Deck 11: Facebook: a Billion-Plus Users, the High-Stakes Move to Mobile, and Big Business From the Social Graph

Question 1

A significant portion of Facebook's underlying technical infrastructure consists of open source software.

Answer 1

True

Question 2

Write a short note on how Mark Zuckerberg has retained control of Facebook.

Answer 2

The firm's rapid growth and high user engagement allowed Mark Zuckerberg, Facebook's founder, to demand and receive an exceptionally high degree of control over the firm - even as the firm went public. Early backers ceded control in order to get in on the deal. At a time when Facebook's board had only five directors, Zuckerberg appointed three of them. When Facebook filed to go public, Zuckerberg's ownership stake was less than half (actually just twenty eight percent of the firm), but Facebook created two classes of shares, ensuring that Zuckerberg has a majority of voting rights in the public company, as well, virtually guaranteeing his control of the firm, regardless of what investors say.
Easy

Question 3

Facebook founder and CEO Mark Zuckerberg maintains a majority of voting rights in the public company, virtually guaranteeing that his control of the firm continues, regardless of what investors say.

Answer 3

True

Question 4

Many analysts were skeptical of Facebook's ability to create a business from mobile. Mobile revenue just before the IPO was zero.

Question 5

Which of the following statements is true about Facebook?

A) Global growth of Facebook is saturated, with most of the planet's population already having Facebook accounts.
B) Approximately 20 percent of Facebook users reside in China.
C) Entrepreneurs beware: Mark Zuckerberg lost most of the value in the firm he founded to the Winklevoss twins, providing evidence that entrepreneurs should have a founder with a strong legal background.
D) Facebook has largely avoided privacy concerns by allowing posts to expire over time.
E) Facebook is highly profitable, with a growing ad business on mobile platforms.

Question 6

Facebook (and other apps the firm owns) collectively represent the largest photo-sharing service on the Web, ahead of Picasa, Flickr, and Photobucket, even though all of these other efforts got started before Facebook.

Question 7

Mark Zuckerberg, the founder of Facebook, ensured that he remained in control of the firm even after it went public by:

A) running the organization single-handedly.
B) valuing the firm at $15 billion, which exceeded investor expectations.
C) employing antitrust laws and limiting the investors' degree of control.
D) appointing 3 additional directors instead of 5.
E) retaining a majority of voting rights in the public company.

Question 8

Facebook's key resources for competitive advantage are the sophisticated technological tools it provides to its users.

Question 9

A stockbroker trades shares she does not own with an obligation of later repayment, and in the hope that the price of traded shares will fall. She then repays share debt with shares purchased at a lower price and pockets the spread between initial share price and repayment price. This attempt to profit from a falling stock price is known as _____.

A) insider trading
B) churning
C) arbitrage trading
D) short selling
E) going long

Question 10

Firms that grow quickly may seem less risky/more likely to succeed; therefore fast growth may help an entrepreneur extract better ownership terms from potential investors.

Question 11

Facebook can be completely indexed by search engines, like Google and Bing, being able to index all of Facebook content.

Question 12

Why is Sheryl Sandberg considered to be the copilot of Facebook?

Question 13

When a firm has an IPO, it is said to have:

A) been liquidated due to short selling.
B) gone public, selling shares on a public stock exchange for the first time.
C) received government funding.
D) been liquidated due to switching costs.
E) issued a dividend.

Question 14

Facebook's phenomenal growth implies that it requires minimal infrastructure investment.

Question 15

Facebook COO Cheryl Sandberg came to the firm from previous employment at Yahoo?

Question 16

Investor groups that provide funding in exchange for an ownership stake in the firm are called _____.

A) credit unions
B) venture capital firms
C) hedge fund managers
D) mutual fund executives
E) greenfield investors

Question 17

When a firm _____, it sells stock to the public for the first time.

Question 18

Facebook continues to relentlessly hunt for innovations showing both patience with new efforts and a_________.

Question 19

Today, mobile makes up the vast majority of Facebook advertising revenue.

Question 20

Roughly one in every seven people on the planet has a Facebook account.

Question 21

Which of the following statements is true of the term "cloud"?

A) It refers to a collection of computing resources available for access over the Internet.
B) It refers to the phenomenon of adapting products and services for different languages and regional differences.
C) It refers to a situation when the value of a product or service increases as the number of its users expands.
D) It refers to a situation when others take advantage of a user or a service without providing any sort of reciprocal benefit.
E) It refers to a closed network or a single set of services controlled by one dominant firm.

Question 22

Facebook is especially appealing to organizations looking to share messages with fans since anyone who has "liked" an organization on Facebook will see all of that organization's posts in their newsfeed.

Question 23

How has Facebook been able to gain a share in the photo-sharing and video-sharing markets at the expense of established firms?

Question 24

_____ is the biggest photo-sharing site on the Web, taking in around three billion photos each month.

A) Facebook
B) Picasa
C) Shutterfly
D) Flickr
E) Photobucket

Question 25

Facebook has dominated the desktop, but why is mobile, specifically apps offered on smartphones, considered different than browser-based services, potentially limiting the likelihood that browser-dominant platforms will also lead with app-centric offerings?

