Facebook, Inc.
Facebook, Inc.
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This article is about the corporation. For the website, see
Facebook.
Facebook, Inc. (NASDAQ: FB) is an American multinational internet corporation which runs the social networking website Facebook. After having been privately owned by Mark Zuckerberg and other founders, and the shared ownership having been contested in the meanwhile, Facebook eventually filed for an initial public offering on February 1, 2012.[1] Facebook Inc. began selling stock to the public and trading on the NASDAQ on May 18, 2012.[3]
History
Mark Zuckerberg wrote Facemash, the predecessor to Facebook, on October 28, 2003, while attending Harvard as a sophomore. According to The Crimson, the site was comparable to Hot or Not, and "used photos compiled from the online facebooks of nine houses, placing two next to each other at a time and asking users to choose the 'hotter' person".[4][5]
To accomplish this, Zuckerberg hacked into the protected areas of Harvard's computer network and copied the houses' private dormitory ID images. Harvard at that time did not have a student "facebook" (a directory with photos and basic information), though individual houses had been issuing their own paper facebooks since at least the mid-1980s. Facemash attracted 450 visitors and 22,000 photo-views in its first four hours online.[4][6]
The site was quickly forwarded to several campus group list-servers, but was shut down a few days later by the Harvard administration. Zuckerberg was charged by the administration with breach of security, violating copyrights, and violating individual privacy, and faced expulsion. Ultimately, however, the charges were dropped.[7] Zuckerberg expanded on this initial project that semester by creating a social study tool ahead of an art history final, by uploading 500 Augustan images to a Web site, with one image per page along with a comment section.[6] He opened the site up to his classmates, and people started sharing their notes.
The following semester, Zuckerberg began writing code for a new Web site in January 2004. He was inspired, he said, by an editorial in The Harvard Crimson about the Facemash incident.[8] On February 4, 2004, Zuckerberg launched "Thefacebook", originally located at thefacebook.com.[9]
Six days after the site launched, three Harvard seniors, Cameron Winklevoss, Tyler Winklevoss, and Divya Narendra, accused Zuckerberg of intentionally misleading them into believing he would help them build a social network called HarvardConnection.com, while he was instead using their ideas to build a competing product.[10] The three complained to the Harvard Crimson, and the newspaper began an investigation. The three later filed a lawsuit against Zuckerberg, subsequently settling.[11]
Membership was initially restricted to students of Harvard College, and within the first month, more than half the undergraduate population at Harvard was registered on the service.[12] Eduardo Saverin (business aspects), Dustin Moskovitz (programmer), Andrew McCollum (graphic artist), and Chris Hughes soon joined Zuckerberg to help promote the Web site. In March 2004, Facebook expanded to Stanford, Columbia, and Yale.[13] It soon opened to the other Ivy League schools, Boston University, New York University, MIT, and gradually most universities in Canada and the United States.[14][15]
Facebook was incorporated in mid-2004, and the entrepreneur Sean Parker, who had been informally advising Zuckerberg, became the company's president.[16] In June 2004, Facebook moved its base of operations to Palo Alto, California.[13] It received its first investment later that month from PayPal co-founder Peter Thiel.[17] The company dropped The from its name after purchasing the domain name facebook.com in 2005 for $200,000.[18]
Ownership
The ownership percentages of the company are[when?] as follows. Mark Zuckerberg: 28.4%,[19] Accel Partners: 10%, Digital Sky Technologies: 10%,[20] Dustin Moskovitz: 6%, Eduardo Saverin: 5%, Sean Parker: 4%, Peter Thiel: 3%, Greylock Partners and Meritech Capital Partners: between 1 to 2% each, Microsoft: 1.3%, Li Ka-shing: 0.75%, the Interpublic Group: less than 0.5%. A small group of current and former employees and celebrities own less than 1% each, including Matt Cohler, Jeff Rothschild, Adam D'Angelo, Chris Hughes, and Owen Van Natta, while Reid Hoffman and Mark Pincus have sizable holdings of the company. The remaining 30% or so are owned by employees, an undisclosed number of celebrities, and outside investors.[21] Adam D'Angelo, chief technology officer and friend of Zuckerberg, resigned in May 2008. Reports claimed that he and Zuckerberg began quarreling, and that he was no longer interested in partial ownership of the company.[22]
Management
Key management personnel comprise Chris Cox (VP of Product), Sheryl Sandberg (COO), and Donald E. Graham (Chairman). As of April 2011, Facebook has over 2,000 employees, and offices in 15 countries.[23] Other managers include chief financial officer David Ebersman and public relations head Elliot Schrage.[24]
Revenue
Most of Facebook's revenue comes from advertising.[25][26] Microsoft is Facebook's exclusive partner for serving banner advertising,[27] and therefore Facebook serves only advertisements that exist in Microsoft's advertisement inventory.
