Wednesday, March 28, 2012

From Dorm Room to Boardroom : The Growth of Social Networks


Over the past several years, social networks have becomeincreasingly popular as they made their way into mainstream society mainly due to the ability to communicate in both real-time and asynchronously with a wide group of people. It is important to remember that the ability to use the Internet to communicate with a diverse and worldwide audience is not new and cannot be attributed solely to tools such as MySpace, Facebook, and Twitter. The ability to connect instantaneously with people from all around the world has been available to us since Prodigy decided to allow people to set up user groups around topics that interested them.

This paved the way to the creation of forum boards, user groups, chat rooms, IRC, instant messaging, and eventually, social networks as we know them today.

Nowadays these social networks come in all different shapes, sizes, and specialties.
Do you love taking photos? Hop on Flickr. Want to communicate in short bursts of messages in real time. Head over to Twitter. A sucker for video? There’s a service a few people have heard of called YouTube. Want something a little more specialized? How about a niche community encouraging members to stay fit? There’s Twit2Fit that is run on the Ning social networking platform. Now, you want to track your workouts from getting back into shape, thanks in part to the support you get on Twit2Fit? Yep, there’s a social network for that, too. You see, there is a social network for just about every broad and specific subject you could possibly want. Of course,
some are more mainstream and “sticky” than others; therefore, there’s more engagement
and sharing by the community, and more iterating of the platform by the founding company. To understand just how many platforms there are and how many different communications verticals they span, Brian Solis and Jesse Stay created the Conversation Prism, shown in Figure 1.1.

The Conversation Prism, created by Brian Solis and Jesse Stay, provides a
visual representation of the social web. For more, visit theconversationprism.com.

These tools enable a single person to develop a personal brand that can compete with household consumer brands. Through the development of these personal brands, social networks, and blogs allow people to now be in control of what news others see. These social networks allow for the management of your online reputation. Besides these benefits, they create the ability for one person to use a platform to talk to thousands of people simply by hitting the Enter key. Social networks enable regular, normal, run-of-the-mill individuals, to become influencers and
trusted resources to their communities. Yes, now YOU can develop your own personal communities. These communities can have a direct impact on your ability to build your business successfully by interacting with your prospects and customers online and building a strong fan base.

Social networks and blogs allow a wine store owner to connect with his community and help to grow his business from $4 million per year to over $60 million per year in revenue. These tools have helped a guy from north of Boston to develop such a strong community that they helped catapult a book he wrote onto the New York Times Bestsellers list only two days after the book was on store shelves. But, these tools have not only been beneficial to individuals. They have also helped some of the largest companies in the world reach out and start connecting with their customers on a one-to-one basis.

Businesses have greatly benefited from turning to social networks and integrating them as part of their marketing, communications, and customer service strategies. Using social networks has allowed businesses that embrace these tools to “humanize themselves.” What do I mean by the term humanize?

For decades, companies have continued to grow through their ability to properly manage their brand by successfully marketing logos, catch phrases, slogans, and tag lines, all of which help to develop brand recognition. These companies became known by our ability to recognize their logos and get their jingles stuck in our heads, or the catchy tag line at the end of every commercial. At the same time, these same companies, in an effort to improve their bottom line, routinely looked at implementing systems and processes that automated as much as possible. Need to talk to customer service? Sure, there is a number to call. But, first, you’re going to
have to hit 1. Then 2. Type your account number. Type it again because you screwed up the first time. Say your last name. Now you’re finally transferred to a human but because you hit 2 instead of 3 during the second step, you were sent to the wrong department. Now you have to be transferred elsewhere where you have to repeat all the information that you just inputted.

It’s barriers like these that, while beneficial to the corporation, prevent them from highlighting the humans and personalities that help the corporation to function on a daily basis. Social networks help to change this. Humans can showcase the individual personalities that help to make them who they are. Companies can now cut out the phone trees and instantaneously interact with a single customer who is having an issue, which, to the customer, is one of the most serious things going on in his life at the very moment.

Besides just being active on social networks, these tools also enable businesses to, as Chris Brogan describes it, “grow bigger ears.”You see, at any given moment, there are multiple conversations taking place about you, your brand, your products or services, your competition, and your industry. Imagine if you could monitor all this chatter in real time and had the ability to quickly respond? That would be valuable to you as a business, right? Hint: You want to be nodding your head up and down as fast as possible. If you’re not, then put this book down, run head first into the wall, and start over again.

