There was a time in our lives, when having an account on facebook used to be a big deal for us! Remember that day, when you created facebook account by telling wrong birth date. Time passed, and time changed, the company whose product used to be an achievement for us, its secrets started appearing in front of all of us! Such secrets, which no one knows. Facebook – a trillion dollar tech company, with 2.9 billion active users, is the world’s biggest social media website. Company is growing, making a lot of money, profit is increasing every year, and investors are extremely happy! Mark zuckerberg. Age – 28 years. Net worth – $98 billions. The third richest man in this world. But today within just a year, mark zuckerberg’s net worth reduced to $46 billions.
Facebook is now meta. And meta’s valuation, has come down from $1.17 trillion to $560 billions! And just a few days ago, facebook fired more than 11,000 employees. Everything is over in one a pinch of time. What will happen to those people? Why did facebook take such a terrible step? What’s going on in the company, that no one knows. Is facebook going to shut down? This is the ultimate rise and fall of facebook! The company that indirectly controls the world.
Facebook is constantly loosing money! Even to such extent, that facebook doesn’t have money to pay their employees. Investors, instead of investing, are withdrawing their investments. And the most interesting part is, from july 2021 to july 2022, monthly actively users of facebook, have increased by 40 millions. But, still the profit is down by 30%. But how? What’s going on in the company, that in spite of increasing users, company is sitting on losses. Because, as awesome as things look from the outside in this company, they are even more terrifying on the inside!
How Facebook Was Born
This story starts from 28 october, 2003. When harvard’s 2nd year computer science student made a social media site named ‘facemash’ for the students studying in his university. Idea becomes hit. And within two weeks, 430 students visit this website. But, the sad part was, the harvard’s administration got his website banned! Because according to them, all the photos which were uploaded on facemash, were hacked from the data center of the university. At that time, three students studying in that university, cameron winklevoss, taylor winklevoss, and divya narendra, together make a social media site named ‘harvardconnection’. And who was coding the website? Victor gao.
But due to financial problems, he had to stop. But, before going, victor suggested team, that he knows someone who can do this. He was none other than, mr. Mark zuckerberg. Harvardconnection team shares his idea with mark. The idea was to build a social media website, which could be used by all school and college going students. This meeting happens at the end of october 2003. And after that, by 1 december, mark sent two emails to harvardconnection, which said that he is eagerly interested in the idea, but due to some work, he is busy. 4th december 2003, harvardconnection team contacts again with mark. And the reply came, i’m solving some problem, i’ll revert back soon. And things just went on. Team kept on following up, and mark kept ignoring.
14th january 2004, again a meeting happens between mark zuckerberg and harvardconnection team. In which mark shows doubt the viability of harvardconnection team. He says, this idea might not work, and i’m too busy to work on it. I’ve got a lot of projects. But interestingly, right after one month, mark zuckerberg launches the website named ‘thefacebook’.
The idea was same, only name was different. 10th february 2004, cameron winklevoss sends a letter to mark zuckerberg, in which it was written, that he is accused of contract breaching and stealing of idea. A few months later, on 21st may 2004, harvardconnection team launched their website with name connectu. And, soon after, in september 2004, conenctu filed a case on facebook and mark zuckerberg. When investigation happened, it came to know, that there was no contract signed between mark zuckerberg and winklevoss. But, the question is when facebook was launched, at that time, friendster, myspace, conenctu, and many more similar websites were also launched. But what facebook did so special, because of which, today none of us even knows the name of these websites!
fighting the demographic restrictions.
Friendster was designed on the principle of dominating the asian market. But the problem was, at that time, there was not much internet penetration in asian countries. On the other hand, facebook was targeting western countries, where, by 2004, internet penetration had come, and because of which, facebook was rapidly gaining users.
Security and user interface.
The security of friendster was very low. And the user interface was filled with different colours, and making it super difficult to use. On the other hand, facebook, was comparatively less cluttery, and was very simple to use.
