Facebook history and Development

Facemash, the Facebook’s predecessor, opened on October 28, 2003. Initially, the website was invented by a Harvard student, Mark Zuckerberg, and three of his classmates – Andrew McCollum,Chris Hughes and Dustin Moskovitz. Zuckerberg wrote the software for the Facemash website when he was in his second year of college. The website was set up as a type of “hot or not” game for Harvard students. The website allowed visitors to compare two student pictures side-by-side and let them choose who was “hot” and who was “not”.

That night, Zuckerberg wrote the following blog entries:

I'm a little intoxicated, not gonna lie. So what if it's not even 10 pm and it's a Tuesday night? What? The Kirkland dormitory 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.
—9:49 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.
—11:10 pm
Let the hacking begin.
—12:57 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, Mark Zuckerberg hacked the "facebooks" Harvard maintained to help students identify each other and used the images to populate his Facemash website.

Harvard at that time did not have a student directory with photos and basic information, and with the initial site generated 450 visitors and 22,000 photo-views in its first four hours online. That the initial site mirrored people’s physical community—with their real identities—represented the key aspects of what later became Facebook.

In January 2004, Mark Zuckerberg began writing the code for a new website, known as 'thefacebook'. He said in an article in The Harvard Crimson that he was inspired to make Facebook from the incident of Facemash: "It is clear that the technology needed to create a centralized Website is readily available ... the benefits are many." On February 4, 2004, Zuckerberg launched "Thefacebook", originally located at thefacebook.com. He told The Crimson, "Everyone’s been talking a lot about a universal face book within Harvard. I think it’s kind of silly that it would take the University a couple of years to get around to it as I can do it better than they can, and I can do it in a week." Zuckerberg also his intention to create a universal website that can contact people around the university. According to his roommate, Dustin Moskovitz, "When Mark finished the site, he told a couple of friends ... then one of them suggested putting it on the Kirkland House online mailing list, which was ... three hundred people." Moskovitz continued to say that, “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."

Just six days after the launch of the site, three Harvard University seniors, Cameron Winklevoss, Tyler Winklevoss, and Divya Narendra, accused Zuckerberg of intentionally misleading them into believing that he would help them build a social network called HarvardConnection.com, but instead using their idea to build a competing product. The three complained to the Crimson, and the newspaper began an investigation. Zuckerberg knew about the investigation so he used TheFacebook.com to find members in the site who identified themselves as members of the Crimson. He examined a history of failed logins to see if any of the Crimson members have ever entered an incorrect password into TheFacebook.com. In the cases in which they had failed to login, Mark tried to use them to access the Crimson members' Harvard email accounts, and he was successful in accessing two of them. In the end, three Crimson members filed a lawsuit against Zuckerberg which was later settled.

Membership was initially restricted to students of Harvard University. Within the first month, more than half the undergraduate population at Harvard was registered on the service. Zuckerberg was soon joined in the promotion of the site by Eduardo Saverin(business aspects), Dustin Moskovitz (programmer), Andrew McCollum (graphic artist), and Chris Hughes. In March 2004, Facebook expanded to Stanford, Columbia, and Yale. This expansion continued when it opened to all Ivy League and Boston-area schools. It gradually reached most universities in Canada and the United States. Facebook was incorporated in the summer of 2004, and the entrepreneur Sean Parker, who had been informally advising Zuckerberg, became the company's president. In June 2004, Facebook moved its base of operations to Palo Alto, California. The company dropped ‘The’ from its name after purchasing the domain name facebook.com in 2005 for $200,000. Thefacebook circa 2004 has been brought back in 2013 and is on display athttp://www.thefacebook.us/. Users can register on it with their normal Facebook account.

On October 1, 2005, Facebook expanded to twenty-one universities in the United Kingdom, the Instituto Tecnologico y de Estudios Superiores de Monterrey (ITESM) system in Mexico (around thirty campuses throughout the country at the time), the University of Puerto Rico and Interamerican University of Puerto Rico network in Puerto Rico, and the University of the Virgin Islands network in the U.S. Virgin Islands. Facebook launched a high school version in September 2005, which Zuckerberg called the next logical step. At that time, high school networks required an invitation to join. Facebook later expanded membership eligibility to employees of several companies, including Apple Inc. and Microsoft. On December 11, 2005, universities in Australia and New Zealand were added to the Facebook network, bringing its size to 2,000+ colleges and 25,000 + high schools throughout the United States, Canada, Mexico, the United Kingdom, Australia, New Zealand, and Ireland. Facebook was then opened on September 26, 2006 to everyone ages 13 and older with a valid e-mail address.

Late in 2007, Facebook had 100,000 business pages, allowing companies to attract potential customers and tell about themselves. These started as group pages, but a new concept called company pages was planned.

In October 2008, Facebook announced that it would set up its international headquarters in Dublin, Ireland.

In 2010, Facebook began to invite users to become beta testers after passing a question-and-answer-based selection process, and a set of Facebook Engineering Puzzles where users would solve computational problems which gave them an opportunity to be hired by Facebook.

As of February 2011, Facebook had become the largest online photo host, being cited by Facebook application and online photo aggregator Pixable as expecting to have 100 billion photos by summer 2011. As of October 2011, over 350 million users accessed Facebook through their mobile phones, accounting for 33% of all Facebook traffic.

On March 12, 2012, Yahoo! filed suit in a U.S. federal court against Facebook weeks before the scheduled Facebook initial public offering. In its court filing, Yahoo said that Facebook had infringed on ten of its patents covering advertising, privacy controls and social networking. Yahoo had threatened to sue Facebook a month before the filing, insisting that the social network license its patents. A spokesperson for Facebook issued a statement saying "We're disappointed that Yahoo, a longtime business partner of Facebook and a company that has substantially benefited from its association with Facebook, has decided to resort to litigation". The lawsuit claims that Yahoo's patents cover basic social networking ideas such as customizing website users' experiences to their needs, adding that the patents cover ways of targeting ads to individual users.

Funding Resouce

Facebook was initially incorporated as a Florida LLC. For the first few months after its launch in February 2004, the costs for the website operations for thefacebook.com were paid for by Mark Zuckerberg and Eduardo Saverin,who had taken equity stakes in the company. The website also ran a few advertisements to meet its operating costs


In the summer of 2004, Peter Thiel made a $500,000 angel investment in the social network Facebook for 10.2% of the company and joined Facebook's board. This was the first outside investment in Facebook.

In April 2005, Accel Partners agreed to make a $12.7 million venture capital investment in a deal that valued Facebook at about $98 million post-valuation. The deal was finalized in May 2005. As part of the deal, Jim Breyer, a partner at Accel, joined Facebook's board, and the board was expanded to five seats, with Zuckerberg, Thiel, and Breyer in three of the seats, and the other two seats currently being empty but with Zuckerberg free to nominate anybody to those seats.

In April 2006, Facebook closed its Series C funding round. This included $27.5 million from a number of venture capitalists, including Greylock Partners and Meritech Capital, plus additional investments from Peter Thiel and Accel Partners. The valuation for this round was about $500 million.

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. Zuckerberg had already stated that he did not want to sell the company, and denied rumors to the contrary. 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.

In September 2006, serious talks between Facebook and Yahoo! took place concerning acquisition of Facebook, with prices reaching as high as $1 billion. 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.

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