Written on April 21st, 2011 by trickfacebookone shout
Facebook’s tangled founding story is about to get more complicated, thanks to a man named Paul Ceglia.
Anyone who has seen The Social Network knows about Eduardo Saverin and the Winklevoss twins. Facebook co-founder Saverin was forced out, sued Facebook and settled for a 5% stake of the company. Tyler and Cameron Winklevoss contracted Zuckerberg to build a Harvard-based social network for them, but when Mark Zuckerberg launched “TheFacebook.com” instead, the twins sued. That case was also settled, though the twins have been trying hard to rescind it in court.
But there’s more to Facebook’s legacy of lawsuits than the movie mentioned. Last year, Ceglia claimed he and Zuckerberg signed a contract giving Ceglia 50% of Facebook. Most legal experts dismissed Ceglia’s lawsuit as outlandish, but it has resurfaced this week with evidence that promises to make this a messy affair.
So what exactly happened at Harvard in 2003 and 2004? Why have so many people claimed an ownership stake in Facebook? Who is Paul Ceglia, and does he actually have a case?
To answer that, we need to explore Facebook’s complicated ownership history.
Eduardo Saverin
Until 2009 Saverin wasn’t even acknowledged as a co-founder. It took a lawsuit and a settlement to make that happen.Both sides dispute the details of the case, but here are the basics. In 2003, Zuckerberg (then a sophomore at Harvard) approached Saverin (a junior) about TheFacebook.com. He asked Saverin to become his business partner and to put down $15,000 for the servers needed to run the site. In return, he’d get about 30% of the company.
When Facebook took off in 2004, Zuckerberg and another co-founder, Dustin Moskovitz, decided that they had to move to Silicon Valley. They got a place in Palo Alto and started coding. Saverin had an internship with Lehman Brothers in New York. According to Business Insider, Zuckerberg asked Saverin to take care of the paperwork, to get funding and to figure out a way to make money.
But Saverin was slow to make decisions and slow to sign off on the paperwork. Eventually, his role was taken by entrepreneur Sean Parker, who quickly secured a $500,000 investment by PayPal co-founder Peter Thiel. Zuckerberg was able to reduce Saverin’s stake in the company from 30% to less than 10% in short order. His equity was diluted from that point onward.
As detailed in The Social Network, Saverin eventually sued Facebook. The matter was soon settled. Saverin got about 5% of the company (worth more than $2.5 billion today) and signed a non-disclosure that has essentially kept him quiet since.
Tyler and Cameron Winklevoss
Zuckerberg just can’t seem to get rid of the Winklevoss twins.In 2003, the Winklevosses and their business partner Divya Narendra approached Zuckerberg about their new project, HarvardConnection, a social networking site for Harvard students. Zuckerberg allegedly entered into a verbal contract with the Winklevosses, promising to help build the site in return for equity.
Meanwhile, Zuckerberg was deep in the development of TheFacebook.com. Between November and 2003 and February 2004, he communicated with the twins through a series of 52 emails and several in-person meetings. Zuckerberg launched TheFacebook.com in February 2004 and, two days later, the Winklevosses learned of the site in The Harvard Crimson. A few days later, the Winklevosses and Narendra sent Zuckerberg a cease-and-desist letter.
While HarvardConnection eventually launched a few months later, as ConnectU, it failed to gain traction. ConnectU’s founders filed a lawsuit against Zuckerberg in 2004, prompting a legal battle that dragged out for years. In February 2008, the two sides finally settled. Facebook acquired ConnectU’s assets in exchange for 1,253,326 shares (worth around $180 million today) and $20 million in cash.
That wasn’t the end, however. In March 2008, the ConnectU founders filed another lawsuit, attempting to rescind the settlement. They argued that Facebook misled them over the true value of the stock. The twins also sued their law firm, Quinn Emanuel, for malpractice. That’s not all: Wayne Chang, founder of a file-sharing service called i2hub that had partnered with ConnectU, sued the twins for 50% of the Facebook settlement.
