Source: ID: Luanbooks
In May 2012, when U.S. stocks were in the cold winter, the eight-year-old Facebook IPO fell short of market expectations.
Barron Weekly commented that FB's revenue growth was slow and lost its charm in the transition to the mobile Internet. Instead of being excited about the FB's IPO, it would be better to save money to buy Google or Apple.
Four months later, Facebook's share price fell nearly 60% from $42 at the time of its listing to $17. Facebook and its underwriters are facing 50 lawsuits because of the failure of its share price's lump-sum IPO. The media began to criticize Zuckerberg, and Wall Street believed that a suit-wearer should be allowed to steer the company, not a kid who liked to wear a pullover. The impeachment of Zuckerberg was rife.
At that time, Facebook had strong enemies and pursuers behind it. Google was cutting into the social battlefield. Because of the slow transition of mobile and the erosion of new products such as Instagram, Zuckerberg's stubbornness made it difficult for the company to move on the mobile side and commercialize.
How did the 28-year-old catch up after missing out on mobile, what adjustments and responses did Facebook make at this stage, and what were the three core competencies the company abstracted out to focus on building?
I. Competitive Environment in 2012
Web Map VS Social Map
Search buildings are built on three things:
First, people write a lot of things and put them on the Internet.
Second, the Internet links them all together.
Thirdly, everyone clicks on these items every day to give feedback.
Now there's a fourth thing. More and more people like these things every day.
In April 2011, when Schmidt stepped down as CEO of Google, the media judged his merits and demerits as outdated and unanimously agreed that social networks were overlooked.
Until leaving office, Schmidt said Microsoft was Google's biggest rival.
The new CEO, Page, disagrees.
At that time, there was a popular argument in the industry that Google controlled the Web graph and the web atlas. Facebook controls social graph, social graph. Web graphs connect Web pages together, social graphs connect people together, and once Facebook launches a social-enhanced search, it's possible to overtake the existing hegemonic Google in a curve.
Facebook banned search engine crawlers from crawling content on its website when it was born. Google could only gnash its teeth and watch more and more social content on the network but could not get it. In 2007, Facebook cooperated with Microsoft Bing and Yahoo Search successively, which enabled social results information to appear on their search services.
Facebook does not allow Google to search its data on the grounds that users'privacy is taken into account. In response to this deliberate and uncooperative discrimination, Page was very angry, accusing FB of hostage users:
When Page took office, he decided that 25% of the year-end bonuses for all full-time employees would be tied to the company's social business performance. In his first week in office, Page appointed six core executives who reported directly to him, including senior vice presidents in charge of social services.
Before the formal war, there was constant friction between the two companies.
The conflict escalated in 2010, when Facebook first deleted Google Gmail from the list of third-party email providers, and then banned Facebook from reading certain versions of Android address books. Facebook then blocked ads from Google's AdSense advertising alliance. In May, 11, it broke the news that Facebook hired a public relations company to distribute Google's black manuscripts.
Zuckerberg was elected Time Person of the Year in 2010
At 1:45 p.m., all Facebook employees received a collective email notification to Zuckerberg's office, while the Lockdown sign was lit in the Facebook building.
Surrounded by all Facebook designers, engineers and product managers, Zuckerberg made an impromptu speech in the open space next to his desk: it was a game of life and death, a zero-sum game.
Every time you mention the threat from Google, you get a wave of emotions. Employees get angry and ready to do a big job.
Facebook's war slogans
Social Media VS Social Network
In the social sphere, Twitter was the best product to break hands with Facebook at that time.
Twitter's organizational management, which had been sold to Google by Costolo, tended to stabilize, and began to promote commercialization, with user growth increasing. From 2010 to 2013, Twitter users grew more than twice as fast as Facebook.
It was hard for users at the time to tell which was more popular with Facebook or Twitter.
Twitter related data
Social Network War
Desktop VS Mobile
Because Facebook was slow to respond to mobile, mobile-born rookies Snapchat, Path, Instagram and WhatsApp were all seen as having the potential to beat the waves in the back.
This set of sticks aroused the rebellious consciousness of the rich second generation Spiegel. He and Murphy rushed to buy an English version of Sun Tzu's Art of War for everyone to learn. However, Poke soon disappeared silently after it went online, and many users did not know that there was such an application. The reason for Poke's failure in Quaro analysis was that Facebook's starting point was acquaintances'social networking and records, which were inherently in conflict with the burning function after it was read, and the accusation of Facebook plagiarism never stopped at that time.