By way of the amount of data that users pour into these social networks on a daily basis, they allow us to monitor all those conversations with listening tools. These listening tools can alert us to any mentions of anything that is of interest to us. Someone bashes you on a blog post? The software service your company sells crashes for a user during a big presentation so he complains online? Your competition announces a major restructuring, product, or financial news? Yep, all these situations and much more can be monitored. In fact, these tools, because of their
real-time nature, routinely provide information faster than Google can index it and
quicker than news organizations can mobilize to broadcast.

Social networks have helped to grow businesses, elevate normal people to web celebrities, bring celebrities down to a human level, launch music careers, change national sentiment toward entire industries and assist in building and growing a community so strong that it helped to elect the 44th President of the United States of America.

One of the fastest growing and most popular social networks ever to be launched has been Facebook. With over 400 million users who generate billions of pieces of content, the social network has a larger population than most countries. When you first join Facebook, you immediately understand how it can be used to connect with family and friends. However, many people find themselves questioning the viability of using Facebook as a main form of communications professionally. Companies, rightfully so, have many questions regarding security, privacy, and how a website where you can comment on what your friends are doing, upload pictures, videos, and become a fan of just about anything in the world can actually help them to move needles that are important to them.

Throughout this book, I will tackle these very issues and help show you, both strategically and tactically, how Facebook can be used within your business. But first, let’s start by exploring how a little social network that was created in a dorm room has become the behemoth that it is today.


About Marc Zuckerberg

Mark Zuckerberg (shown in Figure 1.2) was born on May 14, 1984 and was raised
in Dobbs Ferry, NY. Though it would be a few years before Zuckerberg would create
the top social network in the world, he began coding at an early age while he
was in middle school. Zuckerberg attended Phillips Exeter Academy where he
devised Synapse, a music player that leveraged artificial intelligence to learn users’
listening habits. The technology that Zuckerberg created was so intriguing that it
brought both Microsoft and AOL calling as both corporations tried recruiting
Zuckerberg before he decided to attend Harvard University. But, that was not the
only project keeping Zuckerberg busy while he attended Phillips Exeter Academy.
Zuckerberg also built a version of the popular game, Risk, in addition to a program
to help improve communications within his father’s office. After Phillips Exeter
Academy, Zuckerberg moved on to Harvard where he majored in computer science.





The Early Days

What would become the world’s most popular social network only a few short years
after its launch all started in February 2004 when Mark Zuckerberg launched “The
Facebook,” originally located at thefacebook.com (see Figure 1.3). Before becoming
the richest person in the world under 25, Mark Zuckerberg was a sophomore at

The original login screen to TheFacebook.com that launched on February 4,
2004 for Harvard University students only.

The Facebook came about after, during the previous semester, Zuckerberg created a
Harvard version of a popular rating website “HOT or NOT.” Zuckerberg called it
Facemash, and it was intended to allow students at Harvard University to compare
other students based on their online dorm Facebooks.
At the time that Zuckerberg was creating Facemash, HOT or NOT, as shown in
Figure 1.4, was a popular rating site, founded in October 2000 by James Hong and
Jim Young, that allowed users to vote whether pictures of people that were submitted
to the site were HOT or NOT. As the HOT or NOT website describes

HOT or NOT is the original place to rate, date, and hook up with single people
18–34. With millions rated using HOT or NOT’s proprietary “RATE” feature,
HOT or NOT is the official home of hotness...users can “MEET” other members
through HOT or NOT’s exclusive DoubleMatch™ dating engine. HOT or
NOT also offers other fun options such as real-time chat, virtual flowers and
gifts, and HOTLists™, which let members share their passions through personal
selections of over 220,000 pictures of bands, movies, sports, TV shows, products,
and hobbies.

At its height, HOT or NOT raked in an annual revenue approximated at $5 million
with net profits of $2 million. Whether, at the time, HOT or NOT had already hit
this success, and if they had, if Zuckerberg had known about it, the service was still
very popular among college students. Therefore, it is no surprise that Zuckerberg
saw an opportunity to create a private, internal network similar to the popular rating
service, reserved only for Harvard students. Also, the basic tenets of the service
Harvard University when he developed The Facebook.

