

Facebook turns down $8 billion valuation, projects $550 million in 09 revenue - billclerico
http://www.techcrunch.com/2009/05/19/facebook-turns-down-8-billion-valuation-term-sheet-claims-2009-revenues-to-be-550-million/
web 2.0 is alive and well...
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jeroen
Contrary to what the title implies:

"Facebook declined the term sheet based on the requirement of a board of
directors seat, says our source, and not the valuation."

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JacobAldridge
True (and +1 for putting the actual detail into this discussion rather than
the sensationalist headline).

But part of turning it down, at least in Arrington's seemingly informed
opinion, is based on Facebook (read: Zuckerberg) believing he has other
options which must be in the ballpark of that valuation or above.

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climber
What does it mean that Zuck has 3 seats -- one empty, one he holds, one by
Andressen -- does Andressen get to vote as Andressen wishes, or does he have
to vote Zuck wishes, or does Zuck effectively get to cast all three votes?

How do these board seats relate to the preferred boat seats?

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jimbokun
So, if Facebook is going to have between $400 million and $550 million revenue
this year, does that put to rest once and for all the idea that they are
unable to monetize their users?

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brk
I don't think that anyone has denied that they are able to monetize users in
some fashion. What is hotly debated though is whether or not they can monetize
users sufficiently enough to make those users profitable in the short and/or
long term.

Facebook's overhead certainly appears to be quite substantial. They are
literally building new datacenters and are running a ton of equipment. Even if
you could theoretically fire all the sales, marketing and HR types, you'd
still be left with a pretty big bill at the end of each month.

Various online sources say that Facebook has a little over 1,000 employees.
Let's say the average employee is $80K fully loaded. That's $80M/year just in
payroll. You haven't even talked about real-estate to sit those employees in,
PCs for them to work on, or the servers and infrastructure to run the company.

Also, much of that revenue (for all practical purposes, maybe all of it) seems
to be advertising related. There is a lot of talk about the declining values
of online advertising, and no one seems to have cracked the system on how to
do that advertising in a fully effective manner. So, Facebooks revenue is
coming from a source that they don't have a strong ability to manage and
control (vs., say, user subscription fees).

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pierrefar
Revenue != profits. I wonder what their margins are. They might be losing
money for all we know, even with $550m rev.

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axod
Agreed. 1,000+ employees, 10,000+ servers, plush offices etc don't come cheap.

