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Status update: 10 years in, Facebook still a force

8:59 AM, Feb 4, 2014   |    comments
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Mark Zuckerberg, Facebook CEO and founder

MENLO PARK, Calif. - Facebook on Tuesday celebrates 10 years since Mark Zuckerberg's Harvard dorm room launch of the social network, a business now worth more than corporate centenarians General Motors and Ford Motor combined.

Whiz kid-turned-CEO Zuckerberg's social juggernaut, now the de facto water cooler gathering for 1.23 billion worldwide, commands the world's largest network and a coveted advertising position.

TIMELINE | Facebook turns 10 years old

Facebook's journey into the fabric of people's lives, marketer's playbooks and as a formidable company with staying power wasn't always a guarantee. Blunting hype for its promise of social ad dollars, a steady meme still runs of privacy concerns, advertising angst and fickle users.

Concerns over Facebook's prospects, magnified when Facebook's May 2012 IPO flopped, have eased on Wall Street as the social giant continues to report massive ad growth and maneuver into mobile. Facebook shares soared to record levels Thursday - $62 per share - after the company reported on Wednesday that 2013 revenue surged 55% to $7.9 billion from the year before.

"Over the coming months and years, you'll see us continue focusing on many of the same themes but now with greater scale, ambition and resources," Zuckerberg said during the company's earnings conference call.

Zuckerberg's once-uncertain odyssey a decade later cements the persona of an iconic Silicon Valley leader. His aggressive drive to innovate and court top talent remains matched by Chief Operating Officer Sheryl Sandberg on the business side, says David Sze, a partner with Greylock Partners and Facebook investor. "I certainly wouldn't bet against them," he says.

"We're the largest; we get more mobile time than the next seven or eight combined, including Twitter," said Sandberg in an interview with USA TODAY.

Zuckerberg's steady drumbeat of features added to photos, videos, news media and mobile phone apps has Google on defensive with its rival Google+ in a bid for a piece of social advertising. Yet few seem sold on it, several years in.

At war for talent, Facebook has hired 3.5 former Google employees for every 1 former Facebook employee who has gone to Google, according to professional network LinkedIn, signaling Facebook is more desirable. "Facebook has as talented a team as any tech company," says Gina Bianchini, CEO of Mightybell, a start-up that creates highly specialized online communities.

SOCIAL RIVALS

Facebook has always had rivals. One concern plaguing the social network has been its waning teen audience exiting for the next new social party. Such concerns led it to buy photo-sharing app Instagram for $1 billion and bid $3 billion in an unsuccessful attempt to acquire disappearing photo-messaging service Snapchat.

"People are really eager to spread out their usage of social tools as innovations emerge to try them," says David Kirkpatrick, author of The Facebook Effect. "But the evidence doesn't really show that people are quitting Facebook in order to do that."

Facebook has also made no secret of ambitions to connect the world. But mobile social apps with giant audiences are already all over the world, posing growth challenges. In Japan messaging giant Line commands over 300 million users. In China, where U.S. Internet companies struggle to enter, messaging giant WeChat has more than 500 million users.

"WeChat has already started to move into the U.S., and they clearly have an eye on this market," says Marcos Sanchez, spokesman for App Annie, an app research firm.

"The next decade for Facebook will be about mobile," says Jeremy Liew, a partner with Lightspeed Venture Partners and investor in Snapchat and Whisper. "With Facebook Messenger and Instagram, we see the future of Facebook, multiple single purpose vertical mobile apps."

Twitter has its aim on TV-like video advertising that would compete for television ad budgets and Facebook's own video advertising tests, aligning the two for future skirmishes over social television.

Facebook's "second-screen play - that will be a companion to television similar of what Twitter is doing," says Wedbush Securities analyst Shyam Patil. "They are going directly after TV ads with video ads."

PRIVACY AND DATA

Privacy has long dogged Facebook. Facebook has made privacy changes that befuddle users worried about broadcasting too widely. Facebook has turned some people into advertisements for products based on their "likes," a move that can turn friends into unknowing product shills.

Also, concerns persist as to how Facebook will allow third parties to use its enormous trove of personal information to target its audience and whether such data could wind up in the wrong hands.

"They certainly have every incentive in the world to not destroy the huge opportunity that they have created," Sze says. "They will fix their mistakes quickly."

Photo sharing and messages on niche, sometimes more private, networks has grown in popularity as Facebook has become too enormous for some. That's helped anonymous sharing sites such as Whisper gain traction with the promise of a more authentic conversations in a smaller, private setting.

This phenomenon toward more private social sharing is the same one driving enormous interest for Snapchat.

"I don't think Facebook is going away, but they will have to buy or build each of the next subsequent disrupters," Internet investor Jason Calacanis says.

FACEBOOK MEDIA MOGUL?

While Facebook has firmly established real identity-based sharing, its next chapter will be about personalization. The company has launched an effort called Creative Labs to pump out new apps as it moves forward.

"The main thing Facebook has done is open the possibilities for deep social interaction over all types of content, be it messaging, status updates, photo tagging," former Facebook Chief Technology Officer Bret Taylor says.. "The Internet used to be about interconnecting machines; now it is important in people interacting."

Media distribution powerhouse could be the next big area. Zuckerberg made those ambition clear with the unveiling last week of a new app called Paper, focused on photo news sharing and lengthy story updates from people in a magazine-like format.

That comes as traditional spending on ad budgets is coming into question as brands and agencies ramp up discussions about the merits of social advertisements. "It's easier in social and digital to attract ROI in a lot of ways just because more data is there," says DJ Saul, chief marketing officer at iStrategyLabs, a marketing firm.

And who knew that Facebook, worth about $157 billion, would one day eclipse the value of media giants Time Warner and Disney?

"The astonishing thing about Facebook is that it is the biggest media platform in the history of the universe," Altimeter Group analyst Rebecca Lieb says. "No other print or broadcast platform has ever achieved a 1-billion-plus audience."

Adds Ezra Callahan, Facebook's No. 6 employee: "We knew (in 2004) we had something. To see what it is today, is just amazing to have been a part of it."

FACEBOOK FACTS

201.6 billion friend connections

1.23 billion monthly active users

945 million monthly active users who used Facebook mobile products

6 billion likes per day

400 billion photos shared

7.8 trillion number of messages sent

6,337 employees worldwide

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