Tag Archives: facebook

Facebook chalks up another $500,000,000 ::: UPDATE – NOT TRUE!

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 Update:  This story was FALSE.   Facebook had an MS deal but not additional capital

Facebook founders were still sipping champagne from their 240 million deal with Microsoft as they scooped up 500 million from two hedge funds yesterday.   I’m not clear yet if the valuation was the same but presumably this was all a related deal, and Facebook is now solidly valued at 15 billion.    WoW. 

That’s a lot of money, especially when you recognize that the value is all in people like …. me and you.   Facebook sold our eyeballs to advertisers for something like  $175  per user eyeball.   15 billion / 42 million users   Jeez – I think they are cheaper on Ebay!

[No, this really is not a legit metric – investors are placing huge value on Facebook’s team and future potential more than simply the users, though users are the key to any social network kingdom as the information serfs, and deserve more respect from the social network kings and queens and capitalists]

Marcus at PlentyofFish always has great insight about the relationship of ad revenues to success and to expenses.     Marcus notes that even with the  huge pageviews at Facebook he calculates the advertising to yield to be only  $0.10 per thousand views compared to the $15.00 per thousand Google expects to pull in at their site.     Marcus’ important point is that even as online advertising is exploding most of those revenues are going to the very top sites, most revenue comes from very low CPM advertising, and the number of sites dipping into the advertising pool goes up every …. second.    He doesn’t sound as optimistic as he used to, and that should be alarming for small time web publishing guys like … me.

Hmm – it would be interesting to calculate a theoretical upper limit to the total social online advertising market using:

Total number of online people x  hours spent online x pageviews per hour x  .10 CPM. 

Just off top of my head I get this for USA:

200 million x 2 hours online day x 30 views per hour = 12 billion pageviews per day
 x .10 CPM =   $1.2 million per day

Huh?   This is incredibly low, but I must be missing something here.    The .1 CPM is a fraction of what is normally negotiated so I’ll recheck that..

Microsoft loves Facebook

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Microsoft bought a 1.6% stake in Facebook today for $240,000,000.   Reported at NYT here.  This give a market value to Facebook of right about 15,000,000,000.   

WoW

I do think Microsoft is smart (and Facebook stupid) to make the cash outlay much smaller than most had thought, giving them an alliance and a powerful foothold without spending the “billions” that apparently would have been required to buy a big stake in the internet’s latest wonder site.

With *revenues* of about 150 million Facebook is now valued at …. wait for this ….. one hundred times revenues.    This is simply a spectacular and speculative valuation, even by internet standards where  even a Google is only valued at about fifty times earnings.   Note that if Google was valued at 100x their expected revenues over the next year their capitalization would be something in the neighborhood of 1.5 trillion dollars.    

Many will suggest that the value in keeping Facebook away from Google was so great that MS has won big, but I’d predict not much will come of this alliance.     Like many online regulars I’m already tiring of Facebook and looking for a completely open, portable social application.   To justify today’s value Facebook will need to grow pretty much like nobody’s ever grown before.    Sure, it’s possible, but I think this will go down with Google’s YouTube aquisition as good money after bad, because monetizing Facebook traffic will be far more problematic than Microsoft seems to think.

All that said, congratulations to the Facebook team who must be popping a few corks about now…. no champagne is good enough for this news.

Google v Microsoft over Facebook

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Henry Blodget over at Silicon Alley Insider has a thoughtful post today predicting that Google will beat out Microsoft in the Facebook sweepstakes, and that the real winner here is Facebook founder Zuckerberg who will walk away from any deal with a jaw dropping, market driven valuation of Facebook.     Blodget notes that even if Microsoft spends enough to win the Facebook bidding war Google wins again because Facebook will simply milk Microsoft’s cash cow leaving them with little in the way of a superior online MS environment.

