Today, we will be diving into Facebook. A business that requires little introduction, Facebook was launched in 2004 from Marc Zuckerberg’s Harvard dorm room. Zuckerberg has since grown Facebook into the largest social network in the world and continues to operate the business today. To break down Facebook, I am first joined by Robert Cantwell, founder and CIO of Upholdings. Rob’s unique background makes him an ideal person to speak on Facebook. Rob shared a dorm with Zuckerberg, went on to work at Elevation Partners, a large private investor in Facebook, and eventually became CFO of Everlane, where expansion was closely tied to the growth of Instagram and its advertising tools. We touch on how Facebook successfully navigated the transition from desktop to mobile, what drives the value of the network, and where Facebook may drive value in the future.   I am then joined by Jesse Pujji, a familiar voice as a host of Business Breakdowns. Jesse’s time as co-founder and CEO at Ampush make him ideal to break down the advertising business of Facebook. During our conversation, Jesse outlines the basic dynamics of the Facebook ad ecosystem, the economic proposition to an advertiser, and how to assess risks to Facebook's control of the digital ad market.   Facebook is such an interesting business, and we could likely speak for hours on the potential opportunities for growth. We decided to focus on the core advertising business today, given it represents 98% of revenue. In the future, we want to dedicate individual Breakdowns to WhatsApp, Oculus, and potentially other Facebook initiatives that are worthy of their own deep dives alone. I hope you enjoy this conversation on Facebook.   For the full show notes, transcript, and links to the best content to learn more, check out the episode page here. ----- This episode is brought to you by Canalyst. Canalyst is the leading destination for public company data and analysis. If you enjoy our exploration of what makes a company tick on Business Breakdowns, Canalyst should be the foundation for your quantitative analysis. For more information and access to the Canalyst model on the business we break down in this episode, go to canalyst.com/breakdowns.   -----   Business Breakdowns is a property of Colossus, Inc. For more episodes of Business Breakdowns, visit joincolossus.com/episodes.   Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here.   Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss   Part 1 [00:03:20] - [First question] The size and scale of Facebook and how we interact with it [00:04:59] - The best way to describe what their true core business is [00:07:21] - Observing Facebook’s growth as an operator and how it impacts his view of it  [00:10:46] - The ad model that they offered that wasn’t historically available before [00:12:49] - Competitive advantages they have today that makes theory moat impenetrable [00:15:44] - Potential impacts of the decentralization of the internet [00:19:20] - One of the biggest risks to Facebook over the coming years [00:23:33] - Future asset optionality that investors should be excited about [00:28:16] - Thoughts on whether or not Facebook abuses its power given its size [00:31:19] - Whether or not plans to establish themselves as a super app holds true [00:34:14] - What Facebook is today and where they’re going Part 2 [00:36:25] - Why Facebook has such an effective ad system for digital marketing [00:41:28] - Overview of how an advertiser uses their ad platform [00:45:39] - Key dynamics that impact bidding on certain keywords and customers [00:49:22] - The types of companies that are being built on top of Facebook’s ad railway [00:52:13] - What data they have and common misconceptions about it [00:56:15] - Things Facebook could learn about cross-app system track