Chapter 8 – Facebook: Building a Business from the Social Graph
- short selling: an attempt to profit from a falling stock price. Short sellers sell
shares they don’t own with an obligation of later repayment. They do so in
the hope that the price of the sold shares will fall. They then repay share debt
with shares purchased at a lower price and pocket the difference between
initial share price and repayment price.
- Dark web: parts of the internet not accessible by Google or other search
- The worry is that such a large part of the web that is controlled by one firm
that is closed off will curtail innovation, competition. Etc.
- Cloud: the big group of connected servers that power the site
- Open source software powers much of the site --- runs on the Linux OS and
Apache web server software.
- Other code components written in a variety of languages, such as C)) and
o Access between the components managed by a code layer the firm
o Haystack is FB’s own media serving solution for photos. In-house so
saves FB money on content delivery networks.
- Social graph: the global mapping of users and organizations, and how they
o FB’s ability to collect, express, and leverage the connections between
the site’s users.
o Everything is connected – other users, photos you are tagged in, etc.
- Initially, b/c of the legitimacy of registering for FB (putting in a email to
verify, the two-way friendship..) people were very trusting of the network.
Today, people post lots of personal info that they wouldn’t share outside
their friend group.
- Strong network effect: when the value of a product or service increases as
its number of users expands.
- Powerful switching costs as well --- a move to another service means
recreating your entire social graph.
- In 2007, FB opened itself up to application developers – published a set of
application programming interfaces that specified how programs could be
written to run within and interact with Facebook.
o Developers could