reporter at CNET, told CNBC. "Remember the Facebook phone or Facebook Home? So now their mobile strategy is: having Facebook take over your entire phone doesn't work so we'll just have a bunch of different apps, to hit you with more than one app and help you spend more time on it in different ways."

April 9, 2012: Facebook acquires Instagram

One of the most significant ways that Facebook took this strategy forward was by buying Instagram for $1 billion in 2012 - its largest ever acquisition. The purchase was certainly controversial, and some analysts claimed it had overpaid for Instagram, an app which enables users to apply filters and share photos they've taken on their smartphones. Maude, however, disagreed.

"Facebook recognized that photo sharing was crucial - a huge percentage of posts on the website are photos - and also that an app like Instagram could pose a serious threat to its very existence," he said. "In hindsight the price looks like a bit of a bargain - Facebook saw off a significant treat."

CNET's Carey added that the acquisition helped Facebook relate to its troublesome younger audience, which loves to communicate through photo-sharing. In October last year, the company's CFO David Ebersman admitted there were concerns that Facebook was losing its "cool factor" with teens and that daily activity among younger teens has declined.

But Carey stressed that Facebook's latest offering - news-reading app Paper, launched at the end of January - demonstrated the company's willingness to offer separate products to cater to different audiences.

"(It means that) I feel like I'm left out and don't know what's going on unless I check Facebook, and now I want to check Paper if perhaps Facebook is getting too annoying," Carey added. "They're hitting different angles for different types of tastes."

May 18, 2012: Facebook holds its initial public offering

Following this level of success, it was perhaps surprising that Facebook's debut was so disappointing. It began with technical glitches on the Nasdaq exchange which caused a delayed opening and left many orders unfilled, and was followed by a massive drop in share price.

Its stock, which had an opening price of $38 per share, lost around 50 percent of its value over the next few months, although it has since recovered. In pre-market trading on Tuesday, Facebook shares were around $62.

"Arguably, Zuckerberg left it too late before he floated the company," Maude told CNBC. "The narrative at the time was one of slowing growth - and that's a terrible position to go to the market in. The whole thing was a shambles."

At the time Zuckerberg insisted that mobile was a huge growth area, but Maude said some investors were unconvinced by the potential for mobile advertising.

"The introduction of newsfeed ads, however, completely changed everything - it shifted the dynamics of the business," he added.

January 29, 2014: Facebook Q4 results

Facebook's most recent results sent the share price soaring, amid hopes that its investment in mobile ads was paying off.

Earnings (excluding items) beat analyst expectations, coming in at 31 cents per share, up from 17 cents a share in the year-earlier period. Revenue increased to $2.59 billion from $1.59 billion.

Perhaps most strikingly, however, was the 76 percent rise in revenue from advertising, with mobile ad revenue accounting for over 50 percent of the total for the fourth quarter.

"Mobile is powering ahead; ad revenue is ramping up - these really were excellent results," Maude said.

But he was quick to stress that potential Facebook fatigue means that "all might not be well on the good ship Facebook."

The results came a week after Princeton did a study which compared Facebook's growth to that of an infectious disease--spreading quickly and dying suddenly. The study predicted that the number of Facebook users would drop by 80 percent between 2015 and 2017.

Unsurprisingly, Facebook was quick to respond, posting a blog entitled "Debunking Princeton."

Carey said that the company did have to work hard to appeal to challenging new audiences, but added that it appeared to be doing so.

"Facebook really has to evolve to stay relevant - the Facebook of today is a lot different to the one of ten years ago when it was only for college students," she said.

"As you have a whole new generation using it - younger teens etc - they're finding that they have to be more than where you just to connect to friends, but rather a place where you can get all your information on your phone, so they definitely are strengthened their mobile strategy to make money from that."