At the beginning of the mobile Internet boom, the fastest responders were new entrepreneurs.
In November 2009, mobile IM app WhatsApp launched, sending 1 billion messages a day in November 11, while Facebook sent 4 billion messages a day in the same period.
On October 6, 2010, Instagram, the photo-sharing community, logged on to Apple App Store, and gained 1 million users by the end of the year. In June, 2011, the number of users exceeded 5 million and reached 10 million in September.
WhatsApp, Instagram and Path
Dark clouds overwhelm the city.
Second, Facebook's Strategic Failure
Mobile strategy: HTML5 priority or native App priority?
Facebook chose HTML5 for the following reasons:
Facebook also charges developers on the platform 30 percent. According to subsequent financial reports, Facebook accounted for 12% of Zynga's revenue in 2011 alone, a figure that remained at 10% until the first half of 14 years. The revenue from app payments accounts for 15% of Facebook's total revenue, and the annual growth rate is more than 500%. Such a good business can not easily give up handover to Apple and Google.
Revenue section of Facebook prospectus
Facebook, which has become a tax authority, is naturally reluctant to pay taxes to others. In order to solve the cumbersome problem of payment under HTML 5 Web page mode, Facebook has launched a virtual currency, Credits, which can be understood as FB version of Q coin, and is compulsorily promoted among all application developers on the platform.
(2)Native Apps need to be submitted to the App Store for review, with a cycle of one month.
Facebook set up an independent growth team as early as 2007, and then launched the release test system GateKeeper, which greatly facilitated product manager's A/B. However, the longer audit cycle of native App weakens the ability of testing and agile development, which is unacceptable for Facebook, which advocates data.
A/B Testing Tool Gatekeeper
(3)Google and Apple are covetous about the basic social disk
Deep Integration of iOS 5 and Twitter
Facebook launched mobile apps when Apple Store was launched in 2008, but the team had only a single-digit membership for 12 years. It took Facebook a year and a half before the iPad was launched in early 2010.
For all these reasons, Facebook stood on the HTML 5 team when the mobile boom came, but it soon proved to be a major strategic mistake.
There were two problems with HTML5 at that time:
(1)HTML5 is not yet mature。 HTML5 is set by the industry organization Web Hypertext Application Technology Working Group. Compared with Objective-C, which Apple maintains, industry organizations are slower to support ecological construction and subsequent iterations, while browser support is slower to follow. In particular, Facebook relies heavily on photos. The browser's support for photos is extremely inadequate.
(2)Hardware not meeting requirements。 Because of the memory and storage limitations of smartphones at that time, HTML5 web applications could only run on a single thread and only compute one operation, such as replying to a friend's comment on FB, then pulling down the screen. At that time, the mobile phone could only finish the task of comment reply first, and then handle the task of pulling up the screen. In the case of a certain level of hardware, users can not realize this gap, but in the hardware conditions at that time, the delay between single-threaded tasks exceeded 15 ms, which gave users a very difficult experience.
MySpace defeated Friendster because of the server crash of the latter, which took 15-20 seconds to load. Later MySpace ran slowly because of too many website plug-ins. It followed Friendster and insisted on user experience of Facebook. Will it repeat the mistakes of the martyrs this time?
Share prices are slashed at the waist:
Sponsored Stories are not commercialized as expected
Facebook Advertisements in the Right Side Bar
Facebook Sponsored Story Advertising
Users ignore these ads, advertisers are reluctant to pay, and Facebook revenue growth has slowed since 2011.
On July 27, 2012, Facebook released its first quarterly report after its listing. Revenue in the second quarter was $1.18 billion, up 32% from $895 million in the same period last year, which met most analysts'expectations, but did not meet the market's expectations for high growth of Facebook. Even worse, Facebook did not issue revenue guidance for the next quarter, which caused panic among investors. Facebook fell 11% after the day, and then began to fall.
The Stock Price Performance of Facebook in the Early Stage of Listing
Kaifu Lee copied Facebook for $18
Investors'biggest concern is that more and more users only log on to Facebook through mobile devices, and then Facebook did not have a clear strategy on how to cash in mobile advertising.
