Facebook began as a website for college students and grew into a global social media platform. It was first called TheFacebook in 2004 and later renamed Facebook in 2005. Mark Zuckerberg and his college friends, Eduardo Saverin, Andrew McCollum, Dustin Moskovitz, and Chris Hughes, created it at Harvard University. At first, only Harvard students could use it. Over time, it expanded to other colleges in Boston, Ivy League schools, and eventually most universities in the United States and Canada. In 2006, anyone with a valid email address and who was at least 13 years old could join.
Facebook added important features, such as the News Feed in 2006, which helped users see updates from friends. By 2007, Facebook became more popular than MySpace and was the most visited social media site worldwide. The company earned money by showing ads to users based on their interests and habits. In 2012, Facebook had one of the largest initial public offerings (IPOs) in technology history. It also bought other companies, including Instagram in 2012, WhatsApp and Oculus VR in 2014, which helped Facebook grow beyond social media into areas like messaging and virtual reality.
Facebook faced problems early on, including concerns about how it collected user information. In 2018, a scandal showed that user data was used to influence elections, leading to criticism and legal action. Facebook has also been criticized for allowing false information, hate speech, and harmful content to spread. Changes to its system for showing posts sometimes made divisive content more visible. Facebook was used to organize events like the Arab Spring but also faced blame for its role in events like the Rohingya genocide in Myanmar.
In 2021, Facebook changed its name to Meta, showing its focus on creating the "metaverse," a digital world using virtual and augmented reality. Today, Facebook (now Meta) continues to affect how people communicate, shop, and share culture globally. With billions of users, it remains a major organization in the 21st century.
Facemash
"Facemash" was a website that compared the appearances of female Harvard students. The students did not know their photos were being used for this purpose, as shown by complaints from groups like Fuerza Latina and the Harvard Association of Black Women. The website used ID photos of female students taken without permission from the university's online directories. Users saw pairs of women and were asked to choose who was "hotter." The homepage said, "Were we admitted for our looks? No. Will we be judged by them? Yes."
By the end of the day Facemash was launched, at least 22,000 votes were cast by about 400 to 450 users. A 2003 article from The Harvard Crimson reported that Zuckerberg created the site in less than a week and wrote about the process in a blog. He accessed photos from Harvard's internal computer systems without permission, using special computer programs and coding methods. He called his hacking "child's play." In a blog post, Zuckerberg wrote, "The Kirkland Facebook (referring to a computer system) is open on my computer desktop, and some of these people have pretty bad Facebook pictures. I almost want to put some of these faces next to pictures of farm animals and have people vote on which is more attractive."
Zuckerberg faced criticism from Harvard's Administrative Board in November 2003 after Facemash caused controversy. Groups like Fuerza Latina and the Harvard Association of Black Women protested, and the university's computer services department reported the issue to the board. Zuckerberg was accused of breaking security rules, violating copyright laws, and harming people's privacy. These actions later influenced Facebook's business model, which led to future problems like the Cambridge Analytica scandal.
As a result, the Harvard Administrative Board removed the site on November 2. Details about any actions taken against Zuckerberg are not known. He was not required to leave the university or apologize. There is no information about whether the board took other actions against him.
During the same semester, Zuckerberg expanded on the Facemash idea by creating a social study tool. He uploaded art images to a website he shared with classmates, each image having a section for comments.
TheFacebook
A "Facebook" is a list of students with photos and basic information. In 2004, Harvard University did not have a universal online directory. Instead, paper sheets and private online lists were used. Zuckerberg told the Crimson newspaper, "Everyone has been talking about creating a universal Facebook at Harvard. I think it is silly for the University to take years to do this. I can do it better and faster." In January 2004, Zuckerberg started writing code for a new website called "TheFacebook." He was inspired by an article in the Crimson about Facemash, which said, "The technology to create a single website is available, and the benefits are many." Zuckerberg met with Harvard student Eduardo Saverin, and they each agreed to invest $1,000 in the site. On February 4, 2004, Zuckerberg launched the website under the name "TheFacebook," which was initially located at thefacebook.com.
