The 10 Things Facebook Got Right Pre-IPO
Facebook has the potential to raise $10 billion in an IPO. Here's why that's possible.
Opinions expressed by Entrepreneur contributors are their own.
Facebook could file papers for a mega initial public offering as early as this week. Keeping in mind that it's roughly $100 billion valuation occurred in the span of seven years, the question is: What were the moves that Facebook made as a startup that resulted in such success?
Here are ten ways that I think helped Facebook become juggernaut:
- Nailing the Design. MySpace allowed users to determine the look of their personal profile, while Facebook determined that its user experience would be the same for everyone. And they nailed it. Its crisp, clean and easy to navigate approach has so far attracted more than 800 million active users.
- AcquHiring. When Facebook acquires another company, they scoop up more than just technology and patents. They acquire people with unique skill sets and a passion for connectedness. This hiring strategy often called AcquHiring, enabled Facebook to generate more value from the companies they've acquired.
- Monetizing user data. Today, Facebook.com totes up an amazing 28 percent of all display ads viewed by U.S. consumers online. Why? Early on, it utilized its database of personal information and urged advertisers to target those users with an affinity for their particular products.
- Taking on accredited investors. Facebook has issued more than two billion shares to accredited investors. People like PayPal co-founder Peter Thiel and LinkedIn co-founder Reid Hoffman got in very early, contributing to Facebook's angel and Series A funds. Then Facebook raised $2.34 billion dollars in eight rounds of funding, which is positioning the company to raise an additional $10 billion in an IPO.
- Relaxing membership requirements. At first, Facebook membership was restricted to Harvard students. By 2006, membership was opened to anyone with a pulse and an email address, giving it the broadest demographic appeal possible. From teenagers to grandparents, everyone uses Facebook.
- Requiring real names. From the get-go, Facebook members were required to use their real name -- a deviation from the former avatar or nickname approach of identification from others such as Friendster, message boards and forums that allowed users to remain anonymous. Real names matter in the real world.
- Launching the Open Graph. Facebook's Open Graph, the technology that allows anyone online to automatically identify what they like anytime a Facebook "Like" button appears, is beginning to re-index the web around people.
- Encouraging third-party applications. Facebook has registered more than a million developers who are creating apps for the platform. Investment firms are also launching multimillion-dollar funds dedicated to helping companies develop new applications just for Facebook.
- Establishing user trust. I know what you're thinking, but the fact remains that Facebook's privacy controls have evolved to the point where the user is in control of how much of their information is shared with advertisers and other users. To its credit, Facebook has addressed concerns about privacy when they surface, admitted mistakes and held third-party developers to extremely high standards.
- Branding Pages. Allowing businesses, brands and organizations to create Pages on the site ushered in a new era in marketing. A fifth "P" -- Participation -- joined Product, Price, Place and Promotion in the traditional marketing mix, turning the top down marketing funnel into a viral loop.
What do you think helped Facebook land such a sweet debut? Let us know in the comments section.