“Facebook” Story: Revolutionary Website Created in Harvard’s Dorm

“Facebook Success Story: Beginning, Funding, & Challenges You have received a friend request.

There was a phase when we all received such notifications. Back then, Facebook was trending and everyone had an active Facebook account. Be it aunties, uncles, parents, and even kids.

Facebook hijacked our lives. We used to spend maximum time on our Facebook accounts; accepting friend requests, commenting on photos, or stalking for that matter. Ah, good old days!

Today, the case is different. People barely login into their Facebook accounts. The charm of Facebook is in a way lost. We have got better alternatives. Instagram is the new trend. So how did this happen?

Facebook Success Story - The Foundation

It all began at Harvard University where Mark Zuckerberg was studying Psychology and simultaneously taking coding classes. From an early age, his father made him pursue coding and he even developed few apps which attracted the interest of AOL and Mircosoft. Zuckerberg rejected these offers to complete his education. But it was only in Harvard that he created the app 'Facemash' and became famous (for wrong reasons). This app would let Harvard University rate the pictures of the students. But there was a catch, Zuckerberg didn't take the permission of the students before uploading their pictures and many considered it as a violation of their privacy. Although the site received 22 thousand pictures in the first 4 hours, it was shut down soon after. The Harvard administration board considered expelling Mark but they eventually didn't after he publicly apologized.

But this incident didn't stop him from creating applications. In 2004, Mark along with his fellow Harvard mates coded a new website and named it 'TheFacebook'.

About 'TheFacebook'

Facebook is an American social media networking app based in California. To open an account all you needed to do is go to the website www.thefacebook.com and sign up. Thereafter you could upload pictures, like and comment on pictures of the people whom you follow, and many more.

Initially, it was built for the Harvard students, but later it expanded its services to other Universities like Columbia, Stanford and Yale, and many others. By 2006, anyone above the age of 13 was able to register on TheFacebook. One was able to access their account from any device, anywhere in the world with an internet connection. It was a hit among the students.

Facebook Success Story - Funding

In 2004, Sean Parker became the first president of TheFacebook and in the same year, the company moved its operations to Palo Alto, California after receiving a $50,000 investment from Peter Theil, co-founder of PayPal. The following year, Theil and Accel Partners reportedly invested $12.7M making the company's valuation stood at $87.5 million.

In the coming years, TheFacebook received a series of investments from companies like Microsoft, Digital Sky Technologies, and investors European Founders Fund, TriplePoint Capital, Elevation Partners. Today, the company is valued at $891 billion.

Dropping the 'The'

In September 2005, the company shortened its name to 'Facebook' after purchasing the domain name 'Facebook.com' from AboutFace Corporation for US$20,000.

Facebook Success - Demographics

At first, 12,000 Harvard students registered themselves on Facebook within 24 hours. In one month, over half of the population between the ages of 18-22 signed up. Facebook achieved to attract over 100 million users by August 2008 and in just 2 more years over half a million people were using Facebook.

In 2010, the networking site crossed over 1 trillion page views making it the second-most visited website and most popular social media networking site in the United States.

It was only in the year 2012 that Facebook crossed the 1 billion subscriber milestone followed by 2 billion subscribers in the following year.

At present, Facebook has only 2.6 billion users. The once-popular platform among teens has only 51% of teens use the social networking site today. In India, out of 346.2 million users, only 24% are women.

Facebook's IPO Valuation

Facebook held its initial public offering (IPO) in May 2012. Even though the founder, Mark Zuckerberg, was in no rush to take this step, the company decided to go public as its several shareholders crossed 500. Due to the strong demand, the investors suggested aiming for a higher valuation. The underwriters eventually decided to keep a price band of $38 per share. This priced the valuation of the company to $104 billion. Many investors were skeptical about this valuation, and shareholders, like Goldsachs and Accel Partners, even offered to sell 50% and 17% of their shares, respectively.

On the day of listing, the price of the stock shot up to $45 but the stock was unable to sustain the price, and it closed at the price of $38.23, only $0.23 above its IPO price. Despite weak performance, the company was able to raise $16 billion through the IPO.

In the forthcoming trading days, the prices of the share steeped lower and lower, and by June 6, investors had lost around $40 billion.

In September 2012, the stock hit its lowest and was trading below $18, and it took around 16 months for the stock to recover. Since its debut, retail investors have lost $360 million. The stock was going to provide significant benefits to NASDAQ, but instead, it strained the relationship between the company and the exchange. It was only recently, that the stock hit its all-time high, closing at $313.09. In 9 years, the stock value has increased by 10 times than its IPO price.

Facebook Success Story: Crisis and controversies

Harvard graduates Tyler Winklevoss, Cameron Winklevoss, and Divya Narendra accused Zuckerberg of using their ideas to create his website. They alleged that Mark was misleading them into believing that he would help the trio to build a social networking site called Harvardconnection.com but instead he builds his website. Furthermore, they sued Zuckerberg, and in 2008, they settled for 1.2 million shares worth $300 million.

In 2016, Facebook Research offered users between the ages of 13-35, $20 in exchange for their data for their Project Atlas.

In April 2019, around half a million users' information was found on Amazon cloud servers containing personal information like passwords, friends, likes, and even checked-in locations. Later that year, phone numbers of at least 200 million users were leaked on an open online database.

The giant company also received backlash for issues like internet privacy, retention of users' data, and addictive quality. Few also alleged that Facebook has harmful psychological effects on its users. The company has also been censured for tax avoidance.

In 2020, the Federal Trade Commission also sued Facebook for illegally monopolizing and seeking a sale of WhatsApp and Instagram.

In the third quarter of 2020, although Facebook generated around $21.5billion in revenue, it reported a decline of 2 million active users in the United States and Canada.

Final words

Even after the criticism, Facebook remains a giant company with a market capitalization of $720 billion. It is one of the social networking sites where we can easily connect with anyone around the globe. Many untold stories started on Facebook. There was a time when we used to get updates about our loved ones' life via Facebook. But their moments when such a networking site makes us feel unfulfilled. Although most of us don't login into our Facebook accounts daily, we do it once in a blue moon to relive those moments and memories created on the platform. Also, some part within us thinks 'why did I upload this photo here?'. But it's all good unless and until our crush takes sees those photos on Facebook.