It’s a confusing tangle of lawsuits, but the bottom line is that the Winklevoss twins settled their case with Facebook years ago. Their recent attempts to change that settlement are falling flat. A U.S. judge ruled this week that the settlement still stands. The twins, of course, are appealing that ruling.
What About Paul Ceglia?
Now for the question that has been causing headlines this week: did Zuckerberg potentially sell a 50% stake in Facebook for $1,000?That’s the notion that Ceglia, owner of a wood pellet fuel company, put forth in a lawsuit filed last July. In the suit, he claimed that he and Zuckerberg had an agreement in which Ceglia would receive 50% of Facebook for a $1,000 investment, in addition to 1% of the company each day until a site called “the face book” was completed. Since the project was allegedly 34 days late, Ceglia says he was entitled to 84% of the company.
The story sounded outrageous on the surface, especially as Ceglia had waited a full six years before speaking up. Furthermore, Ceglia is a a convicted felon.
This week, however, the lawsuit resurfaced. Ceglia refiled his case with prominent law firm DLA Piper and said he has produced email conversations that support his claims. The lawsuit now claims that Ceglia offered Zuckerberg $1,000 to work on a project called StreetFax, as well as $1,000 to fund “the face book.” The suit claims the two met in Boston and signed a contract with a witness present.
Allegedly, Zuckerberg and Ceglia discussed details such as the site’s domain name and business model. The suit says Zuckerberg mentioned the Winklevoss twins in November 2003, telling Ceglia that he had “stalled them for the time being.” Eventually, according to the suit, Zuckerberg told Ceglia he thought that 1% of equity for each day of delay was unfair, and the two agreed to split the project 50/50.
Things allegedly blew up in April 2004, two months after Facebook’s blockbuster launch. Zuckerberg is supposed to have told Ceglia he was thinking of taking the server down and wanted to give Ceglia his money back. Ceglia responded negatively, claiming that Zuckerberg was pulling “criminal stunts.” The DLA Piper lawsuit asks for 50% of Zuckerberg’s stake as compensation.
Facebook insists that the emails and contract are fabricated. In an email to Mashable a Facebook representative said:
“This is a fraudulent lawsuit brought by a convicted felon, and we look forward to defending it in court. From the outset, we’ve said that this scam artist’s claims are ridiculous, and this newest complaint is no better.”
Next Steps
Facebook is seeking to dismiss this case, but the emails — fraudulent or otherwise — may be compelling enough for the case to move into discovery. It’s at this point that Facebook will be able to look at the evidence, including Ceglia’s emails and hard drives. If they can show that there was any tampering with the evidence, the case will be thrown out. But if not, the company may be forced to dish out money for yet another settlement, just to make Ceglia go away. DLA Piper, one of the world’s largest law firms, has agreed to take on the case — which is a sign that this dispute could be stuck in the courts for a long time.
Written on April 16th, 2011 by trickfacebookno shouts
Google’s Google’s Q1 earnings are out, and the verdict isn’t good. While its revenues and profits are up by 27% and 15% respectively, its earnings per share didn’t meet Wall Street expectations. Google’s stock price has taken a beating in after hours trading as a result.
That’s not the only thing hidden in Google’s earnings, though. The numbers tell a deeper story about the search giant’s priorities and its biggest challenges. There are surprising jumps in Google’s R&D, stock-based compensation and marketing expenses. Why are all of these expenses on the rise?
To answer that question, let’s dive into the numbers. Here are some takeaways from Google’s Q1 earnings:
1. The talent wars are taking their toll on Google
One of the biggest increases in Google’s Q1 financials was the rise in stock-based compensation expenses. In Q1 2010, Google doled out $291 million in stock options and bonuses. In Q1 2011, that number rose 48% to $432 million.
We know that Google’s been working overtime to retain its employees, as well as expand its workforce. Last year, Google gave everyone a 10% raise and a $1,000 bonus. But that hasn’t been enough to stop Facebook, Twitter and others from raiding its talent. Google’s even reportedly making massive counteroffers of $50+ million to keep its top employees from jumping ship.
