I couldn't help but noticing: Facebook has become a startup wonder and Web powerhouse at about the same time that the overall U.S. economy has hit the skids. So I decided to apply some cutting-edge economic analysis to determine whether there's a correlation.
First, a brief economic history of Facebook. Mark Zuckerberg started the site in 2004, while in college, and by 2005 he had relocated to Palo Alto, Calif., where little startups go to get big-time funding and make billionaires of the founders. In 2006, Facebook changed from a small-time membership site to a worldwide social network open to anybody. Microsoft (MSFT) boosted Facebook's profile in 2007 with a $240 million investment that put the startup's value at about $15 billion. Traffic grew in 2008 and soared in 2009, when the number of Facebook users nearly doubled. By 2010, there were a few days when Facebook even drew more Web traffic than Google (GOOG). Zuckerberg, at 26, became the model for the lead character in a hit movie and Time's Man of the Year. And the social networking site began 2011 with a $450 million investment from Goldman Sachs (GS) that set the company's value at about $50 billion—more than Yahoo (YHOO), Time Warner (TWX), or News Corp (NWS).
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