Zuckerberg wanted to create a website that could connect people at the university. After finishing the site, he shared it with a few friends. One friend suggested posting it on the Kirkland House online mailing list, which had several hundred people. According to his roommate, Dustin Moskovitz, "By the end of the night, we were watching the registration process. Within 24 hours, there were between 1,200 and 1,500 people who signed up."
Six days after the site launched, three Harvard seniors—Cameron Winklevoss, Tyler Winklevoss, and Divya Narendra—accused Zuckerberg of tricking them into believing he would help build a social network called HarvardConnection.com. Instead, he used their idea to create a competing product. The three students complained to the Crimson, and the newspaper began an investigation. Zuckerberg used TheFacebook.com to find members who were part of the Crimson. He checked failed login attempts to see if any Crimson members had entered incorrect passwords. He then tried to access their Harvard email accounts and was successful in two cases. Eventually, three Crimson members sued Zuckerberg, but the case was settled.
At first, membership was limited to Harvard students. Within the first month, more than half of Harvard’s undergraduate students signed up. Zuckerberg worked with Saverin (business), Dustin Moskovitz (programmer), Andrew McCollum (graphic artist), and Chris Hughes to promote the site. In March 2004, Facebook expanded to Stanford, Columbia, and Yale. This growth continued as the site opened to all Ivy League and Boston-area schools. Over time, Facebook reached most universities in the United States and Canada. In the summer of 2004, Facebook became a company. Sean Parker, who had been advising Zuckerberg, became the company’s president. In June 2004, Facebook moved its main office to Palo Alto, California.
The company removed "The" from its name after buying the domain name facebook.com in 2005 for $200,000 ($329,698 in 2025 dollars). The domain was previously owned by AboutFace Corporation.
In May 2005, Accel Partners invested $13 million ($20.9 million in 2025 dollars) in Facebook, and Jim Breyer added $1 million ($1.65 million in 2025 dollars) of his own money. A version of the site for high school students launched in September 2005. Access was later expanded to include employees of companies such as Apple Inc. and Microsoft.
In May 2006, Facebook hired its first intern, Julie Zhuo. After one month, Zhuo became a full-time engineer. On September 26, 2006, Facebook opened to everyone aged 13 or older with a valid email address. By late 2007, Facebook had 100,000 pages where companies promoted themselves. Organization pages began appearing in May 2009. On October 24, 2007, Microsoft announced it had purchased a 1.6% share of Facebook for $240 million ($373 million in 2025 dollars), giving Facebook a total value of about $15 billion ($23.3 billion in 2025 dollars). Microsoft’s purchase included rights to place international advertisements.
In May 2007, Facebook introduced the Facebook Developer Platform at the first f8 developers conference. This platform allowed software developers to create apps that interact with Facebook features. By July 2008, the platform had 33,000 apps, and over 400,000 developers were registered.
Facebook won awards such as being listed in "Top 100 Classic Websites" by PC Magazine in 2007 and winning the "People's Voice Award" from the Webby Awards in 2008. In early 2008, Facebook became EBITDA profitable but was not yet cash flow positive.
On July 20, 2008, Facebook launched "Facebook Beta," a major redesign of its user interface. The redesign included changes like consolidating the Mini-Feed and Wall, separating profiles into tabbed sections, and improving the website’s appearance. Users began switching to the new version in September 2008. In July 2008, Facebook sued StudiVZ, a German social network, for being visually and functionally similar to Facebook.
In October 2008, Facebook announced its international headquarters would be in Dublin, Ireland. A 2009 study by Compete.com ranked Facebook as the most used social networking service by monthly active users worldwide. China blocked Facebook in 2009 after the Ürümqi riots.
In 2009, Yuri Milner’s DST (later split into DST Global and Mail.ru Group) and Alisher Usmanov invested $200 million in Facebook when its value was $10 billion. Usmanov’s USM Holdings also acquired a separate stake. A 2013 New York Times report stated that Russian investors, including Usmanov, owned nearly 10% of Facebook at one point, though exact ownership details were unclear. The 2017 Paradise Papers revealed that Russian state-backed VTB Bank and Gazprom’s investment vehicle partially funded these investments, though Milner was unaware of this at the time.