The lack of engineers to meet the high demand in Silicon Valley has created a war for talent between the world’s top tech companies and the thousands of startups in the Bay Area. The result is that Google has to pay more for talent, and it’s going to get worse.
Prediction: the $432 million it spent in Q1 will be nothing compared to what it spends in Q4 this year.
2. R&D is way up, but why?
Google spent a lot of money on R&D this quarter. In Q1 2010, Google spent $818 million on R&D ($627 million if you remove stock-based compensation). In Q1 2011, that number jumped by a whopping $408 million to $1.23 billion ($989 million sans stock-based compensation).
So what caused the dramatic rise in research and development? While Google declined to break down its R&D line items, we assume it looks something like this:
1) Social
2) Social
3) Social
It’s no secret Google has a poor track record on social media. While YouTube has turned into a strong property, Google Buzz was one of 2010?s biggest tech flops. It’s been developing products like +1 and advanced social search, but none of these projects have been enough to fight off the Facebook threat.
Social media success is so important to the company that bonuses are now tied to Google’s social media success.
We’re sure there are other factors contributing to this quarter’s inflated R&D budget (Android, Chrome), but we bet social is a major contributing factor.
3. Google’s flexing its marketing muscle
In Q1 2006, Google spent $191 million on sales and marketing. In Q1 2010, that number was $607 million. In Q1 2011, that number skyrocketed to $1.03 billion –that’s a shocking increase of 69% in just one year.
What is Google spending all that money on? During today’s earning call, CFO Patrick Pichette defended the $1+ billion rise in operational expenses. One thing he pointed out: Google’s increased spending has made Android a dominant mobile platform. 350,000 Android devices are now being activated every day. There’s a reason why people are predicting Android could own half of the smartphone market by 2015.
We’ve seen an increase in Google’s marketing efforts over the last few years, and that’s reflected in the spending. Android has been the big beneficiary, but Chrome has gotten some the spotlight as well. SVP Jeff Huber said on today’s call that 40% of Chrome’s 120 million users came from its marketing efforts.
For years, Google spurned traditional marketing, but in competitive markets like search and mobile, it simply needed to pony up the cash to get the word out about its products. The investment seems to be paying off so far.
4. Google’s in very good shape
Google’s stock may be taking a beating right now (the stock is down ~5.5% in after hours trading), but overall Google’s doing just fine. Revenue is up 27% and profits are up 15%, despite the big increase in spending. Those are solid metrics that point in the right direction.
The big increase in operational spending is something to worry about, but most of those investments are in marketing, R&D and personnel — the types of investments that typically pay off through better products. It would be a different story if the increases were coming from operational inefficiencies or a bloated staff, but neither seem to be the case.
The bottom line is that Google’s revenues are growing, and that trend doesn’t show any sign of changing.
Images courtesy of Google
Written on April 15th, 2011 by trickfacebookno shouts
Nintendo could be revealing a HD successor to the Wii console this summer, according to new reports.
There hasn’t been a new gaming console since the launch of the Wii and PlayStation 3 in November 2006. However, Microsoft has breathed new life into its console, the Xbox 360, thanks to the Kinect. The Wii, which has been best the best-selling console for years, is about to lose its first place position.
While Nintendo intends to respond to the Xbox threat by cutting the Wii’s price next month, it looks like the gaming company has another trick up its sleeve: a brand new HD console. According to Game Informer‘s sources, Nintendo plans to unveil a new console at the E3 conference in Los Angeles in June or potentially sooner.
Very little is known about the rumored console, not even the name (Wii 2? Wii HD? Wii 360?), but it’s likely to be more powerful than the Xbox 360 or the PlayStation 3, according to Kotaku. Nintendo has apparently been showing off the system to third-party developers so they can prepare titles for the console’s eventual launch in late 2012.
