Oct 28, 2024 · 6h 22m · acquired
Meta (Audio) · Acquired
Ben Gilbert · 2h 54m spoken David Rosenthal · 2h 47m spoken Intro/Outro Singer · 15s spoken Acquired Team / Interjector · 4s spoken
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this comprehensive Acquired season opener, hosts Ben Gilbert and David Rosenthal examine the complete history, product mechanics, and corporate strategy of Meta from Mark Zuckerberg's Harvard dorm room to a four-billion-user global empire. They analyze how absolute founder control, high-velocity growth engineering, ruthless competitive adaptation, and massive frontier bets in AI and AR created one of the most resilient and profitable technology giants in corporate history.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Ben and David hold 99.9% of the talking time here. How this is scored →
Ben and David as informed peer 8.0 Guest teaching 0.0 Guest disagreement 0.0 Ben and David pushing back 0.0
speaking balance: gold is Ben and David, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 2:52:00 Dismissing Beacon's premise
Ben directly dismisses the concept of Beacon as overly complex and misaligned with basic advertiser needs compared to standard display units.
Hardest push from Ben and David ▶ 6:01:40 Pushing back on platform noveltyDavid pushes back against Ben's assertion that Facebook Platform was merely an OS imitation, emphasizing that building a scaled developer ecosystem on the open web was unprecedented.
Biggest teaching moment ▶ 3:12:00 FriendFeed origins of the Like buttonDavid corrects Ben by noting that Bret Taylor and Paul Buchheit invented the Like button at FriendFeed prior to its acquisition by Facebook.
Ben and David hold their own ▶ 2:11:00 Feed caching and N-squared computational complexityBen details the precise back-end database polling, batch caching, and re-ranking algorithms necessary to make infinite feed pagination viable in 2006.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Ben and David as informed peer | Guest teaching | Guest disagreement | Ben and David pushing back | Why |
|---|---|---|---|---|---|---|
| Pre-Show Banter and Nostalgic Musical Inspirations | 7 | 0 | 0 | 0 | Ben and David open with an in-depth analysis of Meta's global scale, comparing its 4 billion monthly active users to historical empires before diving into Zuckerberg's childhood and love for Sid Meier's Civilization. | |
| Learning C++ and Coding the ZuckNet Network | 8 | 0 | 0 | 0 | The hosts trace Zuckerberg's technical foundation from early C++ programming to AIM skunkworks history and the creation of Synapse with Adam D'Angelo at Phillips Exeter. | |
| Friendster, Summer 2003, and the Nature of Luck | 8 | 0 | 0 | 0 | Ben and David dissect the 2003 social networking landscape with Friendster and BuddyZoo, highlighting how CourseMatch and Facemash served as functional stepping stones to Facebook. | |
| Harvard Adoption Density and 'The Trance' | 8 | 0 | 0 | 0 | The hosts explain the strategic importance of dense, closed-network seeding at Harvard and the architectural decision to isolate early college server deployments. | |
| Relocating to Palo Alto and Restructuring Equity | 8 | 0 | 0 | 0 | Ben and David discuss the move to Palo Alto and Sean Parker's foundational role in structuring permanent founder voting control to protect Zuckerberg from VC board coups. | |
| Peter Thiel's Seed Round and Permanent Dropout | 8 | 0 | 0 | 0 | The hosts break down Peter Thiel's angel check and Accel's groundbreaking Series A investment structure, which granted founder control at an unprecedented post-dot-com valuation. | |
| High School, Workplaces, and Summer 2006 Stagnation | 8 | 0 | 0 | 0 | The hosts detail the summer 2006 growth slump, the close call with Yahoo's 1 billion acquisition offer, and the critical Microsoft display ad monetization partnership. | |
| Adam D'Angelo as CTO and Building Engineering Culture | 9 | 0 | 0 | 0 | Ben and David walk through the complex computer science challenges of building News Feed and Zuckerberg's decisive refusal to roll back the feature despite intense user outrage. | |
| Open Registration: Expanding to the World | 8 | 0 | 0 | 0 | The hosts analyze the rollout of Open Registration and the launch of the F8 developer platform, evaluating why building a platform on the web differed from an operating system. | |
| Sponsor: Crusoe Cloud and Climate-Aligned AI Compute | 6 | 0 | 0 | 0 | Following the Crusoe sponsor segment, the hosts describe Microsoft's 2007 $240 million investment at a $15 billion valuation negotiated during an all-night hackathon. | |
| Early Monetization Philosophy and the Origins of Native Advertising | 8 | 0 | 0 | 0 | The hosts examine the failure of Project Beacon, the arrival of Sheryl Sandberg from Google to formalize monetization, and Chamath Palihapitiya's creation of the Growth Team. | |
| People You May Know and User Retention Optimization | 8 | 0 | 0 | 0 | Ben and David discuss the mathematical drivers of network retention, the mechanics behind People You May Know, and the acquisition of FriendFeed to secure the Like button. | |
| Five Existential Threats of the Shift to Mobile | 8 | 0 | 0 | 0 | The hosts outline the five existential threats facing Facebook as user attention transitioned from the desktop web to mobile ecosystems, followed by the competitive response to Google+. | |
| The 2011 FTC Consent Decree and Privacy Foundations | 8 | 0 | 0 | 0 | Ben and David recount the 2011 FTC consent decree, the sudden $1 billion acquisition of Instagram during the quiet period, and the disastrous post-IPO stock plunge. | |
