Episode 186: The Facebook Game Plan That Got Them to 1 Billion Users First Ahead of 20 Competitor...

Welcome to this episode of the Million Dollar Mastermind. I'm Larry Weddell. And before we get started, if you want to know exactly how to win again and again, go to Wydell on winning.com webinar now to watch something I've put together for you. Now let's get going into this episode of Million Dollar Mastermind. I'm excited to bring Vignesh Kumar and share with us some behind the scenes about what made Facebook success, the success. What they did, right, what they focused on from the beginning and allowed them to skyrocket up in growth and basically make themselves a permanent part of our culture and gave them a power and a dominance. But it didn't happen by itself. So much of these stories about the movies, about how Facebook started is they had a nifty idea and people just got on it. It just kind of became big. No, that's not how things get big. They don't just kind of. People love it. It's marketing. You know, like Elvis Presley, he was marketed, you know, he was the number one sensation, but he. He was marketed by that Colonel. What's Colonel I forgot his name. I mentioned him all the time. But anyway, colonel Parker. And, you know, before Elvis would come to town, you know, they, they. They promote all. They go to all the radio stations and do interviews and. And the record stores and. And posters all over town. It'd be like, you know, it was like, the circus is coming to town. And so, of course, when Elvis came to town, he. Huge turnout because he spent his time on marketing Elvis before he got there. And so Facebook did the marketing piece, right? And they emerge from a glut of that type of app or program early on. And so how about tell us the story of the decision they made and. And how they followed through on it to go from what, 50,000 users to over a million.

Oh, one billion, Larry.

Oh, billion. Okay.

Yeah, so let's talk about that. So as a whole, Larry. So what I've seen Facebook do is. And by the way, just so you guys know, I. In 2006, I think six or seven, I sold $2.4 million worth of printers to their offices. So I actually have some personal connection to Facebook. I'm not saying I worked there or anything like that. When they were first opening offices in India, which is where I lived back in the day, right? I actually were seeing that, oh, yeah, Facebook is coming to India. And it's like, all over the news, right? So one of the things I did was I called up one of the Facebook People, I'm like, hey, what do you guys need? You're opening up offices. Can I come down for a visit? And then I went down there and I, you know, made up, you know, talked to a couple of people and they were like, oh, yeah, we actually need some printers for all of our offices. And I was like, yeah, we can get you the printers. Yeah, my cousin actually owns a, you know, printer company, so he can help you with that. So we kind of put this deal together, and they basically bought $2.4 million worth of printers for all of the offices that, you know, Facebook has in India. And. And also, I think a little bit of like, they had some offices in Europe as well. So we put together a good deal that they were able to do that, but that's beside the point. But, yeah, that's one of those things that just organically happened by just me calling up Facebook and I was like, you know, chatting them up to see what they're doing in India. That was a little bit different than what they were doing everywhere else. Right. Anyways, that's beside the point. Yes, Larry.

No, go ahead.

