Fcebook business model-Details
Mark Zuckerberg has always understood the importance of distribution.All his apps have involved some level of sharing, which helped greatly to spread their adoption.
Zuckerberg also used creative approaches to supercharge growth.One
ingenious strategy—which cost virtually nothing—was to allow new members to import the contacts from their hotmail, Yahoo!, and Gmail accounts.
facebook also created profiles for users who had not even signed up—calleddark profiles—that were based on tagged photos.It was another way to help make it easier for those people to become real members.All these efforts had a cumulative impact, making it possible to end-run rivals like Myspace.
facebook is also an example of a blue ocean opportunity.Although it was not the first player in the social-networking space, it was the one that got two critical things right.The first was timing. facebook came at a point when the world was ready for a way to create an online identity and openly share status.
Zuckerberg has also focused on creating a highly
sophisticated financial reporting system.This has made it easier to monetize traffic and also to meet the rigorous compliance requirements of being a public company.This is why Zuckerberg had to learn how to interpret financial statements and understand important concepts like margins.
Revenuesor salesrefer to the total amount a company receives from selling products or providing services.This is also called the top linebecause it’s listed at the top of the statement.In some cases, you see Net Sales, which excludes certain items from gross sales like discounts, promotions, and returns.
facebook gets about 82% of its revenues from advertising and the rest from fees resulting from its credits platform, which provides payment services (mostly for social gaming partners like Zynga). from 2010 to 2011, the number of users for virtual goods went from 5 million to 15 million.
Even though facebook is available in most countries, it still gets a majority of its revenues from the Us.The other main sources include Western Europe, anada, and Australia.Even though traffic has been growing at a rapid clip.
facebook was growing at a torrid pace.But as it reached $4 billion in revenue, it appeared that seasonality was becoming a reality.It’s natural as a company begins to mature and its growth rate high.
Facebook has been aggressively hiring
not just product-development people but also those with experience in areas like data mining and personalization technologies, content delivery, media storage and serving, power distribution, and advertising technologies.facebook was not originally founded to be a company.It’s always cared primarily about our social mission.
According to Zuckerberg, “simply put: we don’t build services to make money; we make money to build better services.”
Zuckerberg, building social apps means avoiding the typical money-making aggressiveness that is prevalent in corporate America.Keep in mind that he could have easily plastered ads across facebook, generating huge revenues.But Zuckerberg realized that this is the worst thing to do when creating an enduring company.