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Facebook business model

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Facebook business model

we are going to discuss  about Facebook business model.

How do they earn?

How he came with this idea

About funding

Problems he faced.

His user base.

Revenue.

Companies they acquired.

And their long term visions

Let’s start

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 .

In starting

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Facebook was not like this

Facemash

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

21 Universities

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

On facebook.

And in 2008

They even built an international head office on an island

Feb 2011 it was

Facebook was number 1

Photo host

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

2012

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Yahoo sued them

According to yahoo, facebook violated 10 patents

But

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.

2004

Thill partner

Invested 5 lakh dollar invested in his company

Where

they lost 10.6% share

April 2005

ACCEL Partners

THey bought around 13% of shares

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After one year

April 2006

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.

This much

In a short span

After this, news declared

that facebook is offering something

750 million

An unknown person wants to buy it

But facebook did not accept it

and they asked for 2 Billion dollars

Sep 2016

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

This much

17 July 2007

Mark declared that he won’t sell it

I’ll be it’s owner.

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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

on facebook.

Because facebook was on the top.

and they needed money to expand it more.

It seems easy now

What are their expenses

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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.

from facebook

and 3.71 billion

approx

that they earned.

means rest of the money was spent.

Feb 2012

They filed themselvs for IPO

Means listed themselves in share market.

and their

they asked for 5 billion dollar

Means received this much money.

In this , mark kept 22% shares

For the company

and

57% shares was for

voting shares

What do i mean by voting shares.

Now i am dissolving my company

Dissolve means

I am receiving funding

But

The point when i have shares below 41%.

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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.

Voting power.

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

Means CEO

Director

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

quarter revenue

was 13.17 bilion

in 2018

Let’s talk about how do they earn money?

Everybody knows

mode is ads.

advertiser show ads.

we see the ad as a viewer

and that money marketer spent on ads is their(facebook) revenue.

Simple

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.

Everything

And we create an image in facebook database.

What kind of a person we are.

After this

marketers

run ads

On that liked photo

all the things you like

By targeting that thing

In targeting, they add location

They can add age group

Your position

Many things

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

Instagram

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Now facebook has their own payment method

Just like paytm

,One platform is

Jibbigo

In 2013, they acquried it

What does it do?

It help advertisers

to run ad in multiple languages

Language translations

Good for digital media

They acquired atlas

By microsoft

What does it do

You reach the number of reach

no. of visitorrs

These things

they can show you ads.

Now

You can see the total reach

everything by this atlas.

One more platform

Onavo

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

Next acquisition

Instagram

In 1 Billion Dollar

Logically thought about it

Facebook will be toward social trend

and instagram for photos.

That is photo centric.

App.

I personally think

Instagram will conquer facebook in future

Next is

Oculus VR

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

ocu

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

and play

My so called bragger friend use it, he never let me use it

But I know how it works

it has many attachments

Now

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.

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But now no doubt it’s a good way of earning..

In 2014,

They acquired whatsapp

If you don’t know whatsapp is owned by facebook

In 2014 , they acquired it.

In 19 Billion dollar

19!

Now why did they acquire it?

Because

I like these personality because

When they see a competition

In future

They immediately acquire it

Facebook knew

That their genre was in photos

Instagram is now better than them

Bought it

Whatsapp

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

Facebook says

We dont sell your data

We use it for internal system

Whatsapp is theirs

Instagram, facebook.

They track both

Regarding anything.

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?

Facebook

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.

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