Okay, wonderful. So let's talk about Facebook as a company. Right? So if you look at Facebook, one of the things they have done, they actually have just. So for anyone who doesn't know Facebook has 1.8 billion daily users, they have about, last time I checked, give or take, they have about 2.6 billion monthly users. Meaning not everyone logs in daily. Some people log in on a month to month basis, but it's not all the same. Now, that is like, they control or they have access to a significant section of the human population. Now what most people don't realize is they didn't start like that. You know, it was basically started as a, you know, like a idea where students go in, like, online. It was basically online student directory. Right. Like, that's what it. Like that's what it was like when it was an original idea. That's what it was right. Now. Funny thing that most people don't realize is when Facebook started, they didn't have one competitor like MySpace. No, no, no. That's not really what happened there. It's like the story that's been told, but in reality, there are actually three different social networks before Facebook. Okay, so I'll list them out. So the first one to ever start there was a quote unquote social network where people can do profiles and stuff was 6degrees.com. Yeah, yeah, it still exists. You can go look it up like it's there. Funny thing is they started in the 90s. Like, they started this idea in the 90s. But the thing is, the problem is no one was online to even do this stuff, right? So that was six degrees. Then simultaneously, when Facebook was launching, here's all the competitors that they had. They had Friendster, they had MySpace, they had Google, they had Orkut. So if you guys remember what Orkut was, Orchid was this competitor to Facebook that Google had. Orchid is actually a engineer's name from Facebook. Right. There was also flickr.com by Yahoo as well. They had all the photos and stuff in there. Now, funny thing is, that's only the ones that I can list off. Off the top of my head. There's actually like 20, 30 other people doing. Doing social networks at the time right now. What made social. Like, what made Facebook grow is that the insight that they had was that at one point, they were basically customizing the user experience for every single country. For example, when they went to Japan, like 2006, 2007, what they noticed was Japanese were really into this idea, and they had this cultural thing going on where their blood type would be in every profile. Okay? Like, if you look at their, like the US or in any other country, you know, in Europe or anything like that, you will never see someone have their name, date of birth, you know, like their certification, all that kind of stuff, and their blood type. It'll never be there. Like, you have to actually ask them or, you know what? Not like they have to have medical procedure, you know, done. That's when you ask them their blood type. But in Japan, your date of birth and your blood type go together. So what they did was, you know, on Facebook, when someone signed up on facebook.com in Japan, they would get local people who were Japanese to kind of be the engineers, and they said, hey, you need to have the blood type. That's when Facebook will become localized. That's when people in Japan will think of Facebook as, like, a local thing, right? So they instituted that. So first thing they did was they made sure that they localized Facebook for whatever country, whatever state, whatever location they were going for. That's number one insight. Number two, which is the biggest insight, is they noticed that when people join Facebook, they have to see their friends, okay? Like, if they don't see their friends, they're not going to, you know, they're not gonna stick around, okay? That's just the reality of it. It's just not going to happen. So one of the basic insights that they had was after they reached 50 million users, give or take, right? Like they reach 50 million users and that's how Facebook had grown at the time. 50 million users is not a lot of people because at that time Facebook, I mean, MySpace and Friendster, they had 200 million, MySpace had 300, 400 million people there. You know what I mean? So essentially it was not that big of a deal or was not a, you know, big concern that existed back in the day. But essentially what they, they figured out was they figured out that the key insight was if the users that come into the platform within 90 days have at least seven friends with them on their platform, okay? It took them a lot of data to boil this down. So let me, like, it took them months and months of like studying user data, user metrics, what users do on the website, data, user retention, all that kind of stuff. Right after that, they figured out that a new user comes in and they invite seven of their friends. And those seven people actively start using Facebook. They are never leaving Facebook. That's it. That is the key insight, right? So then what they did was the entire growth team, which is still the most prestigious team at Facebook, you can go Google this if you want. Facebook, growth team. They are the most prestigious team in Facebook because they figured out that how to go from 50 million to like a billion users, right? So once they figured this part out, they built the entire user experience of someone joining Facebook to focus on this. Everything that they did, everything they did on the website for new users was to get those seven friends in a period of 90 days, right? They did that. And Facebook grew from like 50 million to 1 billion users really, really, really quickly, I think in a two year time frame. That's how they did that, right? Those were the two insights that none of these other companies had. They didn't have that clarity of like, okay, what really is the value, the core value that I deliver for my users? You know, I mean, like they didn't have that insight. And that was the key insight that pushed Facebook into a whole new level. And all of these competitors I just mentioned, none of these exist anymore. Like either they're closed down, either they do not exist, or even if they do, they don't matter anymore.

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And that is the key insight.

Yes, Larry, that's the key insight. But there was a time in there where the other guys, the consensus, you know, this is why you got to watch conventional wisdom and what everybody's doing, you know, what they're teaching in the business schools and things like that, what everybody, the smart people were doing were taking these social media platforms and adding features. They, they were focusing on adding features rather than keeping the priority on growth of users. And Facebook made a conscious decision to postpone that expansion of features until they got up to a certain mass size. Is that correct?

Yes, Larry, because those features would not matter unless their friends were there. You know what I mean? So that was the key insight right there. Yes.

Yeah. And it's funny that the other guys never seem to get the message, you know what I'm saying? Or maybe they got the message too late.

Yep, yep. And the, and the funny thing is, Larry, they actually failed in a certain instance. Because, you know, it's really funny though, their goal was originally inside the growth team, the goal was get any individual to get seven friends in 10 days. That was like the original insight. But they couldn't do it in 10 days. They couldn't get those seven people in 10 days. But you know what happened though? They could get them in 90 days. That was the key thing that was happening. So they aimed for 10 days, but that 10 day period maybe kind of morphed into this 90 day period over time. But that's when the 90 days is when it actually happened. You see what I mean? But that was the goal. So if your friends are there, they're going to be there. And that's the key insight. And the funny thing is, Larry, as soon as someone sees their friends online on a platform or on like something, they're going to go there because that's, you know, because social bonds are really valuable. Because if you have a friend you spent maybe tens of hours, like if someone you went to school with, for example, right. Like one of the things that Facebook was built on was people that you went to school with, you can find, right. You are forced to spend, like if you were to go from like, you know, elementary school, middle school, high school, all that kind of stuff, that's like a 10 year timeframe. Like, you see the point there Larry, it's like you have 10 years or give or take, like seven years at least of shared history with this person. And there's 50 of those guys on this platform. You know what I mean? Like, are you gonna not go there? Like you're gonna go there? Like, that's just the reality of it. So that's kind of why, like, if you look, they started with the, you know, with the friends and the college and, you know, the high school people, because you have so much shared history with them. Even if you find one or two of them that you want to be friends with now, it's still tremendously valuable from a social perspective, maybe not valuable from an economic perspective, maybe not valuable from a utilitarian perspective. Like, you're not going to have that guy come in and change your, you know, tire. But you definitely spent 10 years of your most wonderful years, you know, lack of better words. Like, when you're young, you're doing pretty well. You know, your parents are taking care of everything. Like, that is like a really, you know, wonderful time. And you get 50 of those guys and bring them in, they're gonna bring their friends. That's just the reality of it. Right? And that's how Facebook grew from like, you know, 50 to the billion. And now they have 2.5 billion. I think they'll go to 3 billion the next year. But that's kind of where it all kind of started.

