Dan Rose Profile picture
19 Sep, 16 tweets, 3 min read
May 18, 2012 - there was a crisp blue sky at FB’s campus as we rang the opening bell. Emotions ran high as we took a brief moment to celebrate our hard work. The stock traded up for the first few hours. Then it traded down for the next 12 months...
Facebook’s IPO coincided with a paradigm shift in technology. The majority of our usage and revenue transitioned from desktop to mobile practically overnight. Facebook’s journey to a mobile-first company started with a strategic error and ended with a pivot. Here’s the story:
Mobile initially presented us with a number of challenges, and our instinct was to innovate our way around them. The heart of our strategy was HTML5, which turned out to be a flawed approach. We spent 2 years sprinting down the wrong path before reversing course. Why?
1/ Our engineers coded in PHP, a web-based language that didn’t translate to native mobile apps. Rather than write native apps for 5+ mobile platforms (this was 2010/11), we used web-based HTML5 so we could write once, read everywhere (just like the web).
2/ Our web gaming platform was thriving which validated our aspiration to be a platform provider. But there was no obvious way to translate our web platform to mobile. Apple rejected our platform aspirations, so we decided to fork Android and build our own OS + HTML5 wrapper.
3/ Our web platform also generated 30% of our revenue (payments + ads), and the rest of our revenue was from ads in the right-hand column of our website which didn’t exist on mobile. It was not obvious how we would be able to make money in a mobile world.
We created a dedicated team to focus on mobile. My team led OEM, carrier and developer relations for a “social OS.” Bret Taylor led our development efforts and Zuck drove our strategy. We were proudly all-in, which is often the right approach in a world of limited resources.
But there were 2 big problems with our approach: HTML5 apps performed worse than native apps, making our products slow/laggy. And mobile started consolidating around iOS and Android as developers and users wanted fewer platforms. We were swimming upstream with a broken paddle.
All of this came to head around the time of our IPO. 6 months after we went public the stock was trading at 50% of our initial offering price with no bottom in sight. It was clear we were on the wrong path and running out of time. We couldn’t bury our heads, we had to take action
Zuck pivoted the company overnight. He shut down our HTML5 efforts and mobile OS aspirations. He put all of our engineers through emergency bootcamp to learn how to code for native iOS and Android. He promoted Boz from our consumer team to rethink ads in a mobile context.
It takes time to move a giant ship, and those next 12 months were very tough. Zuck prioritized app performance over everything else, including revenue and innovation. Our products needed to feel modern and snappy before we could even consider monetizing or adding new features.
Zuck insisted that every product review start with mobile-first designs. And while our apps were being re-written, we started to think about putting ads in News Feed. Our bar was very high - the ads needed to feel as relevant as any other content from your friends.
We originally thought the key to ads relevance would be social context, but this was wrong. Relevance was driven by auction liquidity and targeting (more ads to choose from = better odds of showing a good ad). Once we reached critical mass, users embraced seeing ads in their feed
One year after our IPO we finally turned the corner on mobile and never looked back. Growth and engagement exploded as everyone got smartphones. Users clicked on relevant ads which brought in more advertisers which made the ads more relevant - our revenue flywheel was spinning.
Our mobile app strategy turned out to be way more powerful than our web platform, and the revenue we lost from web games was quickly replaced by News Feed ads. Zuck didn’t give up on his platform aspirations, he just refocused his energy on the next paradigm shift in AR/VR.
Zuck taught me the best leaders are willing to swim upstream when the stakes are high, and swallow their pride when it’s time to change course. Admit mistakes but don’t dwell on them. Whatever your strategy, be decisive and go all-in. And lead from the front at all times.