| Founder Control and the All-In Shift to Mobile Feeds | 9 | 0 | 0 | 0 | The hosts narrate how founder control allowed Zuckerberg and Sandberg to abandon desktop ad optimization and task Boz with engineering native mobile in-feed ads. | |
| Rebuilding Native Mobile Apps and App Install Ads | 8 | 0 | 0 | 0 | Ben and David describe the painful transition from HTML5 wrappers to full native mobile apps and the emergence of mobile app install ads as a massive revenue engine. | |
| Strategic M&A and the Audacity of Copying Well | 9 | 0 | 0 | 0 | The hosts review Zuckerberg's leaked 2012 M&A strategy email, the shift of social sharing from Town Square to Living Room, and the structural threat posed by ByteDance's AI-driven model. | |
| The Founding of FAIR and Early AI Architecture | 8 | 0 | 0 | 0 | Ben and David explain the 2013 founding of FAIR under Yann LeCun and how early ML investments directly enhanced feed ranking, ad relevance, and future Reels architecture. | |
| 2016 Election Backlash and the Cambridge Analytica Reality | 8 | 0 | 0 | 0 | The hosts unpack the technical reality versus media narrative of Cambridge Analytica, explaining how legacy 2010 Open Graph permissions clashed with 2018 privacy standards. | |
| Apple's Privacy Campaign and App Tracking Transparency | 8 | 0 | 0 | 0 | Ben and David discuss Apple's App Tracking Transparency (ATT) rollout, Meta's subsequent $10 billion revenue hit and 72% stock decline, and the engineering recovery via Advantage Plus. | |
| Reality Labs, the Orion AR Prototype, and Platform Independence | 8 | 0 | 0 | 0 | The hosts calculate the ROI hurdle for Reality Labs' $60 billion cumulative spend, frame AR as an enterprise platform hedge, and share hands-on impressions of the Orion prototype. | |
| Meta's Financial Profile and Global Internet Saturation | 8 | 0 | 0 | 0 | Ben and David review current business fundamentals—including $135B revenue and 3.3B daily active people—and perform a Hamilton Helmer Seven Powers strategic analysis. | |
| Playbook: Commoditizing Complements in AI | 9 | 0 | 0 | 0 | The hosts detail the open source Llama AI strategy through Joel Spolsky's 'commoditize your complement' framework and draw parallels between Zuckerberg and Bill Gates. | |
| Honoring Meta's Failures and Non-Traditional Origins | 8 | 0 | 0 | 0 | Ben and David catalog Meta's notable product failures, examine proprietary developer innovations like HipHop and Hack, and summarize the company's quintessence as moving like water. |
Statements from this episode (152)
Gilbert: No Entity in History Has Addressed as Much of Humanity as Meta
“So no government, tech company, utility, et cetera, has ever addressed so much of the world.”
Rosenthal: Civilization simulates running a top ten mega-cap company
“So it's kind of like this amazing simulation of what it's like to run one of the top 10 market cap mega capitalization companies in the world today.”
Rosenthal: Mark Zuckerberg built childhood chat tool 'ZuckNet' for family and dental office
“Including a family chat tool for all the networked computers in the house, and also his dad's dentistry office is attached to the house. So he builds this network called ZuckNet, which is family chat between all the computers.”
AOL Instant Messenger Originated as a Rogue Enterprise Chat Project
“Yeah, so it was a couple engineers that just went off and built this, almost against the wishes of management. It was not originally intended to really be for social use or for kids at all. It was more like the idea they had was it was going to be kind of like…”
Rosenthal: AIM reached 36M users by 2001 as first consumer viral software
“It's the first piece of consumer viral software, and so by 2001, a couple years after launch, it has thirty six million users, including, as we've been talking about, basically every middle and high schooler with access to a computer.”
Gilbert: Apple acquired SoundJam and turned its codebase into iTunes
“It got acquired by Apple, and then eventually they, I think, built off the same code base and turned it into iTunes.”
Gilbert: Microsoft offered around $1M to acquire Zuckerberg's high school software Synapse
“Yeah, and I think Microsoft was one of them, too. It was for, like, a million-dollar acquisition offer or something like that.”
Benchmark Passed on Facebook Due to a Conflict With Friendster
“Which is what tied their hands and why they could not pursue an investment in Facebook.”
Rosenthal: Friendster had over 3 million users by late summer 2003
“And by the end of the summer in 2003, Friendster had over three million users.”
Facemash engagement crashed Kirkland House servers and triggered Harvard IT shutdown
“Facemash takes that to such a whole nother level that it actually melts down the servers in Kirkland House, and the IT department at Harvard has to shut off internet within hours of it going live to all of Kirkland House, lest this, like, continue to spread vi…”
Rosenthal: Early open-source web stack eliminated permission and capital barriers
“This is like the first time in history where you need neither money nor permission to launch an application like this on the internet.”
Rosenthal: Harvard IT promised a digital student Facebook years before Zuckerberg
“The IT department at Harvard had been promising for years and talking about how they were going to build a digital version of the Harvard Facebook.”
Gilbert: Stanford, Columbia, and Yale had pre-Facebook campus networks
“Stanford had Club Nexus. Columbia had CU Community. Yale had Yale Station.”