I think this last point is particularly relevant, and poses one of the key threats to Microsoft’s long term viability.    Unlike Google and even Yahoo, new companies don’t appear to see a Microsoft aquisition as much more than a big payday.   It’s not clear to me that Google does any more for the companies it aquires than Microsoft does, but I do think the perception is that Google will inject innovation and enthusiasm where Microsoft will just absorb you into their failing online collective.    I don’t think these assumptions are, on balance, valid, but I think they are part of the equation when new companies and their generally young, inexperienced founders are courted by the big players.

Yahoo Mash – Yahoo!, don’t forget about Yahoo! Mash

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Yahoo’s social networking tool “Yahoo Mash” offered up a good first entry into the social networking space by a major player.    But I’m noticing how it seems to be languishing after the initial positive buzz, and I think this is because Yahoo’s taking too long to go out with full bore, full online network promotion.  

Yahoo Mash offers some features I really like compared to Myspace and Facebook.  It’s an open architecture meaning that you can mashup mash with modules that show pictures or RSS feeds like this blog.   I think my favorite thing about Yahoo Mash is the way the comments stream from profile to profile, so you don’t have to keep bouncing back to a single spot to remember what you said to somebody.    I’m not enough of a social networking person to know if this is a real innovation or not because Myspace and Facebook also have some features that cross pollinate across profiles, but somehow Mash feels more like a “social networking” experience to me, even though I with it had the kinds of business networking features you find at LinkedIn.  

If Yahoo Mash is just working out kinks and getting ready to scale up to full release soon that is fine, but if the idea is to scale the project *slowly* over a year or so I think they are making a big mistake.  Why?   Because social networking is an explosive phenomenon both in the sense that it has quickly become a key online activity across all users but also because it seems to me that social networks don’t gain momentum gradually, rather they become “in fashion” as did Myspace and Facebook and grow quickly and explosively.   Facebook is still in this growth mode while I think Myspace growth is tapering off (I’m too lazy to go look at graphs to see if this is true).  

Disclaimer – I’ve got some Yahoo stock.  Not enough to prejudice my views, but perhaps enough to make me unreasonably optimistic. 

Scoble : More friends than he can click a mouse at

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Robert’s got neat ideas about online “friends”, pointing out that the best definition for online friend is NOT the same as for offline “let’s have dinner” friends in real life.   But he’s complaining that Facebook is poorly engineered because it limits people to 5000 friends.   Over at Scoble’s blog several are correctly pointing out that he’s such an exception to normal use it’s not fair to expect Facebook to change for the few huge social networkers like Robert.

Uh-oh….I hope he doesn’t bump ME off his friends list now…

Dave Winer, meanwhile, is proclaiming that “Facebook Sucks”, noting that their image, video sharing, and some other features are inferior to the alternatives.   It’s an excellent point though Facebook may be opening up enough to allow integration with pretty much *all* other stuff, and if they do they deserve the praise now heaped upon them in almost nauseating fashion.   Thanks Dave for the reality check.    I wonder if anybody will heed it.

Facebook is not worth $100,000,000,000.00 ?! What is this, the 1980s?

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Jason Calcanis has an excellent post noting that Facebook madness has become so absurd people are now seriously suggesting that a company with 100 million in revenues could be worth 100 billion.   

Ha – only a year ago knowlegeable people were scoffing at the notion that Facebook  is even worth a billion dollars.   Although Facebook has grown a lot in this past year and has distinguished itself as a brilliant Web 2.0 juggernaut powerhouse in social media, the hype is almost nauseating.  

Unless, of course, you own a piece of the action….

Bubble investors better pack a a golden parachute, because it seems with all these low revenue sky-high valued companies it could all get very ugly very fast. 

Social media frenzy may kill high quality content. Somebody fix this!

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The news last month that Microsoft may wind up offering Facebook $500,000,000 for a 5% stake is great news … for the tiny number of Facebook insiders who stand to gain from this move which would effectively value the social media giant at about $10,000,000,000.    For the millions of Facebook folks like me who provide the content and faces that drive Facebook it means … um … more advertising.   

Gee, thanks Facebook.   

