Transcription
Facebook started as a small project in a dorm room but quickly grew into a real social media giant. How did it happen? Today I will tell you the story of how Mark Zuckerberg founded Facebook and then developed it into a multi-billion dollar company that connects almost half of the world's population.
The Life Of Zuckerberg Before Facebook
Zuckerberg grew up in a comfortable and highly-educated home. When he was in the sixth grade, he got his first computer and this began his journey into programming. He taught himself the BASIC programming language and when his parents noticed his unusual affinity for computers from a very early age, they hired a software developer to tutor him privately. And by the age of 12, Zuckerberg built one of his earliest computer programs which he called “Zucknet”. Zucknet was an instant messaging app that Zuckerberg built for his father’s dental clinic so that the receptionist could easily inform him of a new patient instead of yelling across the room.
Zuckerberg's first major programming success came while he was in high school. Then, he co-developed Synapse, a music app that used artificial intelligence to suggest a playlist based on the users' listening habits. Synapse was fairly successful after its release, drawing the attention of big companies like AOL and Microsoft which wanted to buy the music app and recruit the teenagers who developed it. But surprisingly, they rejected the offer and Zuckerberg enrolled at Havard University instead.
Zuckerberg got into Harvard in the fall of 2002 to study psychology and computer science. Although he was kind of socially awkward, he had already achieved a reputation as a programming prodigy on campus. In his sophomore year, he observed that students often select courses based on the choices of other students. So he thought of a way to help students make this process seamless by building an app called CourseMatch. CourseMatch allowed students to select courses based on what other students in their field are selecting. It also allowed students with similar interests to come together and form study groups.
Another program that Zuckerberg developed during his time at Harvard was FaceMash. The Facemash website presented the users with two pictures of Harvard students and let them decide who was more attractive. The website soon went viral after its launch over the weekend and quickly prompted outrage. Furthermore, it turned out Zuckerberg had hacked into Harvard’s system to take the students’ pictures without permission. The site was taken down by the school management while Zuckerberg was brought before the administrative board and charged with violation of the internet privacy rule. Zuckerberg was made to publicly apologize and he admitted that the whole concept of FaceMash was inappropriate.
How Facebook was started
Despite the backlash Zuckerberg received for developing FaceMash, it only made him more popular and established him as the go-to software developer on campus. Because of this, he was introduced to three upperclassmen, Divya Narendra and the Winklevoss twins who wanted him to help them complete a social networking site they had started building. In 2002, Divya Narendra and the Winklevoss twins conceived an idea to build a social network called HarvardConnection for Harvard students and eventually expand to other universities. They enlisted the help of a couple of Harvard programmers at first before approaching Zuckerberg for assistance. They brought Zuckerberg up to finish coding of the project they had been working on. Zuckerberg confidently assured Divya Narendra and the Winklevoss twins that the project should not take too long to complete. The partners rejoiced as they hope to see their social network site up and running in no time. Unfortunately, Zuckerberg kept delaying the project and days soon turned into weeks and weeks eventually into months without any positive feedback. The partners grew anxious waiting for Zuckerberg to complete their project but they were met with a rude shock after they learned that another person had beaten them to it. Surprisingly, it was no other person than Zuckerberg whom they had hired to build a competing product.
On February 4, 2004, Zuckerberg launched “thefacebook.com”, a social network for Harvard students, designed to expand to other universities. Narendra and the Winklevoss twins immediately sent Zuckerberg a cease and desist letter but he insisted that he had not used their ideas or existing codes to build “thefacebook.com”. The three partners then complained to the Harvard student newspaper The Havard Crimson to run a story about how Zuckerberg misled them into believing that he would help them build a social network when he was, in fact, building a competing product. During this time, Zuckerberg broke into two of the editors’ email accounts using their private login data from TheFacebook. Again, this shows that Facebook has always been characterized by controversies regarding how it handed users data.
Facebook’s early days
While Zuckerberg has been the face of Facebook since its inception, he was not the only one involved in its creation. During the early days, Zuckerberg had the support of some of his roommates at Harvard who contributed in one way or the other to the development of the social network. Zuckerberg knew from the onset that for Facebook to succeed, he needed someone who had money and was willing to invest in his idea. So Zuckerberg shared the idea of a website that would connect the Harvard campus and ultimately, expand into the neighboring schools. Eduardo Saverin, who was a former president of the Harvard Investment Association, loved the idea and agreed to throw in $1000 to cover the early operations of the website. However, neither Zuckerberg nor Saverin had predicted the level of growth that would follow their newly launched website.