Rosenthal: Zuckerberg Built Facebook by Combining Small Projects, Not Planning Big Things
“So later, after thefacebook.com blew up, Mark told the Harvard Crimson in an interview, I don't really know what the next big thing is, because I don't spend my time making big things. I spend time making small things, and then when the time comes, I put them …”
Gilbert: Original 'Facebook Guy' Header Image Was J. Geils Band Singer Peter Wolf
“There's a great Quora post about this where there's unmistakably the photo of Peter Wolf that Facebook guy is based on. They just sort of pixelated it and You know, made it duotone instead of the original photograph.”
Gilbert: Facebook's Early Differentiator Was Authentic University-Verified Identity
“And that's what makes it different than all these other social networks. Myspace existed. Friendster existed. But anyone could sign up for these. And in part, that meant that they had more explosive growth, because there was no governor on the growth. And we'l…”
Rosenthal: 650 Harvard students joined Facebook in first 24 hours
“Within the first 24 hours, 650 people join.”
Facebook Captured Over Half of Harvard Undergrads in Two Weeks
“Within two weeks, over half of the entire undergraduate population is active on Facebook.”
Seventy Percent of Early Facebook Signups Became Daily Active Users
“70% of people who ever signed up were active that day. There are not user engagement retention metrics better than that in the world.”
Rosenthal: Mark Zuckerberg and Eduardo Saverin split initial Facebook ownership 66/33
“Eduardo invests a thousand dollars in infrastructure for the site. Mark invests another thousand dollars, so together there's 2000 dollars of investment in the facebook.com, and the deal they strike is that Mark gets two-thirds of the company, and Eduardo gets…”
Rosenthal: Mark Zuckerberg expanded Facebook to Columbia specifically to test head-to-head competition
“And he specifically chooses Columbia because, Ben, as you said, there was an existing competitor there. And he's like, I want to see how Facebook competes. And like, I want to know right away, can we displace it?”
Gilbert: Startups seeking complete market dominance should extinguish their hardest competitor first
“If you're okay splitting the market, you go for the white space, and then you say, let's see how much of the low-hanging fruit we can easily get. But if you're Facebook, you're gonna say, let's go to the hardest possible competitor, Extinguish them. And then w…”
Rosenthal: Early Facebook Kept Columbia and Harvard Networks Completely Isolated
“They set up Columbia as a completely different network than Harvard. So if you join the Columbia Facebook, you can't then go access all the profiles of Harvard students.”
Segmenting by School Solved Friendster's Server-Crashing n-Squared Problem
“Friendsters out there trying to compute second degree friends of friends, which is this crazy hard computer science problem, especially as the global number of people growing, it's an n squared problem. And Facebook is over here, or the Facebook at the time, i…”
Gates's Harvard Talk Helped Convince Zuckerberg to Drop Out
“Mark would actually say later that Bill saying that At the event was part of what got him comfortable doing the same thing.”
Facebook Expanded to Over 100 Campuses Within Four Months
“By the end of the semester, they're in over a hundred schools in like, you know, what, three, four months?”
Winklevoss Twins Settled Facebook Dispute for $65M Including Stock
“Eventually, the two twins sue Mark and Facebook. They settle for sixty-five million dollars, forty-five million of which is paid in pre-IPO Facebook stock.”
Rosenthal: Facebook's 2004 Palo Alto house really had a chimney zipline
“And yes, the house did indeed have a pool. Yes, they did indeed install a zipline off the chimney. That was not fiction in the movie. That did actually happen.”
Eduardo Saverin's Ownership Dropped from 33 Percent to Two Percent
“That Eduardo Saverin goes from owning a third of this Florida-based LLC to something like two percent of this C-Corp that is a Delaware C-Corp based in California that goes on to become, or is, Facebook Inc.”
Rosenthal: Plaxo pioneered address book exploitation for viral growth
“After the whole Napster saga, Parker ended up starting the email contact list company called Plaxo, which was kind of its own proto-social network and pioneered email address book exploitation and exporting.”
Gilbert: Pre-Facebook VCs routinely replaced founder CEOs with professional managers
“There wasn't Founders Fund yet. There wasn't A-sixteen Z yet. There wasn't like the notion of founder friendliness. What venture capitalists did is they invested in founders companies and then brought in management to take them to the next level. It's what hap…”
Rosenthal: Sean Parker ensured all 2004 summer housemates received Facebook equity
“The other thing that Sean does, by all accounts, is he makes sure that everyone in the house that summer gets equity in the company.”
Rosenthal: Sean Parker Suggested Naming Wirehog 'Dropbox' in 2004
“While they're talking about this, Sean Parker actually comes up with a name for the product and is like, oh, if you launch this, you should actually call it Dropbox.”
Venture Capitalists Accepting Minority Control Was Considered Blasphemous in 2004
“The idea that a venture capitalist makes an investment in a company and they are not the controlling shareholder was blasphemous just 20 years ago.”
Sean Parker Is Entirely Responsible for Mark Zuckerberg's Founder Control
“Mark having full control over the company as we are going to see time and time and time again as we go through the story here makes all the difference in the world, and that is 100% because of Sean Parker.”
Rosenthal: Facebook bought facebook.com domain for $200,000 in 2005
“I believe they bought it for 200,000 dollars, which actually was a good chunk of that venture money that they raised.”
