Status update: 10 years in, Facebook still a force

MENLO PARK, Calif. - Facebook on Tuesday celebrates 10 years since Mark Zuckerberg's Harvard dorm room launch of the social network, a business now worth more than corporate centenarians General Motors and Ford Motor combined.

Whiz kid-turned-CEO Zuckerberg's social juggernaut, now the de facto water cooler gathering for 1.23 billion worldwide, commands the world's largest network and a coveted advertising position.

Facebook's journey into the fabric of people's lives, marketer's playbooks and as a formidable company with staying power wasn't always a guarantee. Blunting hype for its promise of social ad dollars, a steady meme still runs of privacy concerns, advertising angst and fickle users.

Concerns over Facebook's prospects, magnified when Facebook's May 2012 IPO flopped, have eased on Wall Street as the social giant continues to report massive ad growth and maneuver into mobile. Facebook shares soared to record levels Thursday - $62 per share - after the company reported on Wednesday that 2013 revenue surged 55% to $7.9 billion from the year before.

"Over the coming months and years, you'll see us continue focusing on many of the same themes but now with greater scale, ambition and resources," Zuckerberg said during the company's earnings conference call.

Zuckerberg's once-uncertain odyssey a decade later cements the persona of an iconic Silicon Valley leader. His aggressive drive to innovate and court top talent remains matched by Chief Operating Officer Sheryl Sandberg on the business side, says David Sze, a partner with Greylock Partners and Facebook investor. "I certainly wouldn't bet against them," he says.

"We're the largest; we get more mobile time than the next seven or eight combined, including Twitter," said Sandberg in an interview with USA TODAY.

Zuckerberg's steady drumbeat of features added to photos, videos, news media and mobile phone apps has Google on defensive with its rival Google+ in a bid for a piece of social advertising. Yet few seem sold on it, several years in.

At war for talent, Facebook has hired 3.5 former Google employees for every 1 former Facebook employee who has gone to Google, according to professional network LinkedIn, signaling Facebook is more desirable. "Facebook has as talented a team as any tech company," says Gina Bianchini, CEO of Mightybell, a start-up that creates highly specialized online communities.


Facebook has always had rivals. One concern plaguing the social network has been its waning teen audience exiting for the next new social party. Such concerns led it to buy photo-sharing app Instagram for $1 billion and bid $3 billion in an unsuccessful attempt to acquire disappearing photo-messaging service Snapchat.

"People are really eager to spread out their usage of social tools as innovations emerge to try them," says David Kirkpatrick, author of The Facebook Effect. "But the evidence doesn't really show that people are quitting Facebook in order to do that."

Facebook has also made no secret of ambitions to connect the world. But mobile social apps with giant audiences are already all over the world, posing growth challenges. In Japan messaging giant Line commands over 300 million users. In China, where U.S. Internet companies struggle to enter, messaging giant WeChat has more than 500 million users.

"WeChat has already started to move into the U.S., and they clearly have an eye on this market," says Marcos Sanchez, spokesman for App Annie, an app research firm.

"The next decade for Facebook will be about mobile," says Jeremy Liew, a partner with Lightspeed Venture Partners and investor in Snapchat and Whisper. "With Facebook Messenger and Instagram, we see the future of Facebook, multiple single purpose vertical mobile apps."

Twitter has its aim on TV-like video advertising that would compete for television ad budgets and Facebook's own video advertising tests, aligning the two for future skirmishes over social television.

Facebook's "second-screen play - that will be a companion to television similar of what Twitter is doing," says Wedbush Securities analyst Shyam Patil. "They are going directly after TV ads with video ads."


Privacy has long dogged Facebook. Facebook has made privacy changes that befuddle users worried about broadcasting too widely. Facebook has turned some people into advertisements for products based on their "likes," a move that can turn friends into unknowing product shills.

Also, concerns persist as to how Facebook will allow third parties to use its enormous trove of personal information to target its audience and whether such data could wind up in the wrong hands.