In May 2009, Zuckerberg said the $200 million Russian investment was a "buffer" for Facebook and not needed to achieve cash flow positivity. In September 2009, Facebook became cash flow positive ahead of schedule after closing a $200 million gap in operating profitability.
In 2010, Facebook won the Crunchie "Best Overall Startup Or Product" award for the third year in a row. The company announced 500 million users in July 2010. Half of users accessed Facebook daily for about 34 minutes, and 150 million used mobile devices. A company representative called this milestone a "quiet revolution." Groups were introduced in October 2010. In November 2010, Facebook’s value was $41 billion ($60.5 billion in 2025 dollars), making it the third-largest American web company after Google and Amazon.com.
On November 15, 2010, Facebook bought the domain name fb.com from the American Farm Bureau Federation for an undisclosed amount. In January 2011, the Farm Bureau reported $8.5 million ($12.2 million in 2025 dollars) in "domain sales income," making the fb.com purchase one of the ten highest domain sales in history.
In February 2011, Facebook announced plans to move its headquarters to the former Sun Microsystems campus in Menlo Park, California. In March 2011, Facebook removed about 20,000 profiles daily for violations like spam, graphic content, and underage use. In June 2011, Facebook reached one trillion page views, becoming the most visited website tracked by DoubleClick. A 2011 Nielsen study ranked Facebook as the second-most accessed website in the U.S. after Google.
In March 2012, Facebook launched App Center, a store selling apps for iPhones, Android devices, and mobile web users.
Facebook’s initial public offering (IPO) occurred on May 17, 2012, with a share price of $38 ($53.00 in 2025 dollars). The company was valued at $104 billion ($146 billion in 2025 dollars), the highest valuation at that time. The IPO raised $16 billion ($22.4 billion in 2025 dollars), the third-largest in U.S. history. Based on its 2012 income of $5 billion ($7.01 billion in 2025 dollars), Facebook joined the Fortune 500 list in May 2013, ranked 4
Financials
Facebook was first started as a company in Florida called an LLC. After it launched in February 2004, Mark Zuckerberg and Eduardo Saverin paid for the website’s operating costs using their own money. They also used some money from advertisements to help cover expenses.
In the summer of 2004, Peter Thiel, a venture capitalist, invested $500,001 in Facebook for 10.2% of the company. This was the first time Facebook received money from an outside investor. Thiel also joined Facebook’s board of directors.
In his book The Facebook Effect, David Kirkpatrick explained how Thiel became an investor. Sean Parker, who was Facebook’s “President” at the time, was looking for investors. He asked Reid Hoffman, the CEO of LinkedIn, for help. Hoffman liked Facebook but did not want to invest because of possible conflicts with his job at LinkedIn. He suggested Thiel, a friend from their time working together on PayPal. Thiel met with Parker and Zuckerberg, and they agreed on the investment. Hoffman and Mark Pincus, along with Maurice Werdegar from Western Technology Investment, also participated. The investment was made as a convertible note, which would become equity if Facebook reached 1.5 million users by the end of 2004. Even though Facebook did not meet the goal, Thiel still converted the note to equity.
In April 2005, Accel Partners invested $12.7 million in Facebook, valuing the company at $98 million. Accel joined Facebook’s board, which had five members: Zuckerberg, Thiel, and Accel’s Jim Breyer. The other two seats were empty but available for future appointments.
In April 2006, Facebook completed its Series B funding round, raising $27.5 million from venture capitalists like Greylock Partners and Meritech Capital. Thiel and Accel Partners also invested again. The company was valued at about $500 million during this round.
A leaked financial report showed that Facebook had a net gain of $5.66 million during the 2005 fiscal year.
After MySpace was sold to News Corp in 2005, rumors spread that Facebook might also be sold. Zuckerberg denied these rumors, saying he wanted to keep Facebook independent. In 2006, BusinessWeek reported that Facebook had turned down a $750 million offer and that the asking price later reached up to $2 billion.
In September 2006, Yahoo! discussed buying Facebook for up to $1 billion. Thiel, who was now on Facebook’s board, said the company’s internal value was around $8 billion, based on its future revenue goals.