Gilbert: WTI loaned Facebook $600,000 with warrants in 2004–2005
“Yeah, and so they basically invented venture debt, and so they make a 300,000 dollar loan, it's like, I think like a revolving credit line, in the fall of 2004, and that comes with warrants, that if the company ever goes public, that they can then exercise The…”
Gilbert: WTI's Facebook warrant exercise is best venture debt deal ever
“I spoke with someone years ago who told me this ended up being phenomenally, phenomenally successful, and the warrant exercise on this I think is the greatest venture debt deal of all time.”
Accel led Facebook's 2005 Series A with $12.7M at $98M post-money
“Excel comes in, leads a series A. 12.7 million dollars at a ninety eight million dollar post-money valuation.”
Facebook Was the First Post-Dot-Com Deal With Founder Control
“It was the very first post.com institutional venture capital deal where the founder maintained control.”
Jim Breyer personally invested $1.1M in Facebook's Series A
“1.1 million dollars of this 12.7 million dollar round was done by Jim Breyer personally.”
Facebook's Series A included $3M in secondary for founders
“Three million went to Mark, Dustin, and Sean as a secondary in this deal.”
Gilbert: Facebook Photos Was Built by One Engineer in Two Weeks
“Which, by the way, photos got written by like one guy in two weeks.”
Rosenthal: Facebook Shipped Zuckerberg's Entire 2005 Roadmap Within Two Years
“And the wild thing is, they do accomplish all of this in the next two years.”
Rosenthal: MySpace capped users at eight photos in 2005
“So MySpace only allowed you to have eight photos maximum at the time.”
Facebook Shifted From Product Innovator to Shameless Feature Copier
“For the first six or seven years of its life, Facebook was a change maker, defining what social networking was, and then after that, it became a change taker, and we'll talk about this when it happens, but like, again, the mental flexibility of Mark and the co…”
Facebook Surpassed Google in Daily Page Views in November 2005
“By November of 2005, they were getting two hundred and thirty million page views daily, which means that they had passed Google in page views.”
Gilbert: In September 2005, Facebook held one-third of US college students at 70% DAU
“By September of o' five, they were at five million users. That was 10 X their user base just a year ago in September of o' four, and almost a third of all U.S. College students Were included in that five million. So by September of oh five, they had a third of…”
Gilbert: Facebook hit 8.3M users and $1M monthly revenue by October 2005
“At this period of time, October of oh five, They were up to 8.3 million users. They were the 10th most visited site on the Internet. But the important part is they were doing a million dollars a month in revenue.”
Facebook Became Consistently Profitable Roughly 18 Months After Founding
“They lost money and not that much money for like a year and a half, and then from that point on, they were just profitable.”
Gilbert: Early Facebook high school signups required college student invitations
“You had to log into hs.facebook.com, and it looked mostly the same. It had slightly different features, but there was this weird thing where somebody who was already in college had to invite you. It's not like anyone could sign up for high school Facebook. You…”
Rosenthal: Viacom offered $750 million to buy Facebook in 2006
“Viacom, which owned MTV, thought that that was worth seven hundred and fifty million dollars, which is what they offered to buy the company for in the summer of 2006.”
Zuckerberg Rejected Yahoo Acquisition After Terry Semel Lowered $1B Offer
“So Mark actually agrees to the Yahoo deal. Billion dollars. It's gonna be all in stock. Yahoo's gonna buy the company. In the interim between when they shake hands on the deal and while the docs are being drafted, Yahoo announces their quarterly earnings, and …”
Gilbert: MySpace was acquired for $580 million in 2005
“And also, a year before, MySpace had gotten bought for five hundred and eighty million dollars.”
Rosenthal: Zuckerberg told Acquired he optimizes for impact over money
“And Mark has said so much in so many words to you and me personally that he's not optimizing for financial outcome here. He's optimizing for impact.”
Rosenthal: Facebook's senior team churned after rejecting Yahoo's buyout offer
“The whole management team basically churns over the next set of months.”
Rosenthal: Facebook generated $9 million in revenue in 2005
“So Facebook had made nine million dollars in revenue in 2005 when they were selling themselves.”
Rosenthal: Facebook revenue reached $48 million in 2006
“In 2006, with this Microsoft partnership, that jumps to forty eight million dollars in revenue.”
Rosenthal: Facebook reached $153 million in revenue in 2007
“And then the next year in 2007, again, I think almost all of this is Microsoft, that goes to a hundred and fifty three million dollars in revenue.”
Gilbert: Web applications enabled continuous shipping over multi-year software release cycles
“For the first time in history, you actually could. All these companies with big climbing, Microsoft would ship every three years with a service pack once a year. It's a whole new era where all you have to do is, you know, upload some new PHP code to the FTP se…”
Rosenthal: Facebook was potentially the first startup with an open office plan
“I think Facebook was potentially maybe the first company, first startup, to have an open office plan.”
Gilbert: Early Facebook remains the cultural archetype for modern startup culture
“I mean, to this day, early Facebook is still What most startup culture is aspiring to be. I think often without knowing it, I mean, everything from the sort of posters on the walls with your mantras and your values, to almost having like an employment brand th…”
Gilbert: Early Facebook prioritized raw intelligence over industry experience in hiring
“The other thing that was basically true is they were not really interested in recruiting industry veterans, especially on the technical side. And Mark says this in early talks, that he was just prioritizing raw intelligence over experience.”
Rosenthal: Facebook's Newsfeed was the invention of the web feed
“They didn't exist. This was the first one. This was the invention of the feed.”
