The Rise of Meta: From Dorm Room to Global Dominance

In 2004, a 19-year-old Mark Zuckerberg launched TheFacebook (now Meta) from his Harvard dorm room, sparking a revolution in social media. What began as a college networking site quickly blossomed into a global social media powerhouse, connecting billions of people worldwide. From rekindling long-lost friendships to igniting social movements, Meta has redefined how individuals interact. Since those humble beginnings, Zuckerberg has accomplished something extraordinary. Meta is now the seventh-largest publicly traded company in the world, with a market cap of ~$1.2 trillion. Over the years, the company has made around 90 acquisitions, including some of the most significant in history, such as Instagram. The company currently reaches 3.24 billion people daily – more than 70% of the world's internet users. Join us as we dive deep into the story of Meta.

• Meta's evolution: Meta, formerly Facebook, began as a college networking site in 2004 and has grown into one of the largest companies in the world by market cap.

• Global dominance: Meta's platforms connect 3.24 billion users daily, making it the by far largest social media company globally.

• Impressive acquisitions: Key acquisitions like Instagram and WhatsApp have strengthened Meta's market position and expanded its influence.

• Metaverse ambitions: Meta's rebranding highlights its commitment to leading the future of digital interaction through immersive virtual experiences.

Our story begins in 2004, when Mark Zuckerberg and his Harvard University roommates launched what would evolve into a social media revolution. Originally known as "TheFacebook," it started as a social networking site for Harvard students. Its success led to rapid expansion to other Ivy League schools and eventually to universities worldwide. By the end of 2004, the platform had already started to grow like wildfire beyond the Harvard campus, reaching over 1 million active users.

In 2005, roughly one year after its launch, the company received its first major investment from Peter Thiel, co-founder of PayPal and the author behind the widely celebrated book "Zero to One." During this time, the name was also changed from TheFacebook to Facebook.

By 2008, Meta had surpassed 100 million active users worldwide, fueled by its user-friendly interface and innovative features like the News Feed (2006) and the Like button (2009). This remarkable growth continued in the following years as Meta expanded its global reach and diversified its platforms through acquisitions, such as Instagram in 2012 and WhatsApp in 2014. By this time, roughly 10 years after social media as we know it was invented, Meta was already a clear market leader.

In October 2021, Meta changed its name from Facebook to reflect its broader ambitions beyond social media. The rebranding signaled the company's focus on building the "Metaverse," a term that refers to a collective virtual shared space that merges physical and digital realities. This includes technologies like VR and AR.

The name change was part of a strategic shift to emphasize Meta's long-term vision of developing a new digital ecosystem where people can interact, work, play, and connect in virtual environments. Mark Zuckerberg has described the Metaverse as the next evolution of the internet and a central part of the company's future direction. By rebranding, Meta aimed to distance itself from being seen solely as a social media company and instead position itself as a leader in shaping the future of digital interaction. Additionally, the rebranding helped Meta differentiate its corporate identity from the Facebook social media platform, which is now just one of the many products under the Meta umbrella.

As of Q1 2024, Meta reported a staggering 3.24 billion people using at least one of its core products – Facebook, WhatsApp, Instagram, or Messenger – every day. This means that over 70% of the world's internet users are engaged with any of Meta's platforms on a daily basis.

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A common misconception about Facebook is that "no one uses it anymore." While it's true that the app might have lost some traction among younger users in certain regions like the Nordics, the global data paints a very different picture.

Meta stopped disclosing the number of users for its individual platforms, such as Facebook, Instagram, and WhatsApp, in its quarterly earnings reports starting in October 2022. Instead, the company began reporting a consolidated number of "Family of Apps" daily active people (DAP) and monthly active people (MAP), which include users across Facebook, Instagram, WhatsApp, and Messenger. As of Q3 2022, the last time Meta reported individual user numbers for Facebook, it had 1.98 billion DAUs and 2.96 billion MAUs. Contrary to popular belief, these numbers were not declining; in fact, DAUs and MAUs grew by 3% and 2% year-over-year in that quarter.

This means that over 60% of the approximately 5 billion people connected to the internet globally used Facebook every month as of Q3 2022. Another interesting perspective is the growth in absolute terms: Meta added approximately 70 million daily active users in the last quarter, with DAP increasing from 3.20 billion in Q1 2024 to 3.27 billion in Q2 2024. Meanwhile, platforms like Snapchat and Twitter trailed behind, adding 8 million and 4 million new DAUs and MAUs, respectively.

In short, Facebook remains one of the fastest-growing social platforms globally, whether its critics like it or not. It's crucial to understand the difference between percentage growth and actual net additions, as the latter often provides a more accurate perspective. With a best-in-class ARPU (Average Revenue Per User) among social platforms at $12.33 and steadily growing, Facebook is far from irrelevant on a global scale.

