Mark Zuckerberg, founder and CEO of Facebook
In early 2003, Adam D'Angelo, then a CalTech student who had been Mark Zuckerberg's best friend in high school, had developed the experimental, rudimentary social networking website Buddy Zoo, that was used by hundreds of thousands of people before D'Angelo shut it down. That summer, Zuckerberg and friends who were also computer science students worked coding for the summer in Boston and discussed the implication of D'Angelo's website's success with regard to the future of social networking on the Internet.[1] In the fall, Zuckerberg, returning for his sophomore year at Harvard, wrote CourseMatch, a briefly popular site that helped Harvard students figure out what courses their friends were taking;[1] and then, on October 28, 2003, he wrote Facemash, a site that, according to the Harvard Crimson, represented a Harvard University version of Hot or Not.[2]
That night, Zuckerberg made the following blog entries:[3][4][5]
I'm a little intoxicated, not gonna lie. So what if it's not even 10 p.m. and it's a Tuesday night? What? The Kirkland [dorm] facebook is open on my desktop and some of these people have pretty horrendous facebook pics. I almost want to put some of these faces next to pictures of farm animals and have people vote on which is more attractive.—9:48 pm
Yea, it's on. I'm not exactly sure how the farm animals are going to fit into this whole thing (you can't really ever be sure with farm animals...), but I like the idea of comparing two people together.—11:09 pm
Let the hacking begin.—12:58 am
According to The Harvard Crimson, Facemash "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". 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 directory with photos, and basic information and the initial site generated 450 visitors and 22,000 photo-views in its first four hours online.[6] That the initial site mirrored people’s physical community—with their real identities—represented the key aspects of what later became Facebook.[7]
"Perhaps Harvard will squelch it for legal reasons without realizing its value as a venture that could possibly be expanded to other schools (maybe even ones with good-looking people...)," Zuckerberg wrote in his personal blog. "But one thing is certain, and it’s that I’m a jerk for making this site. Oh well. Someone had to do it eventually..."[8] 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, but ultimately the charges were dropped.[9]
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 website, with one image per page along with a comment section.[7] He opened the site up to his classmates and people started sharing their notes. "The professor said it had the best grades of any final he’d ever given. This was my first social hack. With Facebook, I wanted to make something that would make Harvard more open," Zuckerberg said in a TechCrunch interview.
In January 2004, the following semester, Zuckerberg began writing code for a new website. He was inspired, he said, by an editorial in The Harvard Crimson about the Facemash incident. "It is clear that the technology needed to create a centralized Website is readily available," the paper observed. "The benefits are many."[3] On February 4, 2004, Zuckerberg launched "Thefacebook", originally located at thefacebook.com.[10] "Everyone’s been talking a lot about a universal face book within Harvard," Zuckerberg told The Harvard Crimson. "I think it’s kind of silly that it would take the University a couple of years to get around to it. I can do it better than they can, and I can do it in a week."[11] "When Mark finished the site, he told a couple of friends. And then one of them suggested putting it on the Kirkland House online mailing list, which was...three hundred people," according to roommate Dustin Moskovitz. "And, once they did that, several dozen people joined, and then they were telling people at the other houses. By the end of the night, we were...actively watching the registration process. Within twenty-four hours, we had somewhere between twelve hundred and fifteen hundred registrants."[12]
Just 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.[13]
The three complained to the Harvard Crimson and the newspaper began an investigation. Zuckerberg used his site, TheFacebook.com, to look up members of the site who identified themselves as members of the Crimson. Then he examined a log of failed logins to see if any of the Crimson members had ever entered an incorrect password into TheFacebook.com. In the cases in which they had entered failed logins, Mark tried to use them to access the Crimson members' Harvard email accounts. He successfully accessed two of them.[13] The three later filed a lawsuit against Zuckerberg, later settling.[14]
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.[15] Eduardo Saverin (business aspects), Dustin Moskovitz (programmer), Andrew McCollum (graphic artist), and Chris Hughes soon joined Zuckerberg to help promote the website. In March 2004, Facebook expanded to Stanford, Columbia, and Yale.[16] This expansion continued when it opened to all Ivy League and Boston area schools, and gradually most universities in Canada and the United States.[17] Facebook incorporated in the summer of 2004 and the entrepreneur Sean Parker, who had been informally advising Zuckerberg, became the company's president.[18] In June 2004, Facebook moved its base of operations to Palo Alto, California.[16] The company dropped The from its name after purchasing the domain name facebook.com in 2005 for $200,000.[19]
Facebook launched a high school version in September 2005, which Zuckerberg called the next logical step.[25] At that time, high school networks required an invitation to join.[26] Facebook later expanded membership eligibility to employees of several companies, including Apple Inc. and Microsoft.[27] Facebook was then opened on September 26, 2006, to everyone of ages 13 and older with a valid e-mail address.[28][29] In October 2008, Facebook announced that it was to set up its international headquarters in Dublin, Ireland.[30]