Within a few days, hundreds of students had already registered on the service and within a month, more than half of the students at Harvard had already created their profiles and started making new friends. At this point, it became apparent to the business partners that they had created something phenomenal. Everybody on campus was talking about thefacebook.com and the few students who were not registered on the service felt left out. Soon enough, students from other schools got interested in this social network and wanted the same for their campuses. More demand for the service meant more operating costs so Zuckerberg and Saverin decided to invest another $18 000 to cover the operation cost. But there was one major challenge. Zuckerberg and his team were not the only ones who had an idea for a social network for students. Two students from Columbia University Adam Goldberg and Wayne Ting had launched a similar social network called CampusNetwork just weeks before thefacebook.com was launched in Harvard. But unlike thefacebook.com which was more of an online directory at first, CampusNetwork was more advanced and it allowed users to post photos, write journal entries, and even comment on one another’s posts. Within the first three weeks of CampusNetwork, 3 out of every 4 students at Columbia University already had profiles.
Initially, Goldberg and Ting dismissed Zuckerberg's Facebook as a threat and soon set out to expand to other schools. But at the same time, Facebook opens its door to Stanford, Columbia, Yale, and gradually to all Ivy League schools. The growth of Facebook was slower at Columbia University at first because of the presence of CampusNetwork. However, the fact that students at nearby schools were all using Facebook made students at Columbia University give in eventually.
Business expansion and disagreement
Six months after the launch of thefacebook.com, Zuckerberg decided to move the business from the East Coast to Palo Alto, California. While he was able to convince other members of the team to join him in Palo Alto, Saverin moved to New York for an internship. This move to Silicon Valley would later prove to be a great decision for Facebook at the time but it also marked the beginning of conflict between the founding members. Zuckerberg felt that he was being delayed whenever he had to wait for Saverin before he could make decisions. He didn’t like this delay so he started making decisions without involving Saverin. Of course, Saverin felt left out because he didn’t know about most of the business operations so he froze the company’s account. Although this trick gave him the attention he wanted, Zuckerberg immediately started looking for ways to kick Saverin out of Facebook and its operations.
In Palo Alto, Zuckerberg and the team were joined by Sean Parker the co-founder of Napster. Parker served as an informal advisor for the company before becoming the president. In addition, Parker brought on PayPal co-founder Peter Theil who invested $500 000 into the fledging company. Not only that, Theil did not involve himself in the business operation, allowing the team do whatever they wanted. Saverin was happy that money was coming in but Zuckerberg felt that cooperation with Saverin did not go well. Zuckerberg knew he could do without Saverin. But the problem was how was he going to cut him off without making it apparent. Zuckerberg, however, had some dirty tricks up his sleeves. “Thefacebook.com” was formed as a limited liability company under Florida law but he decided to create a new company under Delaware law to acquire the existing one. Zuckerberg also made Saverin sign an agreement for 3 million shares of the new company but he had to give up all intellectual property and rights. Saverin, who was not aware that he was getting ousted from the company he helped start, signed the document without thinking much about it. Furthermore, Zuckerberg issued 9 million shares of common stock in the new company and distributed it to everyone but Saverin. Saverin’s shares in the company were further diluted and it wasn’t until several months later that he realized that he had been played.
Facebook filed a lawsuit against Saverin but he, in turn, filed another suit against Zuckerberg over allegations that Zuckerberg converted money meant for Facebook’s operations for personal use. In 2009, both cases were eventually settled out of court and part of the agreement was that Saverin would stop talking to the press. Another court case that Facebook had to deal with was related to its beginnings. Narendra and the Winklevoss twins filed a lawsuit against Zuckerberg for allegedly stealing their idea and using the source code that they provided to him to create thefacebook.com. In 2008, a settlement agreement was reached.
