
Facebook Valuation Back At A Cool $70 Billion On SecondMarket - mkrecny
http://techcrunch.com/2011/02/25/facebook-70-billion/
======
nir
That's peanuts. At my local bar we're now evaluating Facebook at $250B at
least.

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cletus
Disclaimer: I work for Google.

People like to compare Facebook to Google as the next "company of the decade"
or the like but let points out some differences:

\- Google received $25 million in funding [1] in basically one large round in
1999 [2]. Facebook has received a total of $2.34 _billion_ [3]

\- Google was started as a project in 1996 [4], became a company in 1998 [3],
funded in 1999 [2], was profitable in 2001 [4] and filed for IPO in 2004 [4].
In the quarter before IPO Google earned a profit of $79 million on revenue of
$700 million [5] and had a project IPO valuation of between $20 and $30
billion;

\- Facebook was founded in 2004 [6] and is still a private company. Financial
statements purportedly leaked as part of the Goldman investment report $1.2
billion in revenue and $355 million in profit for the first nine months of
2010 [7], equivalent to $400/$120 million (although the last quarter would be
higher due to the growth factor) with a private valuation of $50 billion or
more.

Facebook's growth must come from increasing the number of users (getting
difficult with most of the developed world already on it), increase revenue
per user or diversifying their business. Diversification is hard. Most of
Microsoft's money still comes from Windows and Office. Most of Google's is
from advertising. Increasing revenue per user seems the most likely path.

Facebook's value is in their data and the audience. They are a silo and, like
pretty much all silos, that won't last, which isn't to say it won't make some
people a bucketload of money in the interim.

My personal view is that the value of "social search" is overstated. After
all, this is what we used to have. Before search engines and the Internet your
source of what to buy, watch or do came from your friends and the media. The
huge leap forward with search engines--particularly Google--was suddenly you
could canvas the opinions of the entire connected world.

If I want to buy a camera, my friends aren't likely to know what to buy. This
kind of question relies on a certain scale to get meaningful information.
After all, how many of your friends bother to be almost exhibitionist in their
opinions on what they bought ("Like"ing something really doesn't tell you all
that much).

The data can only be held captive for so long. Facebook has already sued to
protect what is publicly visible and accessible data [8]. Facebook already
makes it as difficult as they can to export or even delete your own data. They
realize the value in that data and (IMHO) that sort of business model is only
sustainable in the short to medium term.

So at $70 billion I see upside but at most 2x--maybe 3x--and an awfully large
downside potential. The early investors have made--and will make--out like
bandits. But invest now? I don't really see the point.

[1]: <http://www.crunchbase.com/company/google>

[2]:
[http://web.archive.org/web/20000309205910/http://google.com/...](http://web.archive.org/web/20000309205910/http://google.com/pressrel/pressrelease1.html)

[3]: <http://www.crunchbase.com/company/facebook>

[4]: <http://money.cnn.com/2004/04/29/technology/google/>

[5]:
[http://www.businessweek.com/technology/content/jul2004/tc200...](http://www.businessweek.com/technology/content/jul2004/tc20040727_5797_tc024.htm)

[6]: <http://en.wikipedia.org/wiki/Facebook>

[7]: [http://www.huffingtonpost.com/2011/01/06/facebooks-
financial...](http://www.huffingtonpost.com/2011/01/06/facebooks-financials-
reve_n_805285.html)

[8]: [http://petewarden.typepad.com/searchbrowser/2010/04/how-i-
go...](http://petewarden.typepad.com/searchbrowser/2010/04/how-i-got-sued-by-
facebook.html)

~~~
ThomPete
Without knowing whether Facebook will last or not I agree with you that social
search is overrated.

But your comparison to pre-google pre-internet doesn't hold up.

You are not only connected to people based on friendship but also much more on
affinity and that is the defining factor when it comes to social search. In
fact I believe twitter to be much more interesting from a social search
perspective than FB.

Other than that I appreciate you have taken the time to provide such a clearly
structured argument.

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silverlake
My guess is that Goldman's and JPMorgan's new funds are chasing very few
shares on SecondMarket with large amounts of dumb investor money.

------
spitfire
Now try to make good and sell at that valuation. I dare you.

