Facebook business model
we are going to discuss about Facebook business model.
How do they earn?
How he came with this idea
Problems he faced.
His user base.
Companies they acquired.
And their long term visions
So story starts from 2004
Two friends Mark and edurdo
So they were students of harvard university
and they both got this idea
Harvard has great exposure we all know that.
In the beginning when they started this
It was just for harvard university
Then it gradually got popular in other places also
and today we know the position of Facebook .
Facebook was not like this
It’s an application like tinder
Where you can choose the best picture
Hot or not
Good or bad
You can select it accordingly
If you have not seen Tinder, i’ve made a business model on tinder
You can check on i button
So it started in 2004
it was coded by mark only
1 Oct 2005
Mark expanded it to
Means their market share was increasing
So 26 SEP 2006
They made it open for everybody
ANyone can register here
You need to have email id and phone number
and you should be above 13yrs
So in 2007, their user base was reaching the sky
Like around 10k business pages
And in 2008
They even built an international head office on an island
Feb 2011 it was
Facebook was number 1
In the whole world
More than 100 billion photos were uploaded
and after one year
They bought instagram too
Instagram is the god in this field nowadays
Means they’ve already planned that
Facebook will be separate
And for photo uploading platform
That’ll be in instagram only
I’ll tell you about this later
Now even facebook had bad days, 12 march
Yahoo sued them
According to yahoo, facebook violated 10 patents
This didn’t affect their funding
Means funding was coming
In the starting
They invested their own money
Becuase these things doesn’t need much investment
You can start from normal level.
Invested 5 lakh dollar invested in his company
they lost 10.6% share
THey bought around 13% of shares
After one year
They started receving lot of fundings
Around 2.5 Million Dollar funded by Greylock partners, meritech capital
This stat didn’t stop here
THeir overall evaluation was around 500 Million.
In a short span
After this, news declared
that facebook is offering something
An unknown person wants to buy it
But facebook did not accept it
and they asked for 2 Billion dollars
Even Yahoo tried to buy it
They offered 1 Billion dollars
They were ready to give 1 billion dollars
750 million to 1 Billion offer
They denied it
That their internal valuation of the company was 8 Billion
17 July 2007
Mark declared that he won’t sell it
I’ll be it’s owner.
I can find partners.
But i won’t sell whole equity
24 oct 2007
Even microsoft bought some shares
in 240 million dollars.
Next month, even Hongkong billionare
invested 60 million dollars
Because facebook was on the top.
and they needed money to expand it more.
It seems easy now
What are their expenses
Hosting cost is the highest
You are using facebook for free
Uploads photo for free
Everything in free
But hosting cost is high
How do they earn? We’ll discuss it later.
In aug 2008,
their valuation shifted from 3.5 billion – 5 Billion
If you notice
earlier they said their internal valuation is around 8 billion.
Means they were futuristic.
That they are growing
and they wont’ sell it
In the starting of 2012
they declared that they have received profit of 1 billion.
and 3.71 billion
that they earned.
means rest of the money was spent.
They filed themselvs for IPO
Means listed themselves in share market.
they asked for 5 billion dollar
Means received this much money.
In this , mark kept 22% shares
For the company
57% shares was for
What do i mean by voting shares.
Now i am dissolving my company
I am receiving funding
The point when i have shares below 41%.
It says, that below 41% you can lose the rights.
and anyone can become the owner
But if we can keep the decision power in our hands.
Then nobody can affect us.
now they needed money
So equity was decreasing
so He was left with 22% equity
If in past someone tried to be smart
After buying all the eqiuity from share market.
That person could have claimed that facebook is mine.
Right that is not possible
Mark did the right thing by keep 22% for facebook only
They kept the voting shares.
Voting shares decides the steps company will take.
who will be owner
that is taken by voting committee only
so they did the right thing
SO if you are thinkin of
expanding your company
In order to maintain your equity
Whatever you do , make sure you keep the voting share with you
So the revenue of facebook till 30sep 2018
was 13.17 bilion
Let’s talk about how do they earn money?
mode is ads.
advertiser show ads.
we see the ad as a viewer
and that money marketer spent on ads is their(facebook) revenue.
Just like tv earns.
same like them
They created a platform
where everything is free.
we like posts using facebook.
We check our friends profile.
And we create an image in facebook database.
What kind of a person we are.
On that liked photo
all the things you like
By targeting that thing
In targeting, they add location
They can add age group
So they gave so many ideas.
To marketer in order to run a succesful ad.
According to me,
Social media is the best way for branding
If you want to do good branding
Social media is the best.
In this, we have facebook
Now facebook has their own payment method
Just like paytm
,One platform is
In 2013, they acquried it
What does it do?
It help advertisers
to run ad in multiple languages
Good for digital media
They acquired atlas
What does it do
You reach the number of reach
no. of visitorrs
they can show you ads.
You can see the total reach
everything by this atlas.
One more platform
Which compares two apps
Suppose i am making an app regarding youtube
Here i can compare
it’s performance with youtube
Whether it’s fast or slow
It helps developers a lot
in making apps
In 1 Billion Dollar
Logically thought about it
Facebook will be toward social trend
and instagram for photos.
That is photo centric.
I personally think
Instagram will conquer facebook in future
Best company of VR
Who makes VR.
If you use a normal VR
We connect our phone
and it has two glasses
And we think it’s real
BUt in oculus VR
It has it’s own display
It’s own display , graphic card
and it can connected to computer as well
Install game in your computer
My so called bragger friend use it, he never let me use it
But I know how it works
it has many attachments
Facebook bought oculus vr for 2 billion in 2014
And in starting
People never thought
That gaming industry will be this much
You can see on youtube itself
People are growing just by playing games
When i was little
My parents used to scold me for playing and doing lots of things
They think Itt’s a waste of time
Today you get paid for playing.
There wasn’t anything like this in past.
But now no doubt it’s a good way of earning..
They acquired whatsapp
If you don’t know whatsapp is owned by facebook
In 2014 , they acquired it.
In 19 Billion dollar
Now why did they acquire it?
I like these personality because
When they see a competition
They immediately acquire it
That their genre was in photos
Instagram is now better than them
Everybody use whatsapp.
Instagram is used less than whatsapp
But we always use whatspp
We have whatsapp for business.
So they acquired it too.
Recently, i read that
They are thinking of integrating it.
Not application but chat
Instagram, facebook and whatsapp
will be integrated with each other
So according to me,
This integrated thing will be good.
If i talk about some place on whatsapp
and when i open facebook, i see ads regarding that
We dont sell your data
We use it for internal system
Whatsapp is theirs
They track both
Like you need a gift for your girlfriend.
And you opened facebook and saw gift ideas ads
Maybe big marketers have control in this
this type of targeting is going on
Because i have personally experienced this.
Now they say
They don’t sell data of facebook.
and do leak
And data is leaked not by them.
And because of this
It’s a loss for us
Our personal data can be leaked
We kept that data for us.
for our friends
But we get a call from credit card company
From where do they extract this data?
I spent days in researching about one business model of a company,
If you genuinely wanna appreciate my efforts then please share this article as much as possible.