An End to College-Only

When Facebook started out, the company was only offering social networking to college students. But over time, as it realized that it might have a good idea on its hands, it decided to open it up to all users. That decision looks like a no-brainer now, but without it, Facebook would not have the 901 million active users it has now.

There was some talk in the beginning about whether Mark Zuckerberg would be able to lead a company that’s as big as Facebook. After all, he was never a CEO before. But just about everyone agreed to keep him in place. And by doing so, they allowed him to drive his company to even greater heights than they might have imagined. Questions still remain as to whether or not he has the management chops to successfully run a multibillion dollar publicly traded company. But we will soon see.

After securing so many users, one of the biggest issues for any company is monetizing the growth. For Facebook, that meant bringing in ads that are highly targeted, and the company claims, a worthwhile expenditure for the advertisers. Whether Facebook ads work all that well is up for debate, but it hasn’t stopped the company from generating some serious cash.

Although Facebook could have been just a social network that it controlled in every way, the company made the smart decision to open it up to developers. So companies like Zynga came along and brought their games and applications to the service, and in the process, extended its appeal. Good one, Facebook.

Although advertising was able to turn Google into Google, Facebook understood somewhat early on that it needed another revenue path to make shareholders happy. So it came up with Facebook Credits, a virtual currency that the social network’s users employ when they want to buy virtual goods. For every dollar that’s spent on the service, 30 cents go to Facebook. Not bad.

One of the biggest issues with MySpace, Facebook’s first competitor, was that its users’ profiles were downright ugly. The company allowed users to do whatever they’d like without acknowledging that maybe their creations wouldn’t be so beautiful. Facebook, on the other hand, has controlled the basic layout and design of its profile pages. Although it was criticized for that years ago, it’s now a key reason the social network is so popular.

Although past social networks always came with the ability to share photos and other content, it was Facebook that truly popularized the use of photos and videos in a social setting. In fact, the company made sharing images a central component in its strategy. As you can see now, it worked.

For years, speculation would arise over when Facebook would finally go public. Would it do it in 2009? How about 2010? For a while, it was believed that 2011 would be its IPO year. But by waiting, Facebook was able to continue to grow, build up its cash reserves and generate more excitement on Wall Street. That helped it reach a higher share price, buoy its valuation, and now, aid it in raising vastly more cash in its IPO.

Although Facebook is a standalone company, the social network is by no means staying closely within its own domain to attract users. Quite the contrary, the service’s “like” buttons are found across the Web, and its new Open Graph initiative is designed to increase its user base (and overall use) on other Websites. It’s a smart move that’s paying off in a big way.

One of the most interesting things Facebook did since its founding was keep its distance from Google. The company knew that Google could eventually become a competitor and the last thing it wanted to do was offer it too much insight into what it was doing. Facebook is decidedly antagonistic with Google on some things, and in an odd way, that might have actually helped the company grow.