"They certainly have every incentive in the world to not destroy the huge opportunity that they have created," Sze says. "They will fix their mistakes quickly."

Photo sharing and messages on niche, sometimes more private, networks has grown in popularity as Facebook has become too enormous for some. That's helped anonymous sharing sites such as Whisper gain traction with the promise of a more authentic conversations in a smaller, private setting.

This phenomenon toward more private social sharing is the same one driving enormous interest for Snapchat.

"I don't think Facebook is going away, but they will have to buy or build each of the next subsequent disrupters," Internet investor Jason Calacanis says.


While Facebook has firmly established real identity-based sharing, its next chapter will be about personalization. The company has launched an effort called Creative Labs to pump out new apps as it moves forward.

"The main thing Facebook has done is open the possibilities for deep social interaction over all types of content, be it messaging, status updates, photo tagging," former Facebook Chief Technology Officer Bret Taylor says.. "The Internet used to be about interconnecting machines; now it is important in people interacting."

Media distribution powerhouse could be the next big area. Zuckerberg made those ambition clear with the unveiling last week of a new app called Paper, focused on photo news sharing and lengthy story updates from people in a magazine-like format.

That comes as traditional spending on ad budgets is coming into question as brands and agencies ramp up discussions about the merits of social advertisements. "It's easier in social and digital to attract ROI in a lot of ways just because more data is there," says DJ Saul, chief marketing officer at iStrategyLabs, a marketing firm.

And who knew that Facebook, worth about $157 billion, would one day eclipse the value of media giants Time Warner and Disney?

"The astonishing thing about Facebook is that it is the biggest media platform in the history of the universe," Altimeter Group analyst Rebecca Lieb says. "No other print or broadcast platform has ever achieved a 1-billion-plus audience."

Adds Ezra Callahan, Facebook's No. 6 employee: "We knew (in 2004) we had something. To see what it is today, is just amazing to have been a part of it."


201.6 billion friend connections

1.23 billion monthly active users

945 million monthly active users who used Facebook mobile products

6 billion likes per day

400 billion photos shared

7.8 trillion number of messages sent

6,337 employees worldwide

Mark Zuckerberg reflects on Facebook at 10

Facebook turned 10 on Tuesday. Founder Mark Zuckerberg marked the occasion with a post on - where else? - Facebook shortly after midnight Pacific Time. His recipe for success? "We just cared more," the social firm's CEO says. Pizza also appears to have played a large role.

Here is the post in full:

Today is Facebook's 10th anniversary.

It's been an amazing journey so far, and I'm so grateful to be a part of it. It's rare to be able to touch so many people's lives, and I try to remind myself to make the most of every day and have the biggest impact I can.

People often ask if I always knew that Facebook would become what it is today. No way.I remember getting pizza with my friends one night in college shortly after opening Facebook. I told them I was excited to help connect our school community, but one day someone needed to connect the whole world.

I always thought this was important - giving people the power to share and stay connected, empowering people to build their own communities themselves.

When I reflect on the last 10 years, one question I ask myself is: why were we the ones to build this? We were just students. We had way fewer resources than big companies. If they had focused on this problem, they could have done it.

The only answer I can think of is: we just cared more.

While some doubted that connecting the world was actually important, we were building. While others doubted that this would be sustainable, you were forming lasting connections.

We just cared more about connecting the world than anyone else. And we still do today.
That's why I'm even more excited about the next ten years than the last. The first ten years were about bootstrapping this network. Now we have the resources to help people across the world solve even bigger and more important problems.

Today, only one-third of the world's population has access to the internet. In the next decade, we have the opportunity and the responsibility to connect the other two-thirds.
Today, social networks are mostly about sharing moments. In the next decade, they'll also help you answer questions and solve complex problems.

Today, we have only a few ways to share our experiences. In the next decade, technology will enable us to create many more ways to capture and communicate new kinds of experiences.

It's been amazing to see how all of you have used our tools to build a real community.

You've shared the happy moments and the painful ones. You've started new families, and kept spread out families connected. You've created new services and built small businesses. You've helped each other in so many ways.