In July 2007, Zuckerberg said selling Facebook was unlikely. He stated, “We’re not really looking to sell the company… We’re not looking to IPO anytime soon.” Later that year, Microsoft offered to buy a 5% stake in Facebook for $300–500 million. Other companies, like Google, also showed interest.
On October 24, 2007, Microsoft purchased a 1.6% share of Facebook for $240 million, implying a total value of $15 billion. Microsoft’s investment included special rights, such as priority in payments if the company was sold. In November 2007, Hong Kong billionaire Li Ka-shing invested $60 million in Facebook.
In 2009, Yuri Milner’s DST Global and Alisher Usmanov invested $200 million in Facebook when it was valued at $10 billion. Later reports revealed that Russian state-backed banks partially funded these investments, though Milner was unaware.
In August 2008, BusinessWeek estimated Facebook’s value at between $3.75 billion and $5 billion based on private sales and venture capital purchases. In October 2008, Zuckerberg said, “I don’t think social networks can be monetized in the same way that search did… In three years from now we have to figure out what the optimum model is.”
In March 2008, Facebook hired Sheryl Sandberg as its chief operating officer. Sandberg led discussions on monetization strategies, leading to a focus on advertising as the main revenue source. By September 2009, Facebook reported its first positive cash flow.
In early 2012, Facebook’s profits increased by 65% to $1 billion, with revenue from advertising rising nearly 90% to $3.71 billion. About 56% of advertising revenue came from the United States, and 12% came from Zynga. Payments and fees increased to $557 million.
In August 2009, Facebook acquired FriendFeed, a real-time news aggregator. In February 2010, it bought Octazen Solutions, a contact-importing startup. In April 2010, it acquired Divvyshot, a photo-sharing service. In June 2010, an online marketplace for Facebook stock valued the company at $11.5 billion.
On April 12, 2012, Facebook bought Instagram for about $1 billion. In March 2013, it acquired Storylane’s team but not the product. In October 2013, it purchased Onavo, an Israeli analytics company, for $120 million.
On February 19, 2014, Facebook acquired WhatsApp for $19 billion, the largest investment ever made in a venture-backed startup. On March 25, 2014, it bought Oculus VR, a virtual reality company, for $2 billion.
Initial public offering
Facebook applied to sell shares to the public for the first time on February 1, 2012. The company planned to raise $5 billion by selling shares. At that time, Facebook had 845 million users who visited the website each month, and the site had 2.7 billion likes and comments every day. After the sale, Mark Zuckerberg kept 22% of Facebook’s ownership and controlled 57% of the voting rights.
The companies helping sell the shares set the price of each share at $38, giving Facebook a total value of $104 billion. This was the highest value ever for a company selling shares for the first time. On May 16, one day before the sale, Facebook decided to sell 25% more shares than planned because many people wanted to buy them. The sale raised $16 billion, making it the third-largest in U.S. history, behind only General Motors and Visa Inc. After the sale, Facebook’s stock value became higher than many large companies, including Amazon.com, McDonald’s, Disney, and Kraft Foods. Mark Zuckerberg’s shares were worth $19 billion. The New York Times said the sale helped Facebook become a highly valued investment. A person from JPMorgan Chase called it “the next great blue-chip” company. However, some writers at TechCrunch said Facebook would need to find new ways to earn money to support its high value.
Trading began on May 18, but the NASDAQ exchange had technical problems, causing delays. The stock price dropped below the sale price most of the day, so the companies helping sell the shares had to buy back some shares to keep the price stable. At the end of the day, the stock was worth $38.23, just $0.23 above the sale price and $3.82 less than when trading started. Many financial news sources called this result disappointing. However, the stock had the highest trading volume of any IPO. On May 25, the stock closed at $31.91, which was 16.5% lower than its starting price.
On May 22, regulators from Wall Street’s Financial Industry Regulatory Authority said they were looking into whether banks selling Facebook’s shares had shared information unfairly with some clients instead of the public. Massachusetts Secretary of State William Galvin asked Morgan Stanley to provide information about the same issue. These reports caused anger among some investors and led to lawsuits. One lawsuit claimed losses of more than $2.5 billion. Bloomberg estimated that individual investors may have lost about $630 million from Facebook’s stock after its sale.