New Products: Plagiarizing Factory Facebook
Facebook has tried a lot of new products, but it has lost many battles.
(1) Plagiarizing Facebook
Facebook's plagiarized products
The failure of plagiarism before 2013 was due to the poor understanding of core functions, or to the inability to think too much about scenarios and core requirements under the inertia of data-driven paths.
Take Snapchat's Plagiarized Poke as an example. The starting point of the burning function after reading is to reduce the social pressure of Facebook acquaintances and the threshold of sharing. Facebook's introduction of similar products has some genetic problems. Facebook's burning function after trying to read in independent App and main applications has also suffered from failure.
(2) Failed Operating System Attempt: Facebook Home
Home puts social networking first, replacing the application-centric experience of other mobile phones. By integrating Facebook and Messenger into the home screen, it can directly share and browse friends'dynamics. Everything is related to connect and share. Other applications have been squeezed into a small corner, even with calendar and alarm clock functions. The product is available on HTC's $99 mid-to-low-end First and can be downloaded from Google Play.
Facebook Home Interface
Heavy enthusiasts of social networks may like this app, but First, which is sent and received with HTC, is a low-end, medium-sized device for $99, with low-end configuration, setting a high threshold for heavy enthusiasts to switch.
Within two months after Home went online, mobile phone manufacturers such as Samsung, Sony and Lenovo also expressed reluctance to cooperate with Facebook to develop mobile phones as operators with poor sales stopped selling HTC First.
III. STRATEGIC ADJUSTMENT AND ORGANIZATION CONSTRUCTION
Facebook has not been overwhelmed by internal and external troubles. The key point to stand up again is to get rid of path dependence, build core competence and merger and acquisition output capability.
On September 12, 2012, Zuckerberg, who suffered from stock price slashing and strategic mistake, first interviewed after his listing, said that the company's biggest mistake was to bet on HTML5, focusing its strategy on (native) mobile, and looking forward to the company's profitability scenario in the mobile field.
Re-launch of native applications
In May 2014, Facebook held another F8 Developers Conference every three years. The announcement of three empowerments for developers at the conference was a footnote to how Facebook has built itself in recent years.Build, Grow, Monetize。
These three items correspond to the three most important parts of a product:Retention, Growth and Realization。
Internal Facebook has built a troika of user growth, application construction and commercialization; external Facebook has acquired Instagram, WhatsApp, Oculus and integrated capabilities.
Facebook F8 Developers Conference 2014
Facebook 2018 Organizational Architecture
Facebook Organizational Architecture 2016-2017
Basic capacity building
Facebook is the grandfather of the popular growth hacker Growth Hacking, whose guiding ideology is to use products, technology and data to promote user growth and enhance user retention.
Facebook's Independent Running Model for Growing Teams
The revision process of desktop Newsfeed is a good example:
In 2012, Facebook attempted to iterate over the Newsfeed interface, when FB's top team designed an interface upgrade that improved the complex navigation bar on the left, strengthened images, flattened pages, and aligned with the navigation bar on the mobile. The team agreed that the revision was feasible.
Facebook and Renren
After the company transformed from HTML5 to native App in 2012, the growth team redeveloped the powerful mobile grayscale publishing and A/B testing framework Airlock and the testing system Mobile Lab. The environment changed and the core competence remained unchanged. The team helped Facebook reach today's staggering 2.2 billion monthly activity, with WhatsApp, Messenger and Instagram reaching 1.5 billion, 1.3 billion and 1 billion, respectively.
The recommendation of Newsfeed, the information flow that users saw on Facebook's homepage 10 years ago, was purely patting their heads. In 10 years, Newsfeed introduced EdgeRank algorithm, 11 years machine learning, 13 years of full access to AI, and intelligent recommendation became a powerful middleware capability to output to Instagram and WhatsApp.
In 13 years, Graph Search, a social search service, was launched, introducing natural language search capabilities and providing search services in conjunction with Facebook's massive social content.
Newsfeed needs to emphasize that algorithmic recommendation is becoming more and more important today, and Facebook is the first company to recommend users according to their preferences.
The idea of personalized recommendation can be traced back to Zuckerberg's music player Synapse with his high school classmate De Angelo, who later applied for a patent and proposed an idea of customizing multimedia streams to suit users'preferences.