Question 26

Software that is free and whose code can be accessed and potentially modified by anyone is referred to as _____.

A) shared source files
B) proprietary software
C) available files
D) licensed documents
E) open source software

Question 27

Facebook's acquisition of WhatsApp was a way for Zuckerberg's firm to gain leadership in the fast-growing mobile messaging market.

Question 28

_____ are systems distributed throughout the Internet (or other network) that help to improve the delivery (and hence loading) speeds of Web pages and other media, typically by spreading access across multiple sites located closer to users.

Question 29

The dark Web refers to:

A) peer-to-peer file sharing networks that are used to illegally share copyrighted material.
B) seemingly innocent Web sites, containing malware that infects computers.
C) sites that cannot be indexed by Google and other search engines.
D) networks that allow only mutually trusted peers to participate in file-sharing activities.
E) Web sites that advocate violence toward people of a specific race, ethnicity, or religion.

Question 30

One of Facebook's key resources for competitive advantage is:

A) technology.
B) network internalities.
C) open source software.
D) high switching costs.
E) low venture capital investment.

Question 31

Which of the following statements holds true of network effects?

A) It refers to a collection of resources available for access over the Internet.
B) It refers to adapting products and services for different languages and regional differences.
C) It refers to a situation when the value of a product or service increases as the number of its users expands.
D) It refers to a situation when others take advantage of a user or a service without providing any kind of reciprocal benefit.
E) It refers to a closed network or a single set of services controlled by one dominant firm.

Question 32

Facebook will reduce the rank of posts that request reshares.

Question 33

There's an old computer science saying that a computer should never ask you a question that it should be able to work out the answer to. How can a smartphone work out much more?

Question 34

Which of the following factors has helped Facebook build up trust among its users?

A) Superior technology compared to rivals
B) Mutual and reciprocal approval of friend requests
C) Free nature of applications available to users
D) Low switching costs
E) Availability of venture capital funds

Question 35

The term "social graph" refers to:

A) user-generated content that is shared by a broad community of users.
B) an online community that allows users to establish personal profiles.
C) the global mapping of users and organizations, and how they are related.
D) the sum total of the economic and social value created by a network of individuals.
E) the effects that emerge from individuals who use the same products or services.

Question 36

Facebook purchased Oculus VR because, like Zuckerberg, the firm's youthful founder had already built a platform with a massive customer base.

Question 37

Systems distributed throughout the Internet that help improve the delivery speeds of Web pages and other media, typically by spreading access across multiple sites located closer to users are known as:

A) Internet exchange points.
B) private clouds.
C) colocation centers.
D) content delivery networks.
E) cookies.

Question 38

Describe the two strategic resources that are most critical to Facebook's competitive advantage.

Question 39

Facebook was one of the first social networking sites where users actually identified themselves using their real names.

Question 40

How are News Feeds a source of value for users on Facebook?

A) It fosters the virality of information sharing vital to delivering value from the social graph.
B) They are innovative and Facebook is the only social network to offer the feature.
C) They are effective in protecting a user's personal information from others.
D) They ensure that a single post will reach all friends and fans.
E) They offer cross connectivity for users across several social networking sites.

Question 41

When others take advantage of a user or a service without providing any sort of reciprocal benefit, it is called localization.

Question 42

When others take advantage of a user or service without providing any sort of reciprocal benefit it is called a _____.

Question 43

Third-party Web sites can choose to accept a user's Facebook credentials to allow the user to access their content.

Question 44

Why is Facebook's Open Graph series of APIs for third-party websites significant for the firm?

Question 45

In the context of Facebook's business strategy, the walled garden refers to the connections between individuals and organizations.

Question 46

Why is A/B Testing harder on mobile?

Question 47

_____ refer to programming hooks, or guidelines, published by firms that tell other programs how to get a service to perform a task such as sending or receiving data.

Question 48

Facebook's growing dominance has given rise to the fear that if increasingly large parts of the Web reside inside a single service, innovation, competition, and exchange may suffer.

Question 49

Facebook acquired WhatsApp for $_________

Question 50

Developers who make applications create _____ that have the potential to add value to Facebook beyond what the firm itself provides to its users.

A) switching costs
B) distribution channels
C) one-sided markets
D) complementary benefits
E) private equity shares

Question 51

_____ is a term that refers to a closed network or single set of services controlled by one dominant firm.

A) Walled garden
B) Cloud
C) Network effects
D) Free rider problem
E) Localization

Question 52

WeChat has proven to be a successful app-based platform in China. What does WeChat offer? How has Facebook tried to expand Messenger into a platform?

Question 53

Facebook has offered a system where Web site operators can choose to accept a user's Facebook credentials for logging in. Web site operators appreciate this feature because:

A) they can charge users for accessing their content and hence, generate revenue.
B) they can afford to spend less on Web site maintenance.
C) users can access websites without creating an account, reducing a potential barrier to customer acquisition.
D) Facebook's advertising programs offer better revenue for viewed content.
E) they can associate their offerings with the Facebook brand.