Facebook Newsfeed Initially Updated via Cron Jobs Due to Memory Limits
“Yeah, it was a cron job because they didn't have enough memory to run it in real time.”
Rosenthal: Facebook received 30,000 angry support emails on day one of News Feed
“They get 30,000 angry emails to support on the first day from users who are really upset about this.”
Ten Percent of Facebook Users Joined a Group Protesting News Feed
“10% of the entire global user base signs up for a group, a Facebook group called Students Against Facebook News Feed.”
Gilbert: Users react strongly when information switches from pull to push
“People react really strongly when you change the ease of obtaining that information or whether it feels like you are pushing that information out
Versus someone is sort of pulling by going to your profile and viewing.”
Rosenthal: News Feed initially hurt Facebook revenue by reducing page views
“Newsfeed actually
Significantly hurt Facebook's revenue because where do you think all the page views were coming from and all the refreshes?”
Rosenthal: Facebook opening registration created room for Instagram and Snapchat
“Which ultimately would be a problem because that's what created room for Instagram, for Snapchat, et cetera.”
Rosenthal: Facebook daily user additions surged to 70k post-OpenReg
“So over the summer, Facebook was adding, like, five to 10,000 users a day. By late fall after launching open registration, they're now adding 70,000 users a day.”
Rosenthal: Facebook reached 20M users and grew 100K daily at F8 launch
“So, at Effie, they announced that the Facebook user base is now over twenty million, and it is growing by over a 100,000 users a day, so growth is accelerating.”
Rosenthal: Facebook was the sixth most-trafficked website globally in May 2007
“It is the sixth highest trafficked site in the world, and they're announcing to all the developers in attendance, Facebook API, Facebook Graph is now open to you.”
Gilbert: Facebook Platform Failed Because It Was Too Distant from Hardware
“The reason why we aren't all using rich Facebook apps all the time today and think of it as the default platform, it was just too many layers of abstraction away from the hardware to win.”
Android Was Originally Designed as a BlackBerry Clone Before the iPhone
“Android was a Blackberry clone at the time, not an iPhone clone.”
Rosenthal: Microsoft pursued Facebook in 2007 after missing search to Google
“Microsoft, perhaps obvious now in retrospect to everybody, really just wants to buy the company. But Mark's, of course, not gonna do that after the whole Yahoo experience, etc. Microsoft is also happy, though, to just keep the partnership going and expand it, …”
Rosenthal: Microsoft invested $240M in Facebook at a $15B valuation
“And the big kicker, Microsoft is going to invest two hundred and forty million dollars in Facebook at a 15 billion dollar valuation.”
Mark Zuckerberg Turned Down a $24 Billion Acquisition Offer From Microsoft
“Less than two years later, he turned down twenty four billion and that they were really good for the money. It's Microsoft.”
Rosenthal: Facebook had $150M revenue and broke even during 2007 Microsoft deal
“Facebook at this point in time is basically break even and doing one hundred and fifty million in revenue, most of which is Microsoft itself.”
Microsoft's $240M Facebook Stake Became Worth $8 Billion Post-IPO
“That two hundred and forty million dollar investment, by the time they start selling it down years after Facebook is public, ends up being worth eight billion dollars.”
The Failure of Facebook Beacon Directly Led to the Growth Team
“Chamath Palihapitiya... This was Chamath's big thing before Growth. And actually, the epic failure here of Beacon leads directly to growth, as we shall see in a sec.”
Gilbert: Facebook overcomplicated advertising instead of offering display ads
“The obvious thing is show an image that people can click on and take them to a website. It's display ads. And like, I don't understand why they needed to try to way overthink it and say our ad format has to be something that no one's ever thought of before. Li…”
Rosenthal: Beacon activity collapsed after Facebook shifted to opt-in
“Ultimately, after a few weeks, they do acquiesce, and they say like, okay, we will turn Beacon off, we'll make it opt-in, as opposed to opt-out, and You can have a way to, like, completely turn off all beacon tracking permanently from your profile. A lot of pe…”
Rosenthal: Sheryl Sandberg built and ran Google's self-serve ad business
“And then Cheryl built and ran the whole self-serve business at Google, which was the most important and the most technology, like, enabled part of what they were doing.”
Facebook Handled No Native Ad Targeting When Sheryl Sandberg Joined
“And when she comes on board, like you referenced this earlier, Ben, there's Basically no ad targeting that's happening natively on Facebook. Like there probably is targeting that's happening through the third party Microsoft advertising network, but none of th…”
Rosenthal: Naomi Gleit is Meta's longest-tenured employee besides Zuckerberg
“Naomi, Naomi is now Meta's longest tenured employee besides Mark and runs a ton of stuff at the company.”
Facebook grew from 100M users in August 2008 to 350M by late 2009
“They go from like just barely getting to a hundred million users in August of 2008 to almost a hundred and fifty million by the end of the year. So 50% growth in the last four months of the year. And then 2009 is just like lights out. They grow 250% in 2009 to…”
Facebook's Ratio of Daily to Monthly Users Reached Nearly 70 Percent
“50% of monthly actives were daily actives in oh eight. Since then, they have basically improved that metric every year. There's been a little bit of variance, but it is now almost 70% today.”
Rosenthal: Bret Taylor and Paul Buchheit invented the Like button
“Brett Taylor and Paul Buchite invented the like button.”