In 2010, the first EdgeRank algorithm was introduced, which is slightly more advanced than patting the head: it specifies three factors: intimacy, marginal weight and freshness, quantifies them with a function similar to exponential decay, and finally multiplies them to get each dynamic score, and then filters and ranks them. This version of the algorithm does not introduce any factors of machine learning, but after the F8 conference was introduced publicly, it became unpredictable through media rendering.
After 2011, with the rapid development of Facebook, more than 1 billion and 20 million public homepages are live each month. Machine learning and deep neural network are introduced. According to Facebook's machine learning blog, after 2011, the Newsfeed algorithm has turned to machine learning in an all-round way. In theory, Facebook has the richest data in the world, and the quality of the trained models is extremely high, which becomes an important basis for capacity output.
Facebook's commercialization can't be bypassed by COO Sandberg.
In 2008, Zuckerberg talked with Sandberg for 50 hours before and after, and finally invited her to Facebook. Sandberg, formerly Google's vice president of online sales, employs more than 4,000 people, accounting for a quarter of all Google employees. Under her leadership, Google's sidebar advertising revenue grew from 15% to more than 50%.
After Sandberg joined in, he built Facebook's advertising system, launched public accounts, sidebar ads, docking ads and other advertising models, which increased Facebook's advertising revenue from 300 million in 2008 to 1.9 billion in 2010.
However, in the form of advertising, Zuckerberg insisted on user experience, reluctant to add advertising to the core function of Newsfeed to disturb users, until the stock price dropped in 12 years, Zuckerberg admitted, Promoted Stories sponsored story closed in 14 years.
The Emergence of Feed Advertising and Facebook's Commercialization into a New Stage
Total advertising revenue and single-user advertising revenue can directly reflect the progress of commercialization. From 2014 to 2015, Facebook's single-user advertising value maintained a growth rate of more than 100%.
Sandberg found another leg for Facebook.
Facebook's Advertising Price Growth Rate
Facebook's quarterly advertising revenue
At one level, the acquisition of Instagram by Facebook is inevitable.
Instagram founders Strom (right) and Craig (left)
It would have been interesting if Ins had held a shareholders'meeting at that time.
After the acquisition, Instgram's original founding team was still responsible for the product, but Facebook imported the relationship chain for it and integrated it deeply into the main product, taking over Ins's growth and subsequent commercialization. Facebook's industrialized infrastructure and capacity output were refined in this process.
Instagram Monthly Live Data
Instagram has secured Facebook's mobile foothold and attracted young users. The importance of the deal cannot be overstated. Instgram is worth hundreds of billions of dollars today.
WhatsApp and Messenger
WhatsApp founder Kum was born in Ukraine during the Soviet Union. His parents seldom made phone calls to avoid eavesdropping, which left seeds in Kum's mind for simple, secure encryption and abandonment of advertising. After immigrating to the United States, he went to San Jose State University, and after graduation, he went to Yahoo and met his partner, Eckton. They have worked together at Yahoo for nine years, and they have experienced Yahoo's journey from prosperity to sunset.
WhatsApp founders Kum (right) and Eckton (left)
In February 2009, WhatsApp was established to provide traffic-based information services for users to change their status, such as inconvenient phone calls, fitness and so on. The company's main cost is the cost of sending validated text messages to users. The two founders periodically changed their apps from free to paid to control the pace of development. However, the number of users continues to grow even after paying $1.
WhatsApp has cut a gap in the market. In 2009, only BlackBerry Messenger BMM could provide free SMS service, but only on BlackBerry. Skype and Google's G-Talk did not attach much importance to the mobile market. WhatsApp is growing rapidly in Latin America, Europe and other markets because U.S. carriers usually offer unlimited SMS packages, which are rare in other countries. At the end of November, users sent 1 billion messages a day, 10 billion in 12 years and 17 billion in 13 years.
By early 2014, WhatsApp had 430 million monthly active users, while the company had only 56 employees, half of whom were technicians, and raised a total of $58 million, both of which were dominated by sequoia.
It's amazing to have so few people to maintain a product with such a large user base. Teams are struggling with new functional iterations and don't know how to commercialize it. It is a good way to be acquired and operated independently by a giant. It can not only enjoy the support of the giant in terms of capital, law, finance, engineering design, but also focus its team on products.