The Wii captured the hearts and minds of casual gamers with its innovative controller system and its lower price point, but the specs and visuals of its rival consoles are far stronger, giving them greater longevity. Microsoft has also mitigated the Wii’s advantage with causal gamers, thanks to Kinect. Perhaps that’s what is driving Nintendo’s rumored decision to be first on the market with a new console
Written on April 15th, 2011 by trickfacebookno shouts
While there are hundreds of ways to calculate the ROI of social media, the general consensus is that Twitter and Facebook are worthwhile tools that can add a lot of value to your marketing campaign. Of course, the value of social media depends on how well you execute it.
Fortunately, a few big brands have already blazed trails in the digital marketing world. We spoke to social media and marketing experts at MTV, American Express, Xbox, NBA and AT&T to get the scoop on how they learned to hit the mark.
Have some other lessons that helped you achieve digital marketing success? Let us know in the comments.
1. Be Human
“Nailing a tone that resonates with your audience is of paramount importance,” says Tom Fishman, manager of social media and community at MTV. The goal at MTV, he says, is “to sound human and conversational and not be the voice of some corporate overlord.” To that end, tweets are often written in the first person (“we” and “I”) to convey that there are “hearts and faces” behind the screen. Resonating with a particular audience is especially important because MTV has 70 Facebook Pages, covering everything from Daria to Jersey Shore — MTV’s social media crew has to speak in a way that feels comfortable with each audience.
At Xbox, there are 15 people on the Xbox Tweet Fleet, all of whom tweet with their own personalities and “create a collective voice” by being passionate. Each tweeter signs off with his initials so the consumer knows who tweeted at them (American Express also does this). Adds Jerry Kansky, manager of the Tweet Fleet, “We are the consumers, and we know how we’d like to be talked to, so we’re just being ourselves.”
Chris Baccus, executive director of digital and social media for AT&T, notes that it’s important to “be a part of the conversation and not try to own or control the conversation.” While brands can — and should –- use social media to promote their messages, it’s important to be real and not sound like a press release. After all, people are opting to follow you — don’t give them a reason to unfollow!
Something else that’s human? Making mistakes. If there’s a spelling error in a celebrity’s name or the wrong time is tweeted for a Real World episode, “the move is not to delete the tweet and let it go away,” Fishman says. It’s an opportunity to show what kind of company you are, and that human touch (a follow-up tweet with a “sorry” or “oops”) is something the fans appreciate more than sweeping mistakes under the rug.
2. Know What You Want
Every brand has its own reasons for jumping onboard with social media, and it’s important you know your reason and your goals before you start. “It’s not a toe-in-the-water-thing,” says McKenzie Eakin, whose @XboxSupport handle specifically offers technical customer support.
For AmEx, reach and engagement are essential — as a result, assessment is qualitatively focused — it comes down to sentiment and what people are saying more than the raw volume of tweets and Facebook posts. However, Shari Forman, director of online communications and social media at AmEx, does track links and remains cognizant of the numbers to see what kind of content is most engaging.
MTV’s goal is to crystallize communities around shows and bands. While promoting the new show Skins, Fishman says MTV was able to build a hyper-passionate community before the show even premiered. He says it was an eye-opening experience when it comes to “thinking about how to approach special campaigns in a pre-promotional phase.” MTV Vice President of Digital Media Colin Helms told Mashable in January that, “We usually build a community after the show has launched. We did the opposite with Skins.”
3. Listen and Respond
No one likes asking a question and not having it answered. The @XboxSupport stream sends 5,000 tweets per week, and it is the Guinness World Record holder for most responsive brand on Twitter. The average response time? “Three to five minutes, if not faster,” Eakin says. And Baccus says AT&T usually responds within 15 minutes — impressive, huh?
While public messaging is obviously the purpose of Twitter, it’s also a good idea to engage in behind-the-scenes communication with fans. The MTV team responds to every single direct message that comes its way on Twitter. “It’s another touchpoint for the brand,” Fishman says.
