Bubble Hype: A $240M Slice of Facebook
It was announced that Microsoft purchased a 1.6% stake in Facebook worth $240 million. That places Facebook’s valuation at approximately $15 billion dollars. Yes, you read that right. Facebook, in terms of valuation, is worth $15 billion dollars. For me, this is a site that brings to mind drunken pictures of classmates, people cruising for hookups, a place for widget makers to [possibly] gain traction, and the site that can affect your ability to get a job if a potential employer finds suggestive comments and pictures on your Facebook page. That’s worth $15 billion dollars?
No one can deny that Facebook is the startup that everyone in the tech sector has been talking about for months. Since Facebook opened up to users beyond the college market, sign ups and page views have mushroomed. There is speculation and real cases that users are abandoning MySpace for Facebook because of its clean look, its open platform for widget makers, and the perception that it’s safer than MySpace, which took a public beating a few months ago with the alarming discovery that thousands of sex offenders were using the site.
There isn’t a day that passes that I don’t read or hear (via a podcast) something about the Palo Alto-based startup. To me, the constant chatter about Facebook is similar to the press the iPhone received prior to its launch. Still, I’m just completely puzzled with the amount of buzz surrounding Facebook. I admit that sites like Bebo, Facebook, and MySpace don’t appeal to me because I’m not the demographic they’re after; I’m antisocial and am turned off by that type of networking. However, putting my personal feelings aside, there is a huge amount of bubble-like hype surrounding Facebook that reminds me of the first tech bubble bust.
To think that Facebook is worth $15 billion dollars is ridiculous. It’s a fancier, cleaner, and more “open” version of MySpace. At the most, I think the site is worth $1-2 billion when it comes to valuation. I’m no expert or anything, but that figure is more realistic to me. I believe the amount of press Facebook is getting is contributing to the hype and bloating the valuation to an outrageous figure of $15 billion. Although CEO and founder Mark Zuckerberg has insisted he won’t sell after spurning a $1 billion offer from Yahoo a year ago, I believe now is the time to execute an exit strategy by shopping Facebook around for buyers. Facebook is becoming the new social network hangout these days but so was Friendster a few years ago; look what happened to them. I say cash out while people are actually buying into this ridiculous valuation and start a new venture. Zuckerberg is still relatively young and can move on to the next new thing on the web. He may have been smart to turn down Yahoo a year ago, but there will come a time when people will move on from Facebook to the next new social networking site. It’s happened before, and it will happen again. We humans are a fickle bunch and always want something shiny and new once that luster of what we’re using starts to fade and grows older.
October 25th, 2007 at 7:51 pm
[...] Check it out! While looking through the blogosphere we stumbled on an interesting post today.Here’s a quick excerptIt was announced that Microsoft purchased a 1.6% stake in Facebook worth $240 million. That places Facebook s valuation at approximately $15 billion dollars. Yes, you read that right. Facebook, in terms of valuation, is worth $15 billion dollars. For me, this is a site that brings to mind drunken pictures of classmates, people cruising for hookups, a place for widget makers to [possibly] gain traction, and the site that can affect your ability to get a job if a potential employer finds [...]
October 25th, 2007 at 8:44 pm
It was always my hope that Virb.com would rise above Facebook. It’s the only reason I joined; I thought I was future-proofing. This was months ago. Now it’s almost clear that Virb is a failure when compared to Facebook, even though I feel it’s vastly superior. As popular as Facebook is though, there’s no way that it’s worth that much cash. I’m very curious to see how this plays out in the next couple of years… I see regret in Zuckerberg’s future.
October 27th, 2007 at 6:40 am
I’m absolutely sure there’s some other social network out there superior to Facebook. That’s always the case, and eventually, people will gravitate towards that more superior social network. Maybe it will be Virb.com. Maybe it will be something else completely.