Rosenthal: Facebook testing showed the Like button increased comment volume
“And so, ultimately, they started running some tests with, like, small user groups and specific geographies, and they found that it actually often boosted engagement of comments.”
Rosenthal: Facebook revenue grew from $153M in 2007 to $2B in 2010
“In 2008, the company had done two hundred and eighty million in revenue, up from one 53 the year before in 2007. 2009, they do almost eight hundred million in revenue. He's crushing it. 2010, an even two billion in revenue.”
Facebook Had 425M Mobile Users but Zero Meaningful Mobile Revenue Pre-IPO
“We had more than four hundred and twenty five million monthly active users who used Facebook mobile products in December 2011. We anticipate that the rate of growth in mobile users will continue to exceed the growth rate of our overall MAUs for the foreseeable…”
Gilbert: Mobile app updates took two weeks for review in 2012
“And at this point in time, there was approximately a two-week delay between pushing an update and it being reviewed and accepted.”
Rosenthal: Pre-JOBS Act SEC Rules Mandated Reporting at 500 Shareholders
“Well, back then, once a company crossed 500 shareholders, the SEC actually mandated by law that you had to start reporting quarterly like a public company.”
Gilbert: Facebook Rejected Microservices for a Monolithic Codebase
“So they structured themselves in a way that encouraged flexibility of engineers, and they really broke from the tide of microservices in this era. They had one monolithic code base that everyone worked out of.”
Zuckerberg Negotiated Facebook's $1B Instagram Acquisition Over a Single Weekend
“Not to mention, on top of it all, we're not gonna go into it here because we had a whole episode on Facebook and Instagram, but this was done over two days, over the course of a weekend. Mark didn't do a whole lot of socializing this before pulling the trigger…”
Rosenthal: Facebook IPO raised $16B at $104B cap, ranking third all-time
“They raise sixteen billion dollars at a one hundred and four billion dollar market cap, making it, I think, the third largest IPO of all time at that point behind Visa and, ironically, General Motors coming out of the bankruptcy during 2008.”
Facebook Avoided First-Day IPO Crash Only Due to Underwriting Bank Intervention
“Facebook shares end the day at 38 dollars and 23 cents, up 23 cents from the IPO price, but only because all of the underwriting banks in the IPO stepped in to buy shares and support the price, which was totally crashing throughout the day.”
Sandberg Bet on Mobile Because Zuckerberg's Control Prevented His Firing
“And when they sort of arrived at this plan of, we are going to forego a lot of desktop revenue to basically bet it all on figuring out mobile revenue, she said, well, Mark, nobody can fire you, and only you can fire me, so if you're in, I'm in.”
Gilbert: Mobile in-feed ads proved far more valuable than desktop sidebar ads
“Because the ads are front and center, the value per ad is actually higher. So they ended up creating a much, much more valuable ad unit than they ever had on desktop purely because of this incredible attention on them when you're scrolling in feed on mobile.”
Turning Off Meta Ads Actually Reduces User Engagement in Some Markets
“There are markets in the world today where I think Meta has run this test, where if you turn off ads, In the, you know, meta family of apps products, engagement in those products actually goes down, which is just, like, freaking wild.”
Rosenthal: Facebook mobile hit 53% of revenue in Q4 2013 while desktop shrank
“Facebook announces that mobile advertising is now 53% of revenue, and total ad revenue for the company grew 76% year over year in the fourth quarter, which of course is the most important quarter of the year, which means, I did all the math on that, that means…”
Rosenthal: Meta reached ~$175B market cap after Q4 2013 earnings
“After the QFOR, 2013 earnings announcement, the stock pops way, way, way up to, like, a 175 billion-ish market cap, so up 75% from IPO, you know, what is that, year and a half earlier.”
Rosenthal: App install ads drove early native mobile revenue for Facebook
“A very large percentage of the inventory that they were selling, and especially the revenue of these native mobile ads in the beginning, was actually for app install ads that game developers and other folks were buying on Facebook.”
Instagram found user engagement declined over time due to permanent post fatigue
“The Instagram team noticed over time that even before Snap started eating their lunch that Engagement would decrease the longer you stayed an Instagram user, because you, over time, being done with these permanent posts, and you sort of saved it for the big an…”
Facebook Acquired Onavo to Track Competitor Network Traffic and App Usage
“Well, in 2013, Facebook acquired a small Israeli company called Onavo, and Onavo was exactly what you just said, Ben. A VPN, actually, I think it initially started as, like, a data compression tool, so if you were worried about your data plan, which was Really…”
Rosenthal: Onavo was critical because it alerted Facebook to WhatsApp and Snap
“Either way, Onavo ended up being, like, a hugely important acquisition for Facebook, because it really tipped them off to WhatsApp and Snap, too.”
Gilbert: Incumbents must copy new interaction mechanics to prevent network migration
“I think when someone invents a new interaction paradigm, it's one of these things where, like, you have to adopt it because otherwise people are just going to flee, and of course your business depends on you adopting it because you can't let someone use this n…”
Rosenthal: Instagram pioneered the top-row algorithmic Stories UI, not Snapchat
“Stories as initially launched by Snap in the Snapchat app was a separate tab with a list of your friends who had published stories. It was literally like a table, like a list. ... So when Instagram copied quote unquote stories and launched stories, they launch…”
Gilbert: TikTok is the most significant competitor Facebook has ever faced
“That created a competitor for Facebook that is more significant than anything they've ever faced.”