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More from @drose_999

17 Oct
In 2004 I had an offer to join the new Kindle team at Amzn and I jumped at the oppty. I was on our retail team at the time -> Kindle was new/sexy. But a week before I was scheduled to start my new job, I was told to stay put and I learned an important lesson. Here’s the story:
2 years earlier I had been given P&L responsibility for Amzn’s cell phone store. We sold phones + plans (like Car Warehouse and Best Buy). This was Amzn’s highest margin biz, but it was tiny and not growing and I was told it could get shut down. I had 6 mos to turn it around.
The industry model at that time was give phones for free w/ service plan attach. I reinvested the service plan margin to make phones less than free, and rev growth exploded. GM % plummeted, but profit $ went way up. My little biz was our fastest growing segment at Amzn!
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3 Oct
In 2008 Facebook’s user growth hit a wall at 80M and we were having serious debates about whether any social network could ever reach 100M users. 2 years later we had doubled our user base and not long after that we reached 1B users. Here’s how we did it:
I joined FB in summer ‘06 when we had 7M users and were adding 5k/day. Over the next 18 months, Zuck shipped News Feed, Open Registration, Platform and community-led translation. By end of ‘07 we had 70M users and it seemed like we couldn’t be stopped.
Towards end of ‘07 I helped raise our Series C at $15B valuation. We had <400 employees and only $250M revenue, but we had explosive user growth and powerful network effects. Our entire valuation was based on how fast people were signing up for FB all over the world.
Read 13 tweets
12 Sep
Amazon launched in July 1995, and every Xmas was a near death experience for the first 7 years. I joined in ‘99 and got to experience this first hand. Starting in late Nov, all corporate employees were shipped to fulfillment centers to pack boxes for 6 weeks. Here’s what I saw:
Despite efforts to plan ahead, the company literally couldn’t keep up with holiday demand. 40% of all annual orders would come through in 6 weeks from Thxgiving through New Years. Ops teams would start planning in Jan, but by Sept they were always massively behind.
As “earth’s most customer centric company,” failing to deliver presents for Xmas would have been like Santa missing his deadline. But when demand exceeds even your most aggressive forecasts, it’s a physical world problem that requires physical world solutions - ie human bodies.
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4 Sep
I dropped out of b-school to join Amazon July ‘99. By Dec Amzn’s stock had doubled, Jeff was Time Man of the Year. Then March ‘00 internet bubble popped -> my stock options were underwater and Amzn faced bankruptcy. Yet dropping out was the best decision I ever made. Here’s why:
I needed a pattern interrupt. My life had been conformist up to that point - straight A’s, awards, Harvard, b-school. But business is messy, life is messy. I knew deep down I needed to mess stuff up, get outside the box. I’ve tried to maintain that mentality ever since then.
Shortly after I started my internship at Amzn, I asked CFO Joy Covey if she thought I should drop out of b-school to stay on full time. She said I would learn more on the job than in school (she had dropped out of high school). She was right, you can’t learn biz in a classroom.
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21 Aug
In 2002 I was working in Amazon’s retail division. We were organized by department - books, CDs, electronics, etc - and a separate dept for products sold by 3rd parties. Then Bezos decided 3rd party should appear next to 1st party on the same product page. Here’s what happened:
Amzn launched 3rd party biz right after I joined summer 1999. Started w auctions, competing directly w eBay. Added fixed price when eBay acquired Half. Despite a ton of cross-promo, nobody visited the 3rd party store. eBay had buyer/seller network effects. Amzn couldn’t compete.
By 2002 most people thought we should shut down 3rd party biz. It wasn’t working, consumed a lot of resources, good people were on it, big distraction. At the same time, core retail biz had decelerated to single digit growth after we raised prices to stop bleeding cash.
Read 12 tweets
8 Aug
A few months after I joined Facebook in 2006, we shipped the 2 most important products in FB’s history: News Feed + Open Registration. A lot of smart people thought these moves would destroy FB. Instead, they transformed the company and cemented Zuck’s leadership. The backstory:
News Feed shipped first. In 2006 there were no feeds (other than RSS), NF was a novel product idea. Websites were measured on page views back then, and NF was designed to reduce PVs by eliminating the need to click around profiles. Less PVs = less ad impressions, seemed crazy.
Mark described FB as a utility, and NF was central to his vision. It showed info you could already see on people’s profiles, but organized efficiently on the home page. And stories would be ranked based on what people found most interesting. This was a massive change.
Read 10 tweets

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