One of the original landing pages for HotorNot.com, which, at the height
of its growth, would bring in annual revenue of approximately $5 million.

aren’t features that would be hard for someone who had been coding their entire
life to create.

The Facemash site launched on October 28, 2003 but was shut down by Harvard
administration officials only a few days later because, to gain access to the pictures,
Zuckerberg had hacked Harvard’s computer network and copied over each
of the nine residential houses' databases of ID photos. So, how did a HOT or NOT
knockoff eventually iterate to become the world’s largest and most popular social
network to date?

It all started when Mark Zuckerberg added the site to the Kirkland House email
list, which, at the time, was only approximately 300 people in total. However, from
that single email, and Zuckerberg sharing his latest creation with a few friends,
thefacebook.com spread so quickly that within the first month of its launch more
than half of the undergraduates at Harvard during spring 2004 had signed up.

The Teenage Years

The Facebook was launched and, at first, was available only to Harvard University
students. In March 2004, only one month after its initial launch, Zuckerberg
expanded access to Stanford, Yale, and Columbia. Then Zuckerberg quickly
expanded access to all Ivy League universities, then next to Boston area universities
and colleges, and then across the United States and Canada. Although nothing
specifically points to the geographic location of Harvard University as one of the
reasons for the early explosive growth, it could be argued that it had a big effect. In the
greater Boston area, there are well over 100 colleges and universities. The Northeast
has the largest concentration of colleges and universities in the country. This helped
Zuckerberg spread the social network quickly as it created demand for access as
friends from different schools chatted with one another.

During its initial growth spurt at Harvard, Zuckerberg brought on Eduardo Saverin,
Dustin Moskovitz, Andrew McCllum, and Chris Hughes to help with programming,
graphic design, promotion, and other related tasks. The Facebook would later
incorporate as a business during the summer of 2004. In June 2004, only 4 months
after the platform’s inception, Facebook would receive its first investment totaling
$500,000 from Peter Thiel, cofounder of PayPal. For The Facebook to continue its
Cinderella story, it would be necessary for the company to be located at the epicenter
of technology, Silicon Valley. The Facebook moved operations out of the dorm
rooms at Harvard and out to Palo Alto, California.

In 2005, The Facebook purchased facebook.com for $200,000 and dropped “The”
from its name. Later that year, in September 2005, approximately a year and onehalf
after the initial launch, Facebook opened its network to high schools. It would
be another year, in September 2006, that Facebook would completely open the network
to anyone older than 13 with a valid email address.

During this time, Facebook continued to receive injections of cash to help it scale
its operations to accommodate for the increase in demand from its users. In 2005,
Facebook received venture capital funding from Accel Partners to the tune of $12.7
million. Facebook would receive another injection from Greylock Partners totaling
$27.5 million in 2006.

To help Facebook continue expanding into international markets, in October 2007,
Facebook and Microsoft expanded an advertising deal that gave Microsoft a $240
million equity stake in the social network. As a main pillar of Facebook’s current
revenue model, Facebook launched Facebook Ads a month later, in November 2007.

Coming into Adulthood

In January 2010, Mark Zuckerberg announced that Facebook had signed on its 400
millionth user. Consider that in September 2009, Zuckerberg announced the 300
millionth user, and not too long before that, in July 2009, he announced via the
Facebook Blog that the network had surpassed its 250 millionth user since the site
launched in February 2004. In only approximately 2 months, the social network had
signed up an additional 50 million users. To put that number into even more perspective,
consider that in April 2009, Zuckerberg had announced that Facebook had
passed the 200 millionth user mark. The growth from 200 to 250 million users took
Facebook approximately 90 days. The growth from 250 to 300 million users took
roughly 60 days. That is a growth rate of approximately 833,000 users every day. To
put that into even more perspective, that translates to approximately 35,000 users
an hour or 578 every minute. Some estimates place the growth rate at approximately
750,000 new users per day.

Each time Facebook hit another growth milestone, it did it in record timing compared
to previous accomplishments. Think Facebook is going away any time soon?
Consider the following chronological growth patterns:

• February 2004: Facebook launches
• December 2004: Facebook reaches 1 million active users.
• December 2005: Facebook reaches 5.5 million active users.
• December 2006: Facebook reaches 12 million active users.
• April 2007: Facebook reaches 20 million active users.
• October 2007: Facebook reaches 50 million active users.
• August 2008: Facebook reaches 100 million active users.
• January 2009: Facebook reaches 150 million active users.
• February 2009: Facebook reaches 175 million active users.
• April 2009: Facebook reaches 200 million active users.
• July 2009: Facebook reaches 250 million active users.
• September 2009: Facebook reaches 300 million active users.