Baccus says “social listening” is a big part of AT&T’s initiative. The social team takes note of trends and engages in casual “cocktail conversation” to glean information from customers. The team then uses that information to advocate for its customers within the company. For example, if a number of people in one town are lamenting poor reception, AT&T will alert the local AT&T market managers and network team to investigate the issue. This kind of active response and proactive troubleshooting is highly valued by customers and easily executed via social media.
4. Diversify and Pace Your Content
Fishman says the purpose of
@MTV is to advance the brand’s message, but it’s also important to be “a good source of content for people.” Since MTV is a cultural tastemaker, that content ranges from music and fashion to social issues and politics — the feed provides a lot of relevant information for myriad demographic groups.
At AmEx, Forman focuses on hitting a balance of proactive and reactive tweets. Proactive tweets result from events that are planned on an editorial calendar — promoting Small Business Saturday, for example. Then there are reactive tweets that respond to inquiries from followers and cardmembers. “We’re cognizant of what we’re pushing out, and we know that people are following us for different reasons,” she says.
To figure out what content you should be sharing, pay attention to your followers. NBA fans are passionate about their favorite teams and players, and they want to chat about what happens on the court in real time — the NBA feeds let the conversation flourish. “Our league, team and player Twitter feeds give us a unique opportunity to connect directly with nearly 35 million followers and to help them share in the excitement of our game — the amazing plays, buzzer-beaters and great moments,” says Melissa Rosenthal Brenner, vice president of marketing for the NBA. The NBA feeds often republish “compelling tweets from fans” to share the enthusiasm and show appreciation for their fanatics.
Brands have to be careful not to push too much content — no one wants to hear from a brand more than they hear from their friends and family. The NBA frequently polls its fans to find out just how much content they want. With those responses in hand, “We try to guide ourselves accordingly” and not let too much “uncurated information” clog the feed, Brenner says.
5. Inject Yourself Into the Conversation
We know that responsiveness is important, but there’s another related trait that’s crucial, too — preemptive tweeting. When someone tweets about a problem with his Xbox — even if he’s not tweeting
at Xbox — the Tweet Fleet team responds. In fact, someone on shift is responsible for “engagement finds” — tweeting at users who mention Xbox to let them know the Tweet Fleet is there to offer support for technical issues.
And when something big happens in your industry or your brand has exciting news, get out there and share it. Brenner says game highlights and player milestones are heavily shared because social media has become what NBA Commissioner David Stern has called, “the digital water cooler” — a single place where passionate fans can gather and talk about the game in real time. In February, when Celtics guard Ray Allen broke the all-time 3-point record, @NBA tweeted:
It was retweeted almost 2,000 times, driving “Ray Allen” to the #3 worldwide top trending topic on Twitter.
6. Get Feedback in Real Time
Because the Tweet Fleet fields kudos, comments and complaints about Xbox, it is able to relay important information from the consumers to its tech and development teams, which can be incredibly useful for troubleshooting.
At AmEx, Forman says she and Hamouly closely monitor response to tweets and Facebook posts — are we getting new followers? Are people responding? Are they engaged? -– to make their social marketing efforts more effective. It’s test and learn — if something falls flat, they fix it.
A perfect example of this flexibility is AT&T’s “Plead Your Case” Facebook app campaign. AT&T discovered a high dropout rate — people weren’t clicking through to the end. Instead of letting the campaign fail, the AT&T team made some quick tweaks based on the real-time data it was collecting from the app. The result? More than 90% of people went through the entire process once the fixes were implemented.
Another AT&T lesson involved an email blast sent from the VP of general marketing. It was a broad and generic email that outlined how much money AT&T was spending on infrastructure. The email outraged customers, and the team manned the Facebook Page for 48 hours, compassionately responding to every single post within ten minutes. “It really changed the tone of the page and within 24 hours, the sentiment totally changed because we were engaging and responding.” Lesson learned: AT&T now personalizes email messages and geotargets its email blasts.