I'm so grateful to be able to help build these tools for you. I feel a deep responsibility to make the most of my time here and serve you the best I can.

Thank you for letting me be a part of this journey.

How Facebook changed our lives

The calendar may say 2014, but in tech culture this week actually marks the year 10 A.F - After Facebook.

What did we poor humans do before the advent of Mark Zuckerberg's collegiate brainstorm? Let's see, we smiled when we "liked" something, we dialed the phone to "update" friends and "tagging" was a kids' game.

The upside of those innocent pre-social media times: intimacy. The downside: intimacy. If you wanted to reach a huge group, it meant sending an e-mail with a cc list that looked like the phone book.

Then came teenage Zuck and his shrewdly rolled-out vision for a new kind of digital club where you played bouncer, all with a Machiavellian backstory that eventually merited its own Oscar-winning movie, The Social Network. Facebook haters crowed after its hyped IPO last May quickly went sour, but the company has bounced back with a fiscal vengeance.

By the end of 2013, its turbo-charged stock had made founder Zuckerberg, 29, a $31 billion man thanks to $7.9 billion in annual revenue, a 55% jump over 2012. Fueling such growth was rapid mobile adoption, which last quarter accounted for 53% of all advertising and paves the way for a bullish new year.

At the heart of this business boom is a service that over the past decade has revolutionized and expanded - for better or for worse - the way humans interact. A million of us liked the site in 2004, then 250 million five years later. Today, Facebook has 1.2 billion users. Even if the site were to disappear or wildly reinvent itself in the next decade, our habits are forever altered.

"The biggest impact of Facebook was that it broke us out of e-mail jail," says Paul Saffo, a longtime Silicon Valley futurist. "E-mail implied you had to reply, Facebook did not. E-mail is formal, Facebook is a salutation. E-mail you send, Facebook you broadcast. It's simply a new social medium for which we're still learning the social norms."

While Facebook has spawned plenty of unappealing habits - oversharing perhaps topping that list - its genius was in creating a platform that allowed people to connect over long distances and reconnect over lost years. It tapped into a yearning that grew with the geographic scattering of the nation's workforce.

Your childhood neighborhood may be but a memory, but it could gather once again on Facebook.

"In the recent past, if you left people physically for a job or marriage, you simply moved on, but Facebook made maintaining those relationship easy," says Danah Boyd of Microsoft Research and author of the forthcoming book, It's Complicated: The Social Lives of Networked Teens.

"The important takeaway from Facebook's rise is that people have a desire to connect broadly," she says. "For the longest time, technology limited communication to one on one; just think of the telephone. But now our worlds are complicated networks that overlap. The implications of that have yet to be fully realized."


That may well be, but most of today's Facebook users aren't too concerned with the sociological ramifications of a shift in human communication. They're just glad they can keep grandma or little Billy posted on what's new.

"I lived in California and my grandmother lived in upper Michigan, and I had felt really badly about losing touch until she got a laptop and signed up for Facebook," says Kristy Campbell, 46, a communications director at Juniper Networks.

"Our world opened up to her. She attended my daughter's graduation and prom via Facebook, and when she suddenly passed away. I was left with a digital record of our interactions that I will never take down," says Campbell, who also used the site to create a network of divorcees that helped each other through that life change. "I really don't remember life before Facebook."

For every Facebook user who may have gotten tired of maintaining their page and quit, countless testimonials speak to the network's transformative effect.

Ann Friedlander, 65, of West Palm Beach, Fla., has children in Hong Kong, Connecticut and California. Without Facebook, she says, "I'd never know what they're up to or see photos of my grandchildren."

She also used the site to get back in touch with childhood friends in New Jersey and, more poignantly "discovered, through Facebook, that a neighbor died on 9/11 trying to rescue someone."

In remote Morro Bay midway down the California coast, Kelly Lipton, 64, uses Facebook to ease her sense of isolation, which is amplified by hearing issues. "I find Facebook is a good way to keep up," she says. "I love it so much I can't believe it."

