How to Create the Next Facebook: Seeing Your Startup Through, From Idea to IPO
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Authors: Tom Taulli
How to Create the Next Facebook: Seeing Your Startup Through, from Idea to IPO
Copyright © 2012 by Tom Taulli
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ISBN-13 (pbk): 978-1-4302-4647-3
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Being an entrepreneur is hard. It’s a roller coaster every day. You need a strong stomach, eyes on the future, a soul that wants to change the world, and a heart that believes you can do it. You learn, you fail, you learn some more. The Internet landscape has changed a lot since I started my first company in 1999. Since Facebook launched, we’ve all been pushed to step up our game. There’s been a shift in the technology field to move faster than ever before, while creating value for your users.
“Move fast and break things.” “Done is better than perfect.” Before these clichéd mantras made their way into mainstream startup culture, they described a simple Facebook philosophy—to ship code fast and continuously iterate. Although we’ve always moved pretty quickly in Silicon Valley, Facebook has driven us to move even quicker. At BranchOut, we’re pushed to keep up with Facebook’s weekly development cycles because we’re an application built on their platform. We’ve embraced the developer-driven culture behind the “move fast” mentality because the faster we ship code, the quicker we can make mistakes and learn from them.
There are a lot of competing interests at play when you’re building a company. Facebook had a lot of interest early on in diverging from the path they were on. In 2004, Friendster attempted to acquire Facebook for $10 million. Had that happened, who knows if Facebook would have added photo sharing the next year, eventually opened up to anyone with an e-mail address, and ultimately made the world as open and connected as it is today? When you’re building a company, there’s a lot of outside pressure to hit particular metrics and deadlines. You get a lot of advice. But it all comes down to listening to your users. If you don’t build a passionate company, they won’t come back. At BranchOut, we’re trying to make our users’ lives better. We’re trying to help people represent themselves professionally so they can network, find mentors, and land their dream jobs.
Create value. Run fast, go big, and change the world.
Rick Marini
Founder of BranchOut
Tom Taulli
is based in Silicon Valley, in the heart of IPO land. On a regular basis, he talks with many of the top tech CEOs and founders to find the next hot deals and discover which startups are stinkers. A long-time follower of the IPO scene, Taulli started one of the first sites in the space, called WebIPO, in the mid-1990s. It was a place where investors obtained research as well as access to deals for the dot-com boom. From there, he started several other companies, such as Hypermart.net, which was sold to InfoSpace in 1999. Currently, Taulli is an advisor to tech companies and writes extensively on tech, finance, and IPOs. His work has appeared on Forbes.com, TechWeb, and
BusinessWeek
. He is also frequently quoted in publications like the
Wall Street Journal
and is regularly interviewed on CNBC and BloombergTV. You can follow him on Twitter at @ttaulli.
OK, the title of this book is definitely provocative. Who wouldn’t want to create the next Facebook and become extremely wealthy and famous? No doubt, the company’s success has inspired many people to become entrepreneurs. It has become the hot thing nowadays.
But my book is not about replicating Facebook. After all, the company has become the mega winner in social networking. History has shown that when critical mass is established in a new market, the leader usually keeps its position for many years. Just look at Google, Microsoft, Skype, and eBay.
Achieving dominance is often a matter of a few key decisions. Companies like MySpace and Friendster could easily have become the leader. Hey, my book might have been called
How to Create the Next MySpace
or
How to Create the Next Friendster
if history had been different.
The goal of this book is to look at the critical aspects of how Facebook went from $0 to over $50 billion in 8 years. But I don’t just cover the success; I also look at the mistakes. Some were almost fatal.
Here’s a rundown of the book’s main areas:
Chapter 1
—“The Mission”: Your mission should be a huge goal. You want to change the world in some way, and this is a powerful driver for success. It gets employees excited as well as investors and customers.
Chapter 2
—“Legal”: This stuff is boring and tedious but critically important. In the early days, Mark Zuckerberg nearly destroyed his company as a result of bad legal decisions.
Chapter 3
—“The Product”: Zuckerberg is a product genius. But to be successful, you don’t have to be a natural-born prodigy. This chapter looks at best practices to make products that customers love.
Chapters 4
,
5
, and
6
—“Raising Capital,” “The Pitch,” and “Deal Terms”: Here’s everything you need to know to get investors to write checks. Even highly successful companies need to raise money—and Facebook has been fundraising from the start. In its history, the company has raised more than $18 billion.
Chapter 7
—“Go-To-Market”: This topic gets little attention from entrepreneurs, and it’s a big oversight. If you don’t have a solid go-to-market strategy, your venture will probably fail.
Chapter 8
—“The Financials”: This is another boring topic (sorry!). But don’t skip it. Although the tech industry goes through periods where fundamentals don’t seem to matter much, they are temporary manias. In the end, you need to understand the nuts and bolts of a company’s financials.
Chapter 9
—“The Business Model”: This is how your company makes money. Chances are, you have one core revenue stream. This Chapter looks at some of the main business models that have worked.
Chapter 10
—“Being a Great CEO”: Zuckerberg was not a natural-born CEO. In fact, he was terrible at the role, at least during the first couple of years of Facebook’s history. But he was determined to get better. Being a CEO is definitely something that can be learned.
Chapter 11
—“The Team”: Zuckerberg has always understood the importance of creating a cohesive team. But he also realizes that there are times when people need to be let go.
Chapter 12
—“M&A”: Since 2007, Zuckerberg has struck over 25 acquisitions. Most were ways to get talent, a process known as an acqui-hire. This chapter explains how to bolster your company with deal-making.
Chapter 13
—“Selling Your Company”: Zuckerberg is focused on keeping his company independent. But the fact is, most companies are eventually sold off. This chapter looks at how to maximize the value of a transaction.
Chapter 14
—“IPO”: In 2012, Facebook came public. Yes, it was a challenging deal, but the company had the second largest transaction in US history. This chapter shows what it takes to go public.
Chapter 15
—“Wealth Management”: As an entrepreneur, you have the opportunity to get rich. However, you need to make sure you manage your wealth properly. There are many horror stories about entrepreneurs who have lost fortunes.
Chapter 16
—“Conclusion”: In this chapter, I look at some takeaways and big opportunities for you to think about.
Why should I be the person to write this book? Well, I do have a unique perspective. I have started several companies in tech and have raised capital from angels and venture capitalists. I also sold one of my companies to a public company. At the same time, I’ve made angel investments and have advised companies.
All of these experiences have been extremely valuable. In this book, I try to bring out these lessons. I wish I had known these things when I started my first business!
For the past 15 years, I have also been a writer. I have written 10 books on finance and technology. I have also written for publications like
BusinessWeek
and
Forbes.
In the process, I have talked to many great entrepreneurs, such as Google’s Sergey Brin and Twitter’s Evan Williams. It has been a great learning experience.
Enough with the intro. Let’s get started!