And third and most importantly, staying away from anonymity and diversification. Where, sites like myspace use nicknames, and did everything to boost their revenues. But facebook allowed to keep your own name. Which builds a network effect. You want to join facebook, because you know, your classmates are on facebook.
Year 2008, facebook buyouts connectu in $65 millions. And from here starts, the actual story of facebook. Because, this is how it happens. We think different, but it turns out to be something else!
Buy, copy and destroy!
By 2008, facebook was so big, that either it used to acquire its competitor, and if that’s not possible, they used to copy their main features. By 2012, facebook had one billion users. And everything was going so well, but by 2016, facebook started to have big problems. Platform had become so cluttery, that people started leaving platform. Tons of fake accounts. And the more scary part, fake news. Facebook was regularly getting summons from authorities. To counter fake news, facebook started a feature of flagging fake posts. In the same year, facebook also launched reactions, in which you can use various emojis along with like button. This was a move by facebook to understand the human behaviour, in a much better way. But, it failed. After this, you can think of, what happened with facebook.
Year 2018, a massive data was breached in management consulting firm cambridge analytica. This firm, through the application ‘this is your digital life’, by getting the personal data of 87 million users, used to promote trump in 2016 american presidential elections. When the scandal broke out, whole world got shocked. #deletefacebook started trending on twitter. And the share price of facebook went down by 40%. But interestingly, even after all this, facebook survived but, if you look very closely, today, the condition of facebook is very bad. And this is happening because of three reasons.
1. lack of quality users –
Now look at this very very carefully! According to july 2022, the population of world was 8 billion. In countries like russia, china, iran and north korea, facebook is completely banned. So, the total population of all these countries, that is 1.7 billion. Facebook can’t cater to these people. On top of that, 1.1 billion are those people, who are below 13. Facebook can’t cater to these people also. And cherry on the cake, 37% population of the world, doesn’t have internet access. So, the total non users of facebook, are 5.1 billion. And currently facebook has 2.9 billion active users. So, facebook is technically left with no more new users. Just have a look, growth of users of facebook, is hardly growing. Infact, its users declined in 2022. After this news came in market, its share price started declining. Because, this was the first time in history, that there was decline in revenue and active users.
2.loss of youth appeal-
In simple words, over-commit and under deliver. In october 2021, when mark zuckerberg made announcements of meta, everyone was shocked, because everyone thought that this is going to be the future. But, the level of graphics, user interface, compatibility and connectivity that the mark had promised, at the time of the launch, it didn’t turn out even 1/4th of that. And this backfired! I’ll tell you, how? In india, 5% people actively invest in stock market. But, on the other hand, in us, 58-60% people actively invest in stock market. So you see, in countries like india, retail investors can’t allow any stock to move too much! So in india, until institutional investors pull put their money from a stock, there wouldn’t be a massive change in stock price. But in america, most of the american retail investors, hold facebook stock. And because of the quantity and trade volume of retail investors, stocked dipped fastly! And offcourse, when so many retail investors pull out money, then even the mutual fund companies, where the public money is invested, they also pull out their money from there. Because, mutual funds have people’s money, and mutual fund managers, don’t want to loose peoples money!
So, in very simple words, as soon as facebook announced its results, retail investors and institutional investors, started their facebook stocks. And that is the reason, there is such a huge dip in stock price. And, if you look very closely, revenue is also dropping. Due to which most of the investors don’t have confidence on facebook. That’s why, due to over commitment and under delivery, people lost confidence in facebook. As a result, the actual market capitalization of company, has dropped from $1 trillion to $256 billions. But you know what, there is such an industry, where over commitment and under deliver, happens most!
The fitness industry! And the sad part is, in this case, you put your life on risk, not just money! You won’t even know that how you have been fooled! You’ll think, body is building, career is in making but, in reality, your life is being wasted at this level, that you can’t even think of. This industry is filled with dirty secrets. Such secrets, which most of the people don’t know!