Question 54

If increasingly large parts of the Web reside inside a single (and, for the most part, closed) service, innovation, __________, and exchange may suffer.

Question 55

Most Facebook applications are focused on businesses and educational services.

Question 56

China's fast-growing WeChat is the world's _________largest mobile-messaging service

Question 57

Firms spend more advertising online than they do on radio and magazine ads.

Question 58

Facebook followed Twitter's _____ with its own Facebook live video streaming tool,

Question 59

Facebook's storage needs have grown by a factor of _______in just four years

Question 60

Facebook enjoys significantly higher click-through rates than Google.

Question 61

The term "content adjacency" refers to:

A) placing advertisements to reach consumers based on various traits such as demographics and purchase history.
B) a technique used by online publishers to increase the effectiveness of their campaigns.
C) advertisements that are targeted based on a user's query.
D) a concern that an advertisement will run near offensive material, embarrassing an advertiser and/or degrading their products or brands.
E) problems associated with advertisements that run before a user arrives at the home page of a website.

Question 62

CPM refers to:

A) each instance of an advertisement being viewed by a user.
B) cost per thousand impressions.
C) a concept where advertisers do not pay unless someone clicks on their ad.
D) the maximum amounts of money advertisers are willing to pay for each click on their ads.
E) the number of users who clicked an ad divided by the number of times the ad was delivered.

Question 63

The online advertising acronym CPC is defined as ____________.

Question 64

Ads with social context attempt to take advantage of the concept of social proof - detracting legitimacy from a product through its association with your friends.

Question 65

The advertising acronym CPM is defined as ______.

Question 66

Which of the following issues raises advertiser concerns on promoting products and services on social networking sites?

A) Low marketing budgets
B) Inflation
C) DNS cache poisoning
D) Phishing
E) Content adjacency

Question 67

The acronym ARPU represents the phrase ______.

Question 68

Banner ads are often billed based on _____.

A) clickable numbers
B) frequency tracking scores
C) quality scores
D) cost per thousand impressions
E) their relative popularity

Question 69

Advertisers have relatively low performance on Facebook because they must rely entirely on Facebook-provided data. Ads on Facebook cannot be targeted using any data collected outside of Facebook.

Question 70

_____ is a term used to describe each time an ad is served to a user for viewing.

Question 71

Brand advertisers largely consider user-generated content as low-quality, brand-unsafe inventory for running advertisements. This can be attributed to:

A) content adjacency.
B) audience matching.
C) collaborative filtering.
D) search engine marketing.
E) negative keyword usage.

Question 72

Facebook feeds

A) are limiting the reach of organic posts, prompting many firms to spend on Facebook ads to connect with more users.
B) ensure that any post from an organization's fan page will arrive in the feed of anyone who has "Liked" that page.
C) prohibit content promoting apps that run outside the Facebook platform, since such content competes with user attention and Facebook wants users to spend as much time as possible on its own services.
D) will show identical ads to all users, worldwide, if they are of the same age and gender.
E) are entirely ad-free. Zuckerberg refuses to run ads in feeds because he feels this will degrade the user experience, even though Facebook would likely earn significantly more if it did so.

Question 73

Analysts are so bullish on Facebook's mobile advertising prospects because

A) Mobile ad revenue from the Facebook app has grown steadily since the firm's IPO.
B) Instagram is new to advertising and WhatsApp hasn't advertised much, suggesting that Facebook has lots of unrealized growth potential in its app stable.
C) Ads on Facebook mobile show up in a user's feed, the area of the screen they pay most attention to, suggesting mobile ads will be tougher to ignore than those on the side of a browser screen.
D) All of the above
E) None of the above - analysts remain very pessimistic about Facebook's prospects for mobile advertising.

Question 74

For years, which of the following is the only major media category that has seen an increase in spending?

A) Online advertising
B) Radio jingles
C) Television ads
D) Print media
E) Telemarketing

Question 75

Issues of content adjacency and ______ can make social networking ads less attractive than ads running alongside search and professionally produced content sites.

Question 76

What does the acronym CPM stand for?

A) cost per millisecond
B) cost per billion impressions
C) cost per thousand seconds
D) cost per thousand impressions
E) cost per million seconds

Question 77

Users tend to have more focused intent (often focused on purchase decision-making) when using Google as compared to Facebook.

Question 78

Users of Google and other search engines are said to be on a hunt because they:

A) are acquiring profiling data which acts as ammunition to improve their search results.
B) want to explore and look around.
C) are there to seek information to drive a specific action.
D) allocate time for activities such as looking for news and friend updates.
E) are unwilling to leave the Web page when they are having conversations.

Question 79

The bulk of Facebook's revenue comes from:

A) data aggregation services.
B) application development.
C) subscription fees.
D) data harvesting.
E) advertising.

Question 80

In terms of generating ad revenue on a CPM basis, information and news-oriented sites do much better than social networking sites.