Absolutely. And they got those insights because they studied, like you said, they extensively studied over years, what were the dynamics, what were the drivers to their business. And once they figured it out, they put all their focus on breaking the billion level racing there before everybody else. And they got a lead that so far they haven't given up. But as we've talked about, you know, the Fortune 500 and over a 10, 20 year period of time, a lot of those companies don't survive. But the ones that are focused, the guys are going to survive are going to be the ones that are focused on growth because they're not going to decay from the bottom and fall apart. And as long as Facebook, it looks like they've continued to get, you know, they've been, you know, they've had lawsuits, they've had governments after them. They've got, you know, criticism of this, that the other. But the still the prestigious group inside Facebook is the growth team. And there's a lesson for those of us who want to have companies that last. And that's why in our business, you know, I've never let the focus get Away from the recruiting growth numbers. You know, not just the recruiting numbers, the recruiting growth numbers, not just the revenue, but revenue growth type thing. So not just how many users they would have if you were a social media platform, but the growth of users. You know, that's the thing that will give you your best odds for surviving short term and long term. Thanks so much, Vignesh. Great insights. Anything you want to add as a last word as we wrap this up?

Only last word that I would say, Larry, is more than anything, the biggest kind of leverage comes from, you know, thinking clearly, like you always say, you know, making sure that you're focused on the right things and staying focused on the first things first, right? With the Facebook story that we talked about, the main thing was they focused on the users and getting more users and they boiled that down to such a clear insight. They were able to care about that, you know, like, you can go like they. They clarified and refined it so much that even the lowest of the low kind of intern could understand, okay, this is how the company is going to grow. You know what I mean? We don't have this huge, complex kind of mission or anything like that that got passed around internally like crazy, right? Same thing with my insight about the marketing, thinking clearly and understanding where the game is played. Super, super important. So if you take nothing away from this call, it's to understand where the leverage or the core value lies in your business or what you're doing and focusing on that and caring about that tremendously. Because it's one thing to find those insights, but then it's another thing to actually give it and do it with the conviction that it requires. You know what I mean? Like, for example, in Facebook's case, they like, re organized, Larry, the entire company of thousands of people to focus on this one thing, right? That's it. Like, this was the one thing that the entire company was focused on, right? But most people, what they do is they might have an insight like this, but it gets buried. Like, it buried in like thousands of documents, hundreds of files, and hundreds of like brainstorm things. They don't focus on this, right? So it's one thing to find this, you know, like, you know, being having the willingness to find it and actually finding it, but then not focusing on it is worse than not even finding it. You know what I mean, Larry?

Exactly. I'm glad you brought that out again because it's not what, you know, the success of people, athletes, entertainers, companies and countries is really comes down to what do they focus on? You Know, are they focusing on the things where their energy is going to follow that focus and it's the kinds of things that are going of kind stability and growth or are they focused on things are just going to be basically a big waste of time and, you know, take you off track. And the thing that I want to point out, they had one focus which was grow, you know, grow their user base race to the billion. But they had an action plan. You got to have one focus and then you got to have one action plan. And the action plan they came up with was every user to get seven friends on in the first 10 days. They knew it would probably most people would take 90 days, but they also knew they wouldn't get it done in 90 days if they didn't focus on getting it done fast. So that's why they focused on 7 and 10. 7 and 10. That was the action plan and everybody in the company knew it. 7 and 10. How can we figure out, how can we motivate, how could we reinforce that with every new user to get that message of get seven new friends on in the first 10 days? And by having everybody focused on that, they were able to hit the billion. So it was one goal and one, one action plan. So look at what you're doing to drive your business and see if there's any lessons you can pull out of that to refine your efforts so you can refine the results you want. So thanks so much, Vignesh. It's been a lot of fun.

Thank you, Larry. It's been amazing. Thank you for having me.

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