Facebook: a case study of Web success

by Mathew on November 7, 2006 · 10 comments

If you’ve never come across Startup Review before, it’s a blog written by Nisan Gabbay, who until recently was an analyst with the venture capital group Sierra Ventures. Instead of short posts or gossip about startups, he does an in-depth case study of a company such as Craigslist every week or two, based on interviews and research. Since many of these companies are pretty well known, there aren’t that many earth-shattering insights, but they are very useful nonetheless.


His latest is on Facebook, which is reportedly looking at acquisition offers from Yahoo and others in the $1-billion range, and has already reportedly turned down an offer in the $750-million range. Nisan gives us a good overview of how Facebook capitalized on a pre-existing, real-world community in order to grow quickly:

Facebook created a high utility online service for enabling pre-existing social behaviors within an offline community. This makes for an interesting lesson learned: it’s easier to piggyback off a pre-existing community with offline behaviors that drive online service usage.

He also notes that Facebook created the conditions for such an online community to grow in a relatively sheltered and secure environment, since the site was restricted to college students and others with a .edu address. The company has since lifted that restriction, which has drawn some criticism from those who thought it should have stuck to its original plan, but has also increased the popularity of the site.

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  • http://www.startup-review.com Nisan Gabbay

    Hi Matt,

    Thanks for the coverage of my Startup Review blog. I’m glad that you find the content useful. The writing is targeted towards Internet entrepreneurs and investors, and thus I try to target the insights for that audience. While the insights for well-known companies like MySpace and Facebook might not be that different from coverage elsewhere on the web, I believe that there are good insights provided for the lesser known success stories. You won’t find the type of insight on companies like Rotten Tomatoes or HOTorNOT anywhere else on the Internet in my biased opinion.


  • Mathew Ingram

    I definitely think there’s plenty of insight in what you’re doing, Nisan — even on the big and well-known sites and services like Facebook.

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  • http://google.com/ Damon Gamage

    This one makes sence “One’s first step in wisdom is to kuesstion everything – and one’s last is to come to terms with everything.”

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  • http://twitter.com/arunmichelle/statuses/3098560663 arunmichelle (arun)

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