From 2008 to June 2009, Facebook grew 157 percent, gaining an estimated 208 million
visitors. As of June 2009, Facebook was receiving approximately 340 million
unique visitors per month making it the fourth largest website in the world. The
only websites with more monthly traffic are Google, Microsoft, and Yahoo. During
the month of June 2009, it is estimated that Facebook grew by 24 million unique
visitors as compared to May 2009. This type of traffic, and growing importance
within the fabric of the interwebs, has led Facebook, according to paidContent.org,
to pass Google as the top traffic driver to large sites.

To comprehend such astronomical numbers, let’s look at Facebook at the 200
million active user mark. When Facebook hit the 200 million active users milestone,
it produced a video about the race to 200 million people and provided
these comparisons:

• It took 20,000 years for the world population to get to 200 million.
• It would take 46.5 years for 200 million babies to be born in the United
States.
• If Facebook were a country, it would be the world’s fifth most populous
country, bigger than Brazil, Russia, and Japan.

Therefore, add in another 200 million users, at a current growth of 25 million new
users per month or so, and it’s not hard to realize why so much attention is being
paid to Facebook. Will Facebook be the first social network to hit 1 billion active
users? If their growth rate stabilizes and stays consistent at approximately 830,000
per day, Facebook is on pace to sign 1 billion active users by the start of 2012.
When you hear such large numbers of users flocking to any service, it always begs
the question: Are they actually using the service or are they just signing up for an
account that remains dormant?

For Facebook, its users are actively participating in the conversations and are
spending a lot of their time doing so. Brian Solis (briansolis.com), a thought leader,
prolific blogger, speaker, and author, dug up these stats:

• More than 5 billion minutes are spent on Facebook each day (worldwide).
• 30 million users update their statuses at least once each day.
• 8 million users “fan” Fan Pages each day.
• 120 million users log into their Facebook account each day.
• 1 billion photos are uploaded to Facebook each month.
• 10 million videos are uploaded to Facebook each month.
• 1 billion social objects are shared each week.
• 2.5 million events are created each week.
• 45 million active user groups exist on Facebook.
• 30 million users currently access Facebook through their mobile
devices.

So why is everyone running to join Facebook? Facebook seemed to come of age at
a time when simple and functional design wins out. Over the years, Facebook has
continued to maintain a clean, organized user interface despite adding tons of new
features. Facebook is similar to Google in that way. Besides being a superior search
engine compared to Yahoo, MSN, and others, Google wins over users because it is
simple and easy to use, yet is a powerful engine. Facebook represents the same for
the social networking space.

Facebook provides an easy-to-understand interface, thus making it appeal to all
ages. For the less tech savvy, it is manageable without a lot of help. Those that are
tech savvy can take full advantage of the multitude of settings, options, and flexibility
of the platform to share and engage.

It should come as no surprise that the largest growth age range for Facebook is
between 35–55. This flies in the face of what many people believe is the stereotype
user of a social network such as Facebook. But, it is no longer for only college students.

That’s so 2005. Facebook is now for your parents and your grandparents. It is
for your colleagues and your supervisors. It’s for individuals, celebrities, brands,
products, services,musicians, and anyone else that finds it useful to fish where the
fish are whether it’s for friends, ex-lovers, business opportunities, fans, or constituents.
Facebook is now mainstream and poised to continue its rapid growth rate.
To highlight Facebook’s injection into mainstream, in January 2009, during the
inauguration of the 44th President of the United States, Barack Obama, CNN Live
and Facebook teamed up to provide real-time updates from Facebook’s users in line
with the live coverage by CNN. The result was a live video stream window side-byside
with a Facebook integration that displayed status updates, as shown in Figure
1.5, from all Facebook users regarding the Inauguration. It is estimated that 8,500
status updates per minute were captured during the Inauguration. After the massive
success of this integration, Facebook would again make a similar partnership, but
this time with the NBA. During the NBA All-Star game, Facebook provided a realtime
stream of status updates about the 2009 NBA All-Star game. Facebook followed
this up with a live stream integration during the 2009 Grammy’s.