When people wake up they may start to realize that we’ve got a potential crisis as small numbers of “info intermediators” like Google and Facebook scoop up the lion’s share of the online ocean of cash while the “info creators” are distinctly second class citizens in the big show.   Small time web publishers and mom and pops are in this group.  So are major newspapers like the New York Times and Washington Post and most other print outlets who tend to make relatively little online despite offering much of the web’s best content to date, especially now that the foolish paywalls of some newspaper outlets like NYT are coming down.   Having no paywall will allow them to make more, but it’s not clear to me they’ll make enough to keep all that high quality content coming.  

Print and newspapers are  hurting and that is going to continue.   That’s OK as long as websites and blogs continue to provide great insight and breaking news, but it’s about time the big players in the online world start working *a lot harder* to feed the hands that are feeding them.  It’s about time they realize that the best web ecosystem encourages high quality content and not just socializing for the sake of hanging online with friends.

Yes, it is true that revenue sharing programs like Google adsense give publishers a nice share of revenues that come directly from activity at their websites.  However lost in this debate is the fact that *most* of Google’s money  (and virtually all of Myspaces), goes into the pocket of Google and Fox (owners of Myspace).   This is because most of the cash comes from searches done at Google.com rather than publishing affiliate sites, and Google keeps all that despite the fact it’s generated *indirectly* from the ocean of content Google has categorized.  Sure Google should make *a lot* from categorizing *your content* so effectively, but should they make 100%?   You can argue this arrangement is fine if the big players turn around and do things with that money that make the internet ecosystem thrive and grow in ways it could not without their involvement.  I think that argument was far more valid a few years ago than it is now.  Literally thousands of  startups are dying off as the Youtubes and Facebooks – built squarely on the shoulders of other people’s content  – scoop up the super gigantic big money.    It is not a problem that startups die – in fact it’s a good part of the ruthless evolution of things – but it’s problematic when the lion’s share of online resources from the work of so many are redistributed to so few.    Not because this is “unfair”,  but because this type of  inequity does not lead to optimal system efficiency and growth.

Social media in all its various and sundry forms is a wonderful development.  Finally we see clearly that people, not computers, will be at the heart of future online developments – probably for some time into the future.    Facebook users are now leading the innovation in this area, though Alice at NYT thinks this could lead to unintended consequences.

To protect this new socially charged online environment from the ravages of our silly, stupid and prurient human interests we’ll need better incentives than the big players currently offer to quality content producers.   Those incentives will ultimately shape the quality of online content for years to come.

Facebook will rule the world in 33 days! Ummm … not.

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Yes, of course Facebook is a great implementation of Social Networking which is undoubtedly the paradigm that will dominate the internet world for at least a few years.  However Facebook is hardly a *new* idea  and it’s hardly immune to other social networking forces that are in the mix now and will be popping up as time moves on.

AllFacebook is reporting that soon Facebook could kill off LinkedIn with new ways to segregate and work with your contact list, and I think he’s got a good point.   Ideally it seems like would be nice to have ONE intersection point that can be adjusted and manipulated according to our network, community, or audience.   But it’s not clear people will want that to be a commercial enterprise – in fact OpenID in some form seems more likely to take on that role. 

Despite all the hype surrounding a 10 billion valuation for Facebook and rumors of their takeover of the world I’m skeptical they’ll be as dominant as many seem to think after a few years of hassling with the real world of real people – potentially very fickle facebookers. 

Facebook is seeking the mantle of the one stop social networking shop, and as of the latest buzz they seem in a good position to take over from Myspace as the world’s top social network.   However Facebook has a very long way to go in terms of subscribers even though it does seem that the earlier enthusiasm folks showed for Myspace is  giving way to Facebook.    But Facebook is not as “fun” as Myspace so I’d guess we’ll see a demographic division as kids and new users gravitate to the more “fun” sites like MySpace or the new Yahoo Mash and more sophisticated users move in the direction of Facebook.   

TechCrunch on Facebook’s changes