Zuckerberg said the $19 billion offer for WhatsApp was due to the service's unprecedented growth.
Beluga (left) and Messenger (right)
Although they are all IM software, Facebook has different strategic positioning for WhatsApp and Messenger.
Secondly, in terms of function development, Messenger becomes a service platform, while WhatsApp insists on simple communication functions. Messenger initially hosted Facebook's relationship chain, further carrying functions such as transfer payments, games, customer service, and became a service platform. WhatsApp, on the other hand, focuses on simple communication functions. Information, voice and communication are always the core functions of the product. It was not until 17 years ago that Status Dynamics, which mimics Snap, was added.
Finally, in the market positioning, WhatsApp has been developing rapidly in Latin America, Europe and Asia. However, the growth of users in the United States is not enough. IMessenge, Snapchat and others occupy the top two in the market, while the penetration rate of Messenger in the US is higher than that of WhatsApp. As a result, Messenger has carried the banner of the developed country market, and WhatsApp has gone out to build a new market. 。
By the end of 2014, when WhatsApp was officially acquired, Facebook could finally stand up and claim that it had become a mobile First company, with 2.89 billion monthly viabilities (not heavy) for all its products, 69% of its revenue coming from the mobile side, and the market had recognized Facebook's dominance over mobile advertising platforms.
WhatsApp Monthly Active User Number
Mergers and acquisitions and capacity export
Firm mergers and acquisitions, as well as strong integration after mergers and acquisitions, have enabled Facebook to steadily emerge from the failure of the mobile transformation crisis. It's hard to imagine what Facebook is like today without Instagram and WhatsApp.
At this stage, Facebook mainly guarantees the application infrastructure, commercialization and growth of three carriages, and the application team takes the wheels directly.
An Employee's Monthly Living Quantity
User/employee numbers are a qualitative indicator of the effectiveness of each team, but WhatsApp is able to match 1.66 million live users with an employee who is against the weather, which cannot be achieved without Facebook's powerful output.
Instagram Engineering Team Official Website
Simply put, application teams only need to focus on the product itself, take the wheels they need, grow teams to assist application growth, commercialize teams to help cash in, and Ins teams only need to focus on the product.
For snap, which is more popular in the youth market, the offer price has soared, but Spiegel has completely ignored it, and the best acquisition integration magic is useless. Recognizing reality, Facebook chose a more pragmatic approach, using stronger system capabilities rather than the earliest traffic to copy directly. This time, instead of being in front of Snap's App, Facebook copies its core functionality directly in its own core applications, squeezing your users'time and frequency with a larger network effect.
In August 16, Facebook launched Instagram Stories, duplicated Snap, and displayed multiple user posts in one entry, disappearing 24 hours later.
Snap was caught off guard. According to the 17-year Snap prospectus, in the third quarter of Instagram Stoies, Snap's user growth rate fell by 82% and its ring-to-ring growth rate was only 7%, while Facebook's ring-to-ring growth rate was 4.2% in the same period, and Snap's growth data was worse in the fourth quarter, only 3.2%. Instagram Stories, on the other hand, has a daily life of 150 million, just slightly less than Snap's total number of users.
Facebook interrupts Snap's growth, and Snap's other capabilities have yet to be built.
Snap's growth slowed down immediately after the launch of Instagram Stories
Ending: Facebook Gets a Mobile Internet Ticket
At the F8 Developers Conference on April 30, Zuckerberg introduced Facebook's achievements: successful mobile transformation, mobile revenue exceeded 59%, built a complete mobile infrastructure, the total number of active App users reached 1 billion, and Facebook accounted for 20% of mobile users'time.
2014 Facebook F8 Conference: Mobile Revenue Beyond Desktop Revenue
Three capabilities were proposed for developers: application building, growth and commercialization.
This is a concentration of Facebook's ability to build in the climbing process.
Facebook F8 Conference in 2014:
Application Creation, Growth and Commercialization
At the Q4 earnings conference in 2014, Zuckerberg announced that the company had become Mobile First, many products had become Mobile Only, and mobile advertising revenue accounted for 69%, occupying the dominant position of mobile advertising.
After missing the mobile Zuckerberg, he finally got the ticket.
Facebook 10-year roadmap 2016
5. Qian Chao, who knows the column "Unveiling the Mysterious veil of Growth Hacking"