Facebook has been highly used in the years 2009-2010. It has crossed the visits of Google in some continents. Recently[as of?], Facebook.com was the top social network across eight of individual markets in the Southeast Asia/Oceania region (Philippines, Australia, Indonesia, Malaysia, Singapore, New Zealand, Hong Kong and Vietnam), while other brands commanded the top positions in certain markets, including Google-owned Orkut in India, Mixi.jp in Japan, CyWorld in South Korea and Yahoo!’s Wretch.cc in Taiwan.[citation needed]
In 2010 Facebook began to pro-actively involve its users in the running of the website, by inviting users to become beta testers after passing a question and answer based selection process[31], and also by creating a new section know as Facebook Engineering Puzzles where users would solve computational problems and then potentially be hired by Facebook.[32]
Facebook received its first investment of US$500,000 in June 2004 from PayPal co-founder Peter Thiel, in exchange for 7% of the company.[33] This was followed a year later by $12.7 million in venture capital from Accel Partners, and then $27.5 million more from Greylock Partners.[33][34] A leaked cash flow statement showed that during the 2005 fiscal year, Facebook had a net loss of $3.63 million.[35]
With the sale of social networking website MySpace to News Corp on July 19, 2005, rumors surfaced about the possible sale of Facebook to a larger media company.[36] Zuckerberg had already said he did not want to sell the company, and denied rumors to the contrary.[37] On March 28, 2006, BusinessWeek reported that a potential acquisition of Facebook was under negotiation. Facebook reportedly declined an offer of $750 million from an unknown bidder, and it was rumored the asking price rose as high as $2 billion.[38]
In September 2006, serious talks between Facebook and Yahoo! took place concerning acquisition of Facebook, with prices reaching as high as $1 billion.[39] Thiel, by then a board member of Facebook, indicated that Facebook's internal valuation was around $8 billion based on their projected revenues of $1 billion by 2015, comparable to Viacom's MTV brand, a company with a shared target demographic audience.[40]
On July 17, 2007, Zuckerberg said that selling Facebook was unlikely because he wanted to keep it independent, saying "We're not really looking to sell the company... We're not looking to IPO anytime soon. It's just not the core focus of the company."[41] In September 2007, Microsoft approached Facebook, proposing an investment in return for a 5% stake in the company, offering an estimated $300–500 million.[42] That month, other companies, including Google, expressed interest in buying a portion of Facebook.[43]
On October 24, 2007, Microsoft announced that it had purchased a 1.6% share of Facebook for $240 million, giving Facebook a total implied value of around $15 billion.[44] However, Microsoft bought preferred stock that carried special rights, such as "liquidation preferences" that meant Microsoft would get paid before common stockholders if the company is sold. Microsoft's purchase also included rights to place international ads on Facebook.[45] In November 2007, Hong Kong billionaire Li Ka-shing invested $60 million in Facebook.[46]
Facebook received its first investment of US$500,000 in June 2004 from PayPal co-founder Peter Thiel, in exchange for 7% of the company.[33] This was followed a year later by $12.7 million in venture capital from Accel Partners, and then $27.5 million more from Greylock Partners.[33][34] A leaked cash flow statement showed that during the 2005 fiscal year, Facebook had a net loss of $3.63 million.[35]
With the sale of social networking website MySpace to News Corp on July 19, 2005, rumors surfaced about the possible sale of Facebook to a larger media company.[36] Zuckerberg had already said he did not want to sell the company, and denied rumors to the contrary.[37] On March 28, 2006, BusinessWeek reported that a potential acquisition of Facebook was under negotiation. Facebook reportedly declined an offer of $750 million from an unknown bidder, and it was rumored the asking price rose as high as $2 billion.[38]
In September 2006, serious talks between Facebook and Yahoo! took place concerning acquisition of Facebook, with prices reaching as high as $1 billion.[39] Thiel, by then a board member of Facebook, indicated that Facebook's internal valuation was around $8 billion based on their projected revenues of $1 billion by 2015, comparable to Viacom's MTV brand, a company with a shared target demographic audience.[40]
On July 17, 2007, Zuckerberg said that selling Facebook was unlikely because he wanted to keep it independent, saying "We're not really looking to sell the company... We're not looking to IPO anytime soon. It's just not the core focus of the company."[41] In September 2007, Microsoft approached Facebook, proposing an investment in return for a 5% stake in the company, offering an estimated $300–500 million.[42] That month, other companies, including Google, expressed interest in buying a portion of Facebook.[43]
On October 24, 2007, Microsoft announced that it had purchased a 1.6% share of Facebook for $240 million, giving Facebook a total implied value of around $15 billion.[44] However, Microsoft bought preferred stock that carried special rights, such as "liquidation preferences" that meant Microsoft would get paid before common stockholders if the company is sold. Microsoft's purchase also included rights to place international ads on Facebook.[45] In November 2007, Hong Kong billionaire Li Ka-shing invested $60 million in Facebook.[46]
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