TikTok Operates as Media, Rendering an Authenticated Social Graph Irrelevant
“TikTok and ByteDance, its parent company, as you point out, Ben, was so completely orthogonal to everything that Facebook had learned over the past 15 years. Because, yes, number one, most importantly, it's not social media. It's media. There's no social. And …”
ByteDance Is an AI Company Using TikTok Merely as a Deployment Vector
“ByteDance is an AI company. ByteDance is not a product company. And the core product that ByteDance makes is its AI, along with all sorts of other stuff. TikTok is like the product vector, one of many, and the biggest. By which they deploy their actual product…”
Rosenthal: Meta's app heads and AI leadership all report to Chris Cox
“There's still all the individual products in the family of apps. Those all have their own heads, and they all roll up to Chris Cox, who has had a product for the whole company, and AI, too, actually, reports to him.”
Rosenthal: Yann LeCun required open source and NYU professorship to join Meta
“And Jan says like, well, I'm flattered that you would want me to come work here. That's interesting. But like, I live in New York. I teach at NYU. I don't want to leave. I don't want to quit teaching at NYU. And I'm pretty darn committed to open source and pub…”
Meta Enjoys Guaranteed Profitable ROI on AI Hardware via Ad Optimization
“It's one of the fundamental advantages that Facebook has today relative to all other AI companies is that they are guaranteed profitable ROI on all of their AI spend. All of their research, all their infrastructure, all their GPUs, they have highly, highly pro…”
Gilbert: TikTok could have disrupted Meta without FAIR's AI research foundation
“If not for FAIR, TikTok could have disrupted Facebook.”
Rosenthal: Obama successfully used Facebook strategy to win 2008 and 2012
“Obama totally doubled down on Facebook as a strategy and used it to great effect to win the 2008 and 20 12 elections.”
UK probe found Facebook told Cambridge Analytica to delete data in 2015
“The conclusion was that the quiz was taken by 320,000 people. Since those people had access to friends, the total surface area was the public profile data of eighty-seven million Facebook users. They also found that Facebook had requested that Cambridge Analyt…”
Gilbert: Cambridge Analytica impacting the 2016 election is wildly oversold
“They had an incredible treasure trove of data that apps could slurp up in the early 20 tens, but the actual narrative of Facebook data that Cambridge Analytica had impacted election results is, like, wildly oversold.”
Facebook Does Not Sell User Data, It Sells Access to Targeting
“In part, you know, you can see why Facebook massively prefers the ad based business model of, we never even expose any information to you, advertiser. You target, and then we just deliver the ads. You never get to know anything about who the users are on our p…”
Gilbert: Facebook Settled with FTC for $5B with 20-Year Oversight
“The whole settlement here was not specifically about Cambridge Analytica. There were a bunch of other things that are privacy related, but the number is five billion dollars. And David, there is one thing that it comes with, and that is a 20 year window that t…”
Gilbert: Facebook July 2018 Drop Wiped $119B, Setting a Historic Record
“The company announces in their July, 20 18 earnings call that they're gonna be more focused on user privacy, and that revenue may slow as they make this intense focus. They dropped 19% in one day. They wiped out a hundred and nineteen billion dollars in market…”
Zuckerberg Pitched Steve Jobs on Integrating Facebook's Platform Directly Into iOS
“The next year, in 2008, when the iPhone SDK was launching and people were building apps, Mark and Facebook actually go to Apple and meet with Steve, and they pitch Steve on exactly what you were just talking about, Ben. Like, hey, how about you let us bring ou…”
Gilbert: Meta CFO Projected $10 Billion Impact From Apple's ATT in 2022
“The CFO kind of casually says in a response to someone, oh, we think that the, Impact from ATT to our ad business will end up costing us on the order of ten billion dollars for twenty-twenty-two.”
Meta Erased $232 Billion in Market Capitalization in a Single Day
“The market cap went from nine hundred billion to seven hundred billion. The actual number is they lost two hundred and thirty-two billion in market cap, the new largest in history, surpassing their previous record.”
Gilbert: TikTok stealing users was a bigger existential threat than Apple's ATT
“The interesting thing is, at this time, the real threat wasn't actually ATT. The biggest of those three threats was TikTok stealing users. The whole ATT thing is about how much money can we make off of an ad because it is so well targeted? That's an optimizati…”
Gilbert: Apple's ATT was net value destructive rather than captured by Apple
“And what ended up actually happening from ATT? It's been value destructive. Overall, because I don't think the amount of money that has shifted away from Facebook has been captured by Apple.”
Gilbert: Scaled players with the most engineers and data win platform shifts
“When a shift like this happens, the most scale player with the most engineers and the most data turns out they're still the winner.”
Meta's Reality Labs Segment Has Accumulated $60 Billion in Operating Losses
“So based on their spend already, since they started reporting Reality Labs as a separate segment in 2019, they've spent right around sixty billion dollars. That is in operating losses for the segment.”
Matching iPhone Cash Flows Would Leave Reality Labs Net Negative Until 2035
“Well, I did that napkin math, and if twenty-twenty-four, This year was Apple's 2007, so you just take all the iPhone's cash flows and you start the clock right now. Meta's cumulative cash flows from Reality Labs would be net negative until at least 2035.”
Zuckerberg Claims Meta Media Would Be Twice as Profitable on Owned Hardware
“And Mark made the comment on stage with us that they've run the analysis. They think they could be twice as profitable in their Core media products if they were on their own platform.”
