1. FACEBOOK - 2020
What Went Wrong?

2. IPO ~ USD 100 BILLION Mark
• Too LARGE
• USD 100 Billion was too large an amount to justify in revenues and
show stakeholders any return on their investments in short to mid term
range
• Didn’t leave enough for Stock Traders
• They needed to be part of IPO success, keeping the momentum live
for months easing immediate pressure on revenues
• Added too much pressure on the REVENUE FRONT
• IPO started putting too much revenue pressure for company to focus
on innovation, user experience, better ad formats, or any such thing.
• Energies & Key Focus were channelized to generate ad dollars
instead

3. Tech Cycle of Change
• We were still riding the Hype wave…
• We didn’t understand the fall from Disappointment to Realism, how big it
would be? or how small??
• Adding regular ad formats, building ad hoc revenue strategies, less
innovations, more acquisitions disrupted everything at facebook pushing us
deeper down the curve.
• Brands/Users/Stakeholders were never as happy as they were before

4. MOBILE
• Mobile was growing, faster than we thought
• Facebook mobile didn’t carry ads, so more it grew harder it hit us to hurt
• Users were increasingly engaging with competing products. We bought
Instagram at USD 1 billion but we couldn't have (post IPO) bought more such
products.
• Raising more money got impossible with eroding valuation
• We wanted to innovate and nurture that ecosystem but stakeholders only
cared for ROI
• We couldn’t innovate anymore so we started working with products that were
not received favorably

5. AD DOLLARS
• We started chasing the ad dollars
• Social Connect with Brands was REPLACED with regular Ad Formats
• We had lots happening in terms of User Activity resulting in Massive
Ad Inventory buildup
• That led to advertising overload
• We were unable to strike a healthy balance between Compelling User
Experience, Social Behavior and Pushed Advertisements
• Advertising didn’t remain relevant lacking decisions pertaining to
frequency, relevance, content or the context

6. ADVERTISERS
• Loved Facebook Pages ~ Engaging, Social and FREE
• Were not willing to spend money on Facebook’s paid advertising
programs
• More we pushed paid advertising, more we started to look like any
other advertising platform
• We were cannibalizing our own wonderful product offering –
‘Facebook Pages’ which was the reason Brands started to love Social
Media and Facebook
• We ended up being another ad platform where brands could display
their offerings just like anywhere else
• We lost Advertisers

7. USERS
• We failed to keep our users engaged by offering them enhanced
product offering
• Users were also increasingly opting out of advertising related
activities like becoming a fan or giving out a ‘Like’ to Ads
• The fatigue was setting in but we didn’t do enough to offer any
innovative or compelling change
• Ever rising Privacy concerns
• Ads were the same old format complying to industry’s need to
measure CTRs. We didn’t make it smart or tried setting a new
standards. For users we were the NEW any other website.
• User got vary and moved on to newer compelling offerings

8. GLOBAL
• More governments restricted access to Facebook across the world
• We couldn’t prioritize, filter the content to everyone’s satisfaction
• War for freedom to express were being fought at our expense
• We were ever expanding globally and we did not understand all the risks in
new countries.
• We had much complicated
Tax, Employee, Statutory, Legal, Compliance, Accessibility, Content
Filters, and several other permutations to deal with which put together was a
huge cost to manage
• Payment systems in Facebook apps meant new government regulations.
• We got hurt

9. LEGAL
• The IPO happened before we dealt with patent lawsuits on our hands
that ended badly
• We were also involved in class-action lawsuits, and we lost quiet a
few of them too.
• This was followed with our patents and copyrights not granted which
seriously hurt us
• We got sued by individuals/bodies over all sorts of stuff posted on
Facebook — intellectual property, copyright, defamation, and so on...
• This increased costs more than revenue growth could sustain
• US Tax code reforms, that hit us where it hurts

10. PARTNERSHIPS
• CONTENT: Pre-IPO Zynga contributed 12% of our revenues, Breakup did
hurt us bad
• ADVERTSIERS: We grew at 82% in revenues that was not the growth we
could sustain. Growth declined
• INVESTORS: Our Quarterly financial results were unpredictable for investors
to remain calm
• COMPANIES: More we acquired companies more it disrupted Facebook
• Employees: We grew from 3000 employees to spin out of control too soon to
fuel the growth. This still came bundled with entire power concentrated to one
man, Mark Zuckerberg himself, that didn’t work in our favor

11. TECH CRUNCH
• Facebook grew to be massive and very complex code at the backend which
developed lots of bugs
• These bugs gave access to info that was private resulting in users dropping
out, media bad mouthing facebook, rising privacy concerns
• A lot of our servers were handled by third parties, and they occasionally got
disrupted
• We started building a lot of our own data centers to handle traffic while we
had limited experience doing that
• Viruses, hacking, phishing and malware
• Newer technologies allowed users to block ads

12. Anubhav Sharma
http://about.me/anubhavsharma