Revenues
(estimated, in millions US$)
|
2006 |
$52[28] |
— |
|
2007 |
$150[29] |
188% |
|
2008 |
$280[30] |
87% |
|
2009 |
$775[31] |
177% |
|
2010 |
$2,000[32] |
158% |
|
2011 |
$4,270[33] |
114% |
Facebook generally has a lower clickthrough rate (CTR) for advertisements than most major Web sites. According to BusinessWeek.com, banner advertisements on Facebook have generally received one-fifth the number of clicks compared to those on the Web as a whole,[34] although specific comparisons can reveal a much larger disparity. For example, while Google users click on the first advertisement for search results an average of 8% of the time (80,000 clicks for every one million searches),[35] Facebook's users click on advertisements an average of 0.04% of the time (400 clicks for every one million pages).[36]
Sarah Smith, who was Facebook's Online Sales Operations Manager, reports that successful advertising campaigns on the site can have clickthrough rates as low as 0.05% to 0.04%, and that CTR for ads tend to fall within two weeks.[37] By comparison, the CTR for competing social network MySpace is about 0.1%, about 2.5 times better than Facebook's rate but still low compared to many other Web sites. According to BizReport.com, Facebook's low CTR is because Facebook users are more technologically savvy and therefore use ad blocking software to hide advertisements, users are younger and therefore better at ignoring advertising messages, users spend their time communicating with friends and therefore have their attention diverted away from advertisements.[38]
On pages for brands and products, however, some companies have reported CTR as high as 6.49% for Wall posts.[39] A study found that, for video advertisements on Facebook, over 40% of users who viewed the videos viewed the entire video, while the industry average was 25% for in-banner video ads.[40]
Open source contributions
Facebook is both a consumer and contributor of free and open source software.[41] Facebook's contributions include: HipHop for PHP,[42] Fair scheduler in Apache Hadoop,[43] Apache Hive, Apache Cassandra,[44] and the Open Compute Project.[45]
Facebook also contributes to other opensource projects such as Oracle's MySQL database engine.[46][47]
Offices
Mergers and acquisitions
On November 15, 2010, Facebook announced it had acquired the domain name fb.com from the American Farm Bureau Federation for an undisclosed amount. On January 11, 2011, the Farm Bureau disclosed $8.5 million in "domain sales income", making the acquisition of FB.com one of the ten highest domain sales in history.[48]
Menlo Park Headquarters
In early 2011, Facebook announced plans to move to its new headquarters, the former Sun Microsystems campus in Menlo Park, California.
Facebook Hyderabad
In 2010, Facebook opened its fourth office, in Hyderabad[49][50][51] and the first in Asia.[52]
Facebook, which in 2010 had more than 750 million active users globally including over 23 million in India, announced that its Hyderabad centre would house online advertising and developer support teams and provide round-the-clock, multi-lingual support to the social networking site's users and advertisers globally.[53] With this, Facebook joins other giants like Google, Microsoft, Oracle, Dell, IBM and Computer Associates that have already set up shop.[54] In Hyderabad, it is registered as 'Facebook India Online Services Pvt Ltd'.[55][56][57]
Though Facebook did not specify its India investment or hiring figures, it said recruitment had already begun for a director of operations and other key positions at Hyderabad,[58] which would supplement its operations in California, Dublin in Ireland as well as at Austin, Texas.
Operations
A custom-built data center with substantially reduced ("38% less") power consumption compared to existing Facebook data centers opened in April 2011 in Prineville, Oregon.[59]
Initial public offering
Facebook filed their S1 document with the Securities and Exchange Commission on February 1, 2012. The company filed for a $5 billion initial public offering (IPO), making it one of the biggest in tech history and the biggest in Internet history.[60] Facebook valued its stock at $38 a share, pricing the company at $104 billion, the largest valuation to date for a newly public company.[61] The IPO raised $16 billion, making it the third largest in U.S. history.[62][63] The shares began to be traded on May 18, and though the stock struggled to stay above the IPO price for most of the day, it set a new record for trading volume of an IPO.[64]
See also
| Author: | Bling King |
| Published: | May 19th 2012 |
| Modified: | May 19th 2012 |
US$ 3.71 