Facebook for everyone
By December 2004, thefacebook.com already had 1 million active users spread across various universities in the United States. This unprecedented level of growth attracted a number of investors in its early days who wanted to buy thefacebook. Among them was MTV which offered to buy the company for $75 million in 2005. Zuckerberg, however, rejected the offer and instead agreed to a $12.7 million investment deal from Accel Partners in April 2005 at a $98 million valuation. As part of its effort to expand, the company dropped “the” from its name after purchasing the domain name facebook.com in 2005. In the same year, the company also introduced photo sharing and later the ability to tag friends in photos. High school students and a number of universities outside the United States were also allowed to join the service. By December 2005, Facebook had 6 million monthly active users.
In 2006, Yahoo! attempted to acquire Facebook with an offer of $1 billion. It was the biggest so far but Zuckerberg rejected the offer. Instead, Facebook expanded its membership to corporate employees and later to anyone over the age of 13. Also, Facebook launched the news feed feature which allowed users to see real-time updates about their friends’ activities. The following year, Facebook launched a more controversial feature called the Facebook Beacon. Beacon was an advertising software that sent data from external websites to Facebook. These activities were published on the news feed without the users’ consent and there was no option to turn it off. For instance, a man purchased a diamond ring on a third-party website with the intention of surprising his wife. However, his plan was thwarted after Facebook broadcast the purchase to everyone in his network - including his wife. After an outcry from users, Facebook updated the news feed to allow users to control what appears in the news feed while the Beacon feature was shut down. At the time that Facebook introduced Beacon, it also launched the Facebook Pages along with the self-service ads platform with more options to gather insights about user behavior. Facebook also announced Facebook Platform for developers to create applications that would run inside the site. This move attracted thousands of developers within the first year of its launch. But despite the ongoing privacy controversies for Facebook, it has been an important tool for political activities across the world. One of the earliest examples was in early 2010 during the Arab revolution which began in Tunisia before spreading to Egypt and other countries. During the revolution, people created Facebook pages to create awareness about what is going on in their communities. Eventually the governments of Tunisia and Egypt fell and many pointed out that Facebook was a factor that helped the protesters during these revolts.
Going public and acquisitions
After the failed attempt by Yahoo to acquire Facebook, Microsoft invested $250 million in the company for 1.6%, giving Facebook a value of $15 billion. Facebook continued to experience an influx of new users. By October 2007, the company had 50 million monthly active users and in February 2009, the number had increased to 175 million monthly active users. After growing to 845 million monthly active users, Facebook filed for an initial public offering. And on May 18, 2012, Facebook held its initial public offering, raising $16 billion in one of the largest IPOs in U.S. history.
Over the years, a number of competing products have emerged but Facebook buys them out or shamelessly copy their product or feature. In April 2012, Facebook acquired Instagram for approximately $1 billion since it considered the photo-sharing app a direct competitor for Facebook. In 2014, Facebook acquired the instant messaging app Whatsapp for $19 billion and the virtual reality startup Oculus VR for $2 billion. Facebook offered to buy Snapchat in 2013 for $3 billion but Snapchat rejected the offer. In response to this, Facebook made attempts to compete with Snapchat. The most famous of these attempts was probably the introduction of Instagram stories which is a copy of Snapchat’s popular feature.
Controversies
Privacy concerns remain an ongoing problem for Facebook. For instance, Facebook was allegedly used by Russia to influence the 2016 US presidential election. Thousands of social media accounts were created by Russians to spread propaganda and fake news with the intent of influencing the outcome of the election. This fake news was spread via advertisements on Facebook to reach millions of users. Another well-documented controversy is the Facebook-Cambridge Analytica data scandal. The British consulting firm Cambridge Analytica harvested personal data belonging to millions of Facebook users without their consent. This data was later used to create tailored advertisements on Facebook to influence the outcome of the 2016 US presidential election as well.
Facebook's current position
Despite the controversies surrounding Facebook, the company has gradually increased over the years. In October 2012, Facebook’s user base grew to 1 billion monthly active users. And less than 3 years later in August 2015, Facebook announced a new milestone of 1 billion daily active users. Expectedly, the user base grew to 2 billion monthly active users in June 2017. In October 2021, Zuckerberg announced that the company is rebranding itself to Meta. The name change reflected an emphasis on the “metaverse”, a virtual reality environment that has been described as the future of the internet. Despite huge investments in VR technologies, the recent turmoil around Meta stock, and growing competition from new apps like TikTok, Meta seems to maintain its strong position in the field of social media.