Meta Devoted Zero Minutes to Core Social Apps at Connect 2024 Keynote
“Meta held a multi-hour keynote at Connect in September, 24. And of those multiple hours, zero minutes were dedicated to their core products of social media apps, their hundred billion dollar business of selling advertisements on these social media products.”
WhatsApp Has Surpassed 100 Million Monthly Active Users in the US
“WhatsApp has a hundred million now in the US, which this is sort of a big narrative violation that WhatsApp will never catch on in the US, and iMessage is dominant, and even after that it's, you know, text message. This is crazy. A hundred million people a mon…”
Meta reports $135 billion revenue and 35% operating margin in 2023
“Their revenue in twenty-twenty-three at the end of the year was a hundred and thirty-five billion dollars, operating income of forty-seven billion dollars, so that's a 35% operating margin.”
Meta Built a Hyperscaler-Sized Data Center Footprint Exclusively for Internal Use
“They now last year spent twenty-eight billion dollars in capex, which you should mostly read as data centers. They operate a Hyper-scaler-sized data center footprint, give or take. You know, you think AWS, Azure, Microsoft, and Google Cloud. Meta is the fourth…”
Meta's US and Canada Revenue Per User Grew from $11 to $227
“The second insane thing, at IPO, the US and Canada market had an average revenue per user of 11 dollars. That number is now 227 dollars.”
Excluding China, Less Than Six Percent of Internet Users Escape Meta
“That leaves about four hundred and fifty million people, or six percent of the human population, Who have access to the internet, but are not yet meta monthly actives. That doesn't mean they're not meta users. That just means they weren't monthly active users …”
Rosenthal: Process power transfers to new hires, cornered resources do not
“And a good test for this is when you bring somebody brand new into the organization and plug them in, does the power transfer to them as well? If no, then it's a cornered resource. If yes, then it's process power.”
Rosenthal: Almost no company can match Meta's global integrity and anti-spam scale
“So, while probably, you know, YouTube, to a certain extent, TikTok, perhaps, also have similar strengths here, I doubt there is any other company in the world capable of actually operating privacy, integrity, and security, and within that is also anti-spam stu…”
Rosenthal: GPU-driven feed recommenders create a rising barrier to entry
“I think the only way that this new paradigm exists is because of AI and because of GPUs specifically, and I'm not even talking about generative AI, I'm talking about, like, feed recommender systems and personalization systems. And so, like, there is a very, ve…”
Meta Open-Sources AI to Commoditize Complements and Lower Long-Term Costs
“When you think about it, it's actually a form of operating leverage, where he's basically saying there's a big fixed cost I am willing to bear in order to bootstrap this ecosystem and commoditize all of these complements, commoditize all of these other closed …”
Rosenthal: Only giant platforms like Meta can afford to commoditize AI models
“Only a company of the scale of Meta can kind of run this playbook, playbook in quotes, because no startup is going to be like, oh, okay, what is my strategy to make sure that OpenAI and Anthropic don't get leverage over me?”
Gilbert: Microsoft is the true strategic and operational comparison for Meta
“The real comp for this company is Microsoft. That was actually my next one. They do iterative product development. They put the first version out just to kind of get feedback and see how they need to rev it and get better for the future. The early days are cha…”
Gilbert: Zuckerberg's post-2016 leadership mirrors Gates staying through DOJ antitrust fallout
“Zuck, after all the 2016 election fallout, and the shift in public perception, and having to do all this testifying, Is like watching an alternate future for Microsoft where Bill Gates had decided to stay at the helm instead of leaving after the DOJ case.”
Rosenthal: Great companies retain homegrown or long-tenured senior executives
“This is almost always true, really is true in every great company that I can think of. The core senior most executive team are all people who came up in the company Or have been there for a very, very long time. It's not a whole bunch of mercenaries there at t…”
Gilbert: Zuckerberg accurately forecasted Meta's 10-year focus on AR and AI in 2015
“Mark was actually two for three on, he was forecasting, like, in 2015, what are we gonna Be focused on 10 years from now. That was one of them. Or the other two were augmented reality and AI.”
Rosenthal: Facebook skipped the 'startup phase' to build a global empire directly
“It's quite ironic that Facebook became the prototypical startup, given that the goal was never to be a startup. The goal was first to be a project, and then to build, like, a very profitable business. The largest empire in the world. Yes. There was no in-betwe…”
Gilbert: Network effects lack the durability of hardware and OS platforms
“A network effect is good, but it's not as good as that incredible platform durability.”
Meta Requires Tight Engineering Coupling Unlike Amazon's Decoupled API Interfaces
“Amazon uses interface so teams don't have to talk to each other. At Meta, they require incredibly tight communication. It's a very different organizational philosophy where they're like, no, no, no, not only do we not have external customers, we want this insa…”
Gilbert: Meta reached four billion users via engineered growth tactics, not virality
“It would be easy to look at this company and say, wow, what a viral product. What a universally applicable product. That is not the case. It is unnatural to have connected four billion humans. This is a freak of nature. This is not just something that people a…”
Gilbert: Meta's core essence is its ability to move like water
“Ultimately, my big takeaway is the company moves like water. It is the company that has connected the world that will always gear up for the next battle and be whatever they need to be in the next era, and whether it's them defining the next generation of comp…”