Interestingly, in many developing countries, people perceive Facebook as synonymous with the internet itself. Studies have shown that more people report using Facebook than the internet, likely due to the platform being pre-installed on many low-cost mobile phones. This makes Facebook the first encounter with the internet for many people, often without them even realizing it.

Among Facebook's numerous services, one that stands out is its rapidly growing Marketplace. Launched in response to the popularity of buy-and-sell groups on the platform, Marketplace had over 1 billion users each month, outpacing competitors like eBay (with around 130 million users). This figure was disclosed by Meta in 2021, but since then, they have not released updated numbers, likely due to increased antitrust scrutiny. It's therefore reasonable to assume that this number is significantly higher today.

The potential of Marketplace is vast. Its business model, which leverages scale and network effects to achieve high margins, has proven incredibly lucrative for other companies like Rightmove and eBay, both of which enjoy FCF margins of 55% and 20%, respectively. Although Facebook only began monetizing and enhancing Marketplace in 2018, the service is arguably still in its early stages.

Facebook's acquisition of Instagram in 2012, just a month before its $104 billion IPO, is often lauded as one of the best acquisitions in history. Facebook purchased Instagram for $1 billion at a time when the photo-sharing app had only 30 million users and had never generated any revenue.

Today, while the exact number of Instagram's MAUs remains somewhat secretive – likely due to antitrust considerations – it's estimated to have around 2.4 billion MAUs, with an annual growth rate of 10-15%.

Instagram's demographics are particularly appealing: over 70% of its users are under 35, and the average user spends more than 30 minutes per day on the app. The user base is also evenly split between men and women. Officially, Instagram ranks as the third most popular app ever measured by MAUs, following Facebook and WhatsApp.

For those who argue that Facebook is losing relevance, Instagram offers a compelling counterpoint. Unlike The Blue App, Instagram seems far from reaching its peak in terms of monetization, product development, or user engagement, making it the true jewel in Facebook's portfolio.

Another exciting component of Facebook's ecosystem is WhatsApp, especially in developing countries where mobile phone and internet connectivity often lag behind. With over 2 billion users, about 500 million in India and another 100-150 million in Brazil, WhatsApp is poised to become a critical player in these markets.

Meta for instance launched WhatsApp Pay in late 2020, allowing users to make payments and transfer money directly within the app, a feature reminiscent of Tencent's WeChat. Given its integration with Facebook Shops and the forthcoming CRM tool Kustomer, WhatsApp is evolving into a super app with significant potential.

Zuckerberg has previously revealed that the WhatsApp Business API already sends over 100 million messages per day, indicating the app's substantial scale on the B2B side. The long-term vision for WhatsApp is becoming clearer as more pieces of the puzzle fall into place each quarter.

Most tech enthusiasts are now familiar with Meta’s ambitious vision for the Metaverse, a virtual universe that aims to blend physical and digital realities in unprecedented ways. Since rebranding from Facebook to Meta in 2021, the company has shifted significant focus towards developing this expansive virtual environment, which is envisioned to encompass gaming, social interaction, work, and entertainment.

Mark Zuckerberg has expressed high hopes for the Metaverse, with around 17% (or 10,000) of Meta’s employees now dedicated to virtual and augmented reality. The company is not only developing its own Metaverse platform but also acquiring studios and expertise in AR/VR to support this vision.

In various interviews, Zuckerberg has passionately discussed how Meta is leveraging its existing VR technology as a foundation for the Metaverse. This includes using VR for virtual meetings and social interactions, which Meta has already started to implement.

Zuckerberg has been cautious when discussing Meta's potential as a dominant "App Store player" within the Metaverse, likely due to ongoing antitrust scrutiny. However, his clear intention to build an interconnected virtual ecosystem suggests that Meta sees the Metaverse as a central component of its future growth.

The Meta Quest 2, formerly known as Oculus Quest 2, is being positioned as one of the first mainstream gateways to the Metaverse, offering users immersive experiences that go beyond traditional gaming. The "Other" revenue category, which includes Metaverse-related ventures, has shown significant growth, indicating increasing consumer and developer interest in Meta's vision. As the global AR/VR market is projected to grow rapidly, Meta's focus on the Metaverse is seen as a strategic move that could reshape how people interact with digital content, making it a trend worth watching for both tech enthusiasts and investors alike.

As Meta continues to evolve from a social media giant to a pioneer in the digital frontier, its journey reflects the audacious vision of its founder, Mark Zuckerberg. What began in a Harvard dorm room as a simple college networking site has grown into a global powerhouse, reshaping how the world communicates and interacts. With its rebranding in 2021, Meta signaled its ambition to lead the next era of digital interaction through the Metaverse, aiming to create immersive, interconnected virtual experiences, the result from this remains to be seen. As it navigates the complexities of this new digital frontier, Meta's story is likely far from over – perhaps it's just beginning.