And while much has been made of late about how younger generations are fast migrating away from Facebook to newer social networking sites and apps, Bella Maestas, 15, of Hillsborough, Calif., loves the way Facebook helps her tackle homework with classmates and stay connected socially.

"In a way, it takes the place of the diary," she says. "It also leaves a mark of you on the world. Everyone wants to be known, noticed and remembered."


Whether Zuckerberg knew he was tapping into something as universal as a need to reach out and be remembered is unknown. But, by all accounts, a missionary's zeal permeated the initially small Silicon Valley offices of Facebook as the company built momentum.

"It was pretty remarkable when I started (in late 2004), still a living room operation in Los Altos Hills," says Ezra Callahan, 32, who joined the team just out of Stanford and was employee No. 6.

He left in 2010 and took "a year to recover." The all-in intensity was such that employees were encouraged to live as close to work as possible.

"You were given a $600-a-month stipend if you lived within a mile of the company, and half of us qualified," he says. "It was intentional. We were a family. The value of having such a close culture was it made people want to stay and work harder."

Peter Sealey, a former marketing director at Coca-Cola and Columbia Pictures, joined Facebook's board of advisers a few years after its launch. "Even then," he says, "you could immediately tell these people were working on something that would have a profound impact on society."

Sealey says to him Facebook's future was self-evident when he took into account technologist George Gilder's law, which states that the value of a network goes up with the square of the number of users.

"Today, the Catholic Church has 1.2 billion members, and so does Facebook, in just 10 years," he says. "Humans have an ingrained need to have a tribe and to share among that tribe. Myspace could have won this battle, but Zuckerberg just built a more convenient and familiar service."

Speaking of the Harvard dropout (he's in good company: so was Bill Gates), it's clear Zuckerberg doesn't intend to rest on his laurels or his cash.

"We can do a better job" informing members about newly added features, Zuckerberg told USA TODAY at a company event in Menlo Park in December. "We have focus groups explaining what we intend to do, but we still catch a lot of people by surprise."

Facebook's willingness to be flexible with its approach when it has to be will be key to its future, says Bret Taylor, the company's former chief technology officer who oversaw integration with Apple's iOS software as well as the adoption of the famous Like button.

"Facebook could be very different in 10 years, but I see it being around, because it's not afraid to change often," he says, offering as example the company's purchase of photo-sharing site Instagram for $1 billion last April.

"There are interesting parallels in Google buying YouTube and Facebook buying Instagram. I was at each company when that happened, and both were criticized for overpaying," he says. "Both turned out to be good deals. It is hugely important in moving forward to show a willingness to be bold."


As for the future, there was some buzz recently about a Princeton University study that said Facebook was akin to a viral outbreak that would mercifully abate, losing 80% of its peak user base in the next few years.

Facebook's cheeky response was to offer a "report" by its data scientists predicting that "Princeton will have only half its current enrollment by 2018, and by 2021 it will have no students at all."

Jibes and parries aside, Facebook's next decade is likely to be more tumultuous than its culturally dominant first 10 years. A recent YPulse survey revealed that 65% of those under 18 thought Facebook was "losing its cool factor."

But regardless of this cultural patriarch's future, the best way to judge Facebook's impact is the same way we ultimately assess the job of any parent - by their kids, which in social media terms include Twitter, SnapChat, WhatsApp and international successes such as Japan's Line and China's WeChat.

Facebook taught us that the Internet could be used to share our lives in a way and with a scope that was novel, and just as the dominant communication tool of the moment was growing ponderous.

"Remember when America Online started, and you'd hear that ping and the voice said 'You've got mail,'? Well that soon had turned into, 'Argh, I've got mail,' " says author Boyd with a laugh. "Then Facebook came along, and all of a sudden, 'Oooo, there are all my friends!'

"There may be a lot of shiny new (social media) apps out there now, but Facebook's impact was as extraordinarily important as AOL's. AOL opened up people to the Internet. Facebook opened up people to each other."


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