7. Know Your Audience
Eakin says that the Xbox audience is so diverse — moms, dads and kids — that the same tone doesn’t fly for all tweets. She says her tweeters take the extra few seconds to click on a user’s Twitter handle to find out who they’re talking to, because a working mother should be spoken to differently than a 14-year-old gamer. That personalization is simple to implement, and it goes a long way.
In addition to knowing who your audience is, you should know where it is. AmEx has an international following, so Forman geotargets posts on Facebook for promotions and contests. “Recognize that you’re casting a wide net and be specific about who can benefit” from what you’re offering, Forman says — or else you could get some angry messages.
8. Know the Platforms
Twitter and Facebook are not interchangeable, and you should have a different approach for each. In general, Twitter is more of a two-way conversation — a brand’s Twitter feed is a timeline of responses to customer inquiries, “thank yous” for nice tweets, brand updates and conversational dialogue. Facebook, however, is more of a community -– the wall can be treated as a sort of bulletin board for announcements. Having Facebook posts push to Twitter and vice versa isn’t the best idea — the platforms serve different purposes.
AmEx’s Small Business Saturday campaign lives on Facebook, where it has more than one million fans and was one of the fastest-growing Facebook Pages during the early days of its creation. Though the campaign also had a Twitter handle (@SBSat), the Facebook Page had the unique opportunity to build a community –- and target more people, thanks to Facebook’s immense user base.
The NBA embraces both platforms pretty equally. “We want to be where our fans are — and we have worked hard to engage our fans and develop a strong presence on each platform,” Brenner says. The NBA has more than 200 players on Twitter and more than 50 players on Facebook. The NBA, player and team pages boast nearly 100 million fans on Twitter and Facebook combined.
In terms of post volume, brands typically can communicate more on Twitter than Facebook before annoying their followers, thanks to Twitter’s @replies, which are hidden from users’ feeds if they are not following those mentioned in the tweets. Forman and her AmEx partner are active Facebook users, and they use their personal experience to guide and inspire their posting schedule on Facebook and Twitter so as not to overwhelm their followers.
9. Create a User-Centric Experience
Social media has changed the way we market — billboards, print ads and commercials were always one-way. Now, brands engage in dialogue with the consumer, and communication has become a two-way street. Fishman says that, for this reason, you must make sure that the most important thing is to be “100% user-centric.” He adds that everything the MTV social team does is first assessed through the lens of, “How are we adding value for our users?” MTV’s TJ campaign also drove home the commitment to the users –- TJ Gabi fully dedicates her day to blogging, tweeting and interacting with the users and “isn’t beholden to some of the priorities that we are at the corporate level,” Fishman says.
Part of this user-centric experience can be thanking and rewarding the users. When someone “likes” your brand or follows it on Twitter, he’s publicly endorsing your company and becoming a brand ambassador. And so, he should be acknowledged. Forman says a huge part of AmEx’s social media campaign is making its cardmembers feel special -– they have exclusive access to concert tickets, travel giveaways and special discounts.
Written on January 25th, 2011 by trickfacebookone shout
Canadians spend more time online than users in any other country, and and while they’re surfing the web, many visit Facebook.
ComScore numbers show about 68 percent of the Canadian population is online, compared to 62 percent in France and the U.K., 60 percent in Germany, 59 percent in the U.S. and 57 percent in Japan.
Canadians were some of the early users of Faceboook, according to The Globe and Mail, and at one point trailed just behind the U.S. in overall numbers of users.
Facebook had been the most trafficked site in all of Canada in 2007 according to Alexa, although though there was speculation that something might have been wrong with Alexa’s tracking numbers.
But according to Socialbakers.com, Canada is no longer dominating Facebook. The country has more than 17 million users on the site and is coming in 9th to 10th place, either in front of or behind India.
More impressive and relevant: 51.2 percent of Canada’s total population, or 65.9 percent of the country’s online population, uses Facebook, which makes it one of the most significant demographic groups on the social network.
What insights do these statistics offer for marketing on Facebook?
