Facebook Case Study

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Case Study

Facebook - The Complete Biography

August 25, 2006 by Sid Yadav
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An in-depth profile of Facebook, written by Mashable contributor Sid Yadav and edited by Pete Cashmore. Facebook is the second largest social network on the web, behind only MySpace in terms of traffic. Primarily focused on high school to college students, Facebook has been gaining market share, and more significantly a supportive user base. Since their launch in February 2004, they’ve been able to obtain over 8 million users in the U.S. alone and expand worldwide to 7 other English-speaking countries, with more to follow. A growing phenomenon, let’s discover Facebook. The Facebook Phenomenon

First, let’s start by looking into Facebook in a broad spectrum - as the network, the phenomenon, the company, and its brand. History
Originally called thefacebook, Facebook was founded by former-Harvard student Mark Zuckerberg (while at Harvard) who ran it as one of his hobby projects with some financial help from Eduardo Saverin. Within months, Facebook and its core idea spread across the dorm rooms of Harvard where it was very well received. Soon enough, it was extended to Stanford and Yale where, like Harvard, it was widely endorsed. Before he knew it, Mark Zuckerberg was joined by two other fellow Harvard-students - Dustin Moskovitz and Chris Hughes - to help him grow the site to the next level. Only months later when it was officially a national student network phenomenon, Zuckerberg and Moskovitz dropped out of Harvard to pursue their dreams and run Facebook full time. In August 2005, thefacebook was officially called Facebook and the domain facebook.com was purchased for a reported $200,000. Availability

Unlike its competitors MySpace, Friendster, Xanga, hi5, Bebo, and others, Facebook isn’t available to everyone — which explains its relatively low user count. Currently, users must be members of one of the 30,000+ recognized schools, colleges, universities, organizations, and companies within the U.S, Canada, and other English-speaking nations. This generally involves having a valid e-mail ID with the associated institution. Surveys & Studies

A large number of surveys and studies have been conducted around Facebook - some with interesting results. For instance, according to an internal September 2005 survey, approximately 85% of the students in the supported colleges had a Facebook account, with 60% of them logging in daily. A survey conducted by Student Monitor revealed Facebook was the most “in” thing after the iPod and tying with beer, and comScore Media Metrix discovered users spend approximately 20 minutes everyday on Facebook. Another 2005 survey said 90% of all undergraduates in the U.S. use either Facebook or MySpace regularly, and a detailed questionnaire analysis by Chris Roberts revealed that 76.2% never click on its ads. Perhaps the most amazing statistic of all may be that Facebook is the 7th most trafficked site in the U.S. Business & Funding

Given the situation other social networks on the web are facing, Facebook is in a good position financially. While it hasn’t managed to get acquired like its rival MySpace (despite some rumors about an $800m deal with Viacom), it’s been quite lucky in most aspects. For its initial funding, it received $500,000 from Peter Theil, co-founder of PayPal. A few months later, it was also able to get $13 million from Accel Partners, who are also investors in 15 other Web 2.0 startups, and $25 million from Greylock Partners, making their overall venture equal to approximately $40 million. For users, Facebook’s core service is completely free and ad-supported. In fact, in August 2006 Facebook signed a three year deal with Microsoft to provide and sell ads on their site in return for a revenue split. The deal followed an announcement from Facebook’s direct competitor MySpace who signed a similar deal with Google. The youthful demographic that both the services attract is highly...
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