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CASE: E-220
DATE: 05/03/06
Mike Harkey prepared this case under the supervision of Professor William P. Barnett, Thomas M. Siebel Professor
of Business Leadership, Strategy and Organizations, and Mark Leslie, Lecturer in Management, as the basis for
class discussion rather than to illustrate either effective or ineffective handling of an administrative situation.

This case was madepossible by the generous support of Mr. James G. Shennan, Jr.

Copyright © 2006 by the Board of Trustees of the Leland Stanford Junior University. All rights reserved. To order
copies or request permission to reproduce materials, e-mail the Case Writing Office at: cwo@gsb.stanford.edu or
write: Case Writing Office, Stanford Graduate School of Business, 518 Memorial Way, Stanford University,Stanford, CA 94305-5015. No part of this publication may be reproduced, stored in a retrieval system, used in a
spreadsheet, or transmitted in any form or by any means .. electronic, mechanical, photocopying, recording, or
otherwise .. without the permission of the Stanford Graduate School of Business.

FACEBOOK

I wake up and check my e-mail, then I go to Facebook. At night, I do the samething. Facebook is
like an ice cream sundae because you can do anything with it, and no matter what, it's still fun.
.Tiffany Chang, 17, student at University of California Davis1
INTRODUCTION
In just over two years, Mark Zuckerberg had built the social directory Facebook from nothing
more than an idea into a national phenomenon worthy of a reported $750 million buyout offer. It
had becomeso vital to the university lifestyle that first-years were creating their Facebook
profiles long before they even set foot on campus.2 By the end of 2005, college students all over
the U.S. were spending countless hours every day on the addictive and rapidly growing website.
Nevertheless, other well-funded, so-called .social networking. sites had come and gone long
beforeZuckerberg coded Facebook in his Harvard University dormitory. Was it just a fad that
would disappear from the collegiate landscape as quickly and as vigorously as it had consumed
it? Or would Facebook remain popular and overcome mounting competitive threats and intense
media scrutiny?

The organization had grown from just a few friends programming around a kitchen table to a
full-fledgedtechnology business with over 100 employees and 7.5 million users. Zuckerberg
would have to develop an organization strategy that could allow the company to keep up with its
underlying growth metrics, while ensuring Facebook.s user experience was better than its
alternatives. The company.s core market.college students.were prone to switching and
potential newmarkets.college students outside of the U.S. and high school students.were rife
with well-funded entrants that were a step ahead of Facebook. Focusing the organization on the

1 Matt Marshall and Anna Tong, .Palo Alto, Calif.-based Facebook brings social networking online,. San Jose
Mercury, August 29, 2005.
2 Fred Stutzman, .Percent of Freshmen Who Use Facebook.com,. eMarketer, January 2006.Facebook E-220

p. 2
right objectives would be critical; getting the company to perform efficiently against those
objectives would be a challenge for Facebook CEO and 21-year-old Harvard drop-out Mark
Zuckerberg.
Founder
As an undergraduate at Harvard, psychology major Zuckerberg enjoyed building computer
software applications in his free time. He hadbeen programming since he was 10 years old, and
his skills had, in his words, .reached a point where it went into my intuition, and I wasn.t really
thinking that much about it consciously..3 He added:

I made a ton of random things when I was at Harvard, and most of them no one
ever saw. A lot of them just weren.t meant for other people to see, and they were
just things that I made for...
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