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If I were advising Facebook and Mark Zuckerberg…
I think Facebook is cool. Its a great platform. Opening the platform up to third party developers was a brilliant move. I think we’ll look back on that as one of the pivotal, legitimate moments in Web 2.0. Mark and his team are smart. No, they are very smart. The brightest to come along since Larry and Sergey - no doubt about it!
There has been a lot of speculation about Facebook’s IPO and a rumored buyout offer of $6 billion from Microsoft. Facebook already turned down a $1 billion buyout offer from Yahoo.
But where’s the beef? Users? Yes. Third party apps? Yes. Revenue? Nope. And that may be the problem with the IPO route. The market (Wall Street) will react differently to Facebook than the the Valley will. A lot of people are pointing to Google’s IPO and comparing it to what Facebook could be. Remember, even though Google enjoyed a good IPO, the market was still skeptical and it took awhile for Wall Street to shake off their jitters. How will they react to a company that has a fraction of the revenue (Google was doing well over $1 billion in revenue at their IPO -Â Facebook is rumored to have $30M in revenue)? Remember, although I think Wall Street didn’t see it at the time, Google has the most awesome revenue model in the history of business. What is so awesome about banner ads on college kids profiles? If you have the users - it makes for a great business but its no Google.
Sure there is something good there but is it that good? Is it IPO good? Is it $6 billion good? I’m inclined to believe that it isn’t. However, with MS in dire need of a good social network and has more than $60 billion in the bank the $6 billion valuation may be a good one. Remember, value is simply whatever two parties agree value is.
So what would I tell them?
Mark, buddy…if you have a offer on the table for $6 billion, then I’d take the money and run. How do you turn down $6 billion? An IPO isn’t a sure bet. You’re already a star - take the money and run!
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Left by Chris Knudsen on life, business, and entrepreneurship » More on Facebook and the problem with online advertising on 07/13/2007Amen. You’re spot on. $30M in revenue is not a massive IPO deal. Wall Street won’t get Facebook with $ coming in.
If they don’t take the money, they’re not too bright. Or maybe they’ll prove they’re way brighter than anyone thought.
Left by Jeremy on 07/13/2007@Jer:
Yeah its a real trick. Look at MS. Everybody thought they were crazy because they didn’t take $100M buyout offer from IBM in 1981. Look what happened there…
Left by Chris Knudsen on 07/13/2007