During President Obama’s Inauguration speech, Facebook logged 8,500 status
updates per minute. (Screenshot by David Orban.)


Such partnerships have proven successful for Facebook as it serves as a proving
ground to those that are resistant to using the service. Certainly, there were probably
viewers of CNN Live, the Grammy’s, and the NBA All-Star game who are skeptical
about the service or continued to think it was only for high school and college
students. But having the integration in place with a network such as CNN, which is
arguably the top news network, during one of the most important chapters of our
nation’s history to date, served as a milestone for the social network.

Facebook isn’t only growing its user base at a blistering pace: It continues to build
out its organization and gain market power. To accommodate this growth, during
2009, Facebook opened its new headquarters located in Palo Alto. During 2010,
Facebook is poised to grow its internal team by adding a new office in Austin, Texas
with an initial group of 300 team members. That is in addition to other smaller,
satellite offices all over the country.No longer is Facebook working out of multiple
rented office spaces, coffee shops, and bookstores.

With the rapid growth and popularity that Facebook continues to experience, there
have been several estimated valuations of the company. Probably the best stat to
look at is from a May 2009 investment from Digital Sky Technologies to the tune of
$200 million. The investment deal between Digital Sky Technologies and Facebook
was for preferred stock at a $10 billion valuation. With this intensive growth has
also come fame and fortune for its founder, Mark Zuckerberg.

Zuckerberg is the youngest person to ever be named to the Forbes 400 list. In 2008,
Forbes estimated Zuckerberg’s net worth at approximately $1.5 billion, making him
the 321st richest person in the United States.

Although Facebook has faced competition from other social networks such as
Twitter, FriendFeed, MySpace, Flickr, and other smaller services, it seems as though
it can’t be stopped. In August 2009, Facebook acquired FriendFeed for, roughly, $50
million. This purchase came after approximately one year of FriendFeed continuing
to grow its user base and implementing new features that left Facebook users begging
for. As these new features were released, interestingly enough, they would
appear on the Facebook platform not long after.

This is one of the marks of Facebook so far. When other services implement features
that its platform currently does not support, usually, not too long afterward,
we see the same services appear in Facebook. Most notably was the integration in
February 2009, before its acquisition of FriendFeed, of the Likes feature that had
become so popular among FriendFeed users. In September 2009, Facebook finally
responded to demands from the users to implement a status-tagging feature to ping
(alert) other users or Pages when they’ve been mentioned in a status update. Again,
similar to the Likes feature from FriendFeed, this alert feature is a combination of
@ replies in Twitter coupled with the tagging feature in Facebook Photos and
Videos.

I opened my Facebook account after I graduated from college, though only by a
couple months; I was not part of the initial surge of people who rushed to the service.
Though it is interesting to see the fast growth of the 35+ group of users, I have

spoken with many people who have told me stories about multiple generations of
their families being on Facebook. I don’t foresee my grandparents jumping on the
service any time soon but think it would be interesting to receive a comment from
them to a status or link I posted.

I know what you’re thinking right now. First, you probably didn’t realize that
Facebook was that large. Don’t worry—you’re not alone. Almost every person I talk
to doesn’t believe me. But, now that you know, how can you jump in and get
involved (or more involved)? Can you take the available features and turn Facebook
into a successful tool for communicating with your prospects and customers? What
about privacy?

All these questions and plenty more will be answered in the upcoming chapters.
Along the way I explain the features and their basic functions, and then highlight
how you can begin using them for your business. For those of you who like case
studies and stories of success, don’t worry, I have you covered. If you walk about
after finishing this book and think “Oh, that was interesting” and never do anything
with the information, then I failed to do my job. If, instead, you take this book,
scribble throughout it, call a team meeting, grab a blank whiteboard, and start
strategizing about how you’re going to integrate Facebook (and other social networks)
into the fold of your business, fantastic.

The most important thing is for you to keep an open mind as you flip the pages of
this book. Understand the social networks, especially ones such as Facebook, are
the new way to communicate and market your brand. You can either choose to
embrace it or watch your competition pass you as they figure it out. For the nonbelievers
who are reading this book, this is your call-to-action. Enough is enough.

It’s time to accept that social networks aren’t going anywhere. For those of you who
are already deeply engaged in social networks such as Facebook, I hope that I can
shed light on some ideas and features that you haven’t previously considered using.
Let’s start this journey by going over some of the basics....

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