Is Facebook Worth $100 Billion?

[CountDeMoney]

I'm a thin, attractive man in his late twenties who smokes.  That's as straight as straight can look, right?

[CountDeMoney]

Fuck Facebook. In the face.  You need to find me, I'm in the phone book.

[garbon]

I think they are worth it because I don't even think we've figured out the ways in which you can extract revenue from a user base like that. Hell, 5 years ago nobody thought that Farmville/Thisville/Thatville would be a means of making millions of dollars, right?

I guess I'm just wondering how long we are going to sit around thinking about ways to "extract revenue from a user base like that". Seems like facebook has had a colossal user base for a while now but I haven't seen much concrete on who that user base will actually be used. And then of course the potential attrition of users depending on usage...

[Barrister]

I think they are worth it because I don't even think we've figured out the ways in which you can extract revenue from a user base like that. Hell, 5 years ago nobody thought that Farmville/Thisville/Thatville would be a means of making millions of dollars, right?

I guess I'm just wondering how long we are going to sit around thinking about ways to "extract revenue from a user base like that". Seems like facebook has had a colossal user base for a while now but I haven't seen much concrete on who that user base will actually be used. And then of course the potential attrition of users depending on usage...

They're not thinking about ways to extract revenue.  There revenue was three billion dollars last year.  Theyr'e already extracting bucketfulls of revenue.

[garbon]

I think they are worth it because I don't even think we've figured out the ways in which you can extract revenue from a user base like that. Hell, 5 years ago nobody thought that Farmville/Thisville/Thatville would be a means of making millions of dollars, right?

I guess I'm just wondering how long we are going to sit around thinking about ways to "extract revenue from a user base like that". Seems like facebook has had a colossal user base for a while now but I haven't seen much concrete on who that user base will actually be used. And then of course the potential attrition of users depending on usage...

They're not thinking about ways to extract revenue.  There revenue was three billion dollars last year.  Theyr'e already extracting bucketfulls of revenue.

My article was about how they have only scratched the surface and it has already been expressed here that the valuation of $100 billion doesn't make sense if they aren't being seen as having the potential to tap all sorts of revenue streams.

[Berkut]

I think they are worth it because I don't even think we've figured out the ways in which you can extract revenue from a user base like that. Hell, 5 years ago nobody thought that Farmville/Thisville/Thatville would be a means of making millions of dollars, right?

I guess I'm just wondering how long we are going to sit around thinking about ways to "extract revenue from a user base like that".

I imagine for as long as they keep coming up with ways of doing so - it's not like this is completely specualtive. They are extracting revenue right now, quite a lot of it in fact, and it is growing quickly.

Seems like facebook has had a colossal user base for a while now but I haven't seen much concrete on who that user base will actually be used. And then of course the potential attrition of users depending on usage...

Huh? They are very profitable already.

[garbon]

I think they are worth it because I don't even think we've figured out the ways in which you can extract revenue from a user base like that. Hell, 5 years ago nobody thought that Farmville/Thisville/Thatville would be a means of making millions of dollars, right?

I guess I'm just wondering how long we are going to sit around thinking about ways to "extract revenue from a user base like that".

I imagine for as long as they keep coming up with ways of doing so - it's not like this is completely specualtive. They are extracting revenue right now, quite a lot of it in fact, and it is growing quickly.

Seems like facebook has had a colossal user base for a while now but I haven't seen much concrete on who that user base will actually be used. And then of course the potential attrition of users depending on usage...

Huh? They are very profitable already.

Please see my post above.

[Barrister]

My article was about how they have only scratched the surface and it has already been expressed here that the valuation of $100 billion doesn't make sense if they aren't being seen as having the potential to tap all sorts of revenue streams.

A lot of internet companies seem to operate on the "if you build it, they will come" sort of business plan - put together a big enough base of users and then we'll figure out how to make money (Twitter, I'm looking at you).

But FB has been figuring this out, and is already enormously popular.  The valuations thrown around don't mean FB has to invent revenue where none existed - but if does have to triple (or more) revenue, which is no easy task but at least imaginable.

[garbon]

http://finance.yahoo.com/blogs/breakout/3-ways-facebook-ipo-exploit-users-172215377.html

Here's something that gets at the question I'm asking as future revenue generation.

3 Ways Facebook Plans to Exploit Users

1. Facebook is going to "sell" users for $120 each

According to their filing, Facebook had 850 million Monthly Active Users (MAU) at the end of 2011. From that user base the company generated roughly $3.7b in revenue, or just under $4.50 for every member. Nearly 90% of this number comes from selling your information to advertisers who, in turn, try to sell you things Facebook says you want.

That may seem like a reasonable trade until we get to the IPO. "If this thing goes public at the price they're expecting (Facebook) will get $120 per user," Matt Nesto notes. Said another way, Facebook is going to sell you for 120 bucks. Wall Street bankers will get a cut of this figure, with Facebook getting the bulk of the money. FB users get nothing.

2. Facebook users are about to become billboards

In the first line of a 2,000 word letter from Mark Zuckerberg, the Facebook founder announces the following: "Facebook was not originally created to be a company. It was built to accomplish a social mission — to make the world more open and connected."

Noble stuff from a guy about to be worth nearly $30 billion. Regardless of the original inspiration, once Facebook goes public Zuckerberg's job is to create value for shareholders. That means getting more than $4.50 a year for selling each user's information to advertisers. One of the ways Facebook is going to go about this value extraction is turning your every click into a sponsorship.

If you feel exploited now you ain't seen nothing yet. Post-IPO, everything you "Like", suggest or link is going to be packaged and sold. Anyone you "Friend" will be pitched stuff you like. People with whom you have common friends will be sold goods on the basis of your unwitting recommendation. You won't just be connecting with people anymore, you'll be infecting them with spam, pop-ups, and network.

If that sounds something like a social disease it's because that's exactly what it is.

3. The IPO is as much a Public Relations coup as a Share offering

Typically when a company goes public it gives the shareholders something in return. Under normal circumstances that means management giving up some degree of control, either in the form of voting rights or via an independent board of directors charged with looking out for shareholder interests. At least that's the basic idea.

In the case of Facebook, the company is surrendering nothing. Zuckerberg will retain control of the company both in matters of day-to-day business as well as anything requiring a shareholder vote (buyouts, mergers etc). Should Zuckerberg become incapacitated his controlling interest will pass "to a person or entity he designates as his successor." Mark Zuckerberg could bequeath control of Facebook to his dog, Beast, and there isn't thing one shareholders could do about it.

Regardless of the company line about enhancing user experiences and fostering openness, the Facebook IPO will result in more ads and exploitation of user information. The shares may go up or down upon issuance but that's almost an afterthought. Buyers of the stock are simply cashing out VC's and funding the exploitation of whatever information they and their friends choose to share.

Like it or not your Facebook experience is about to change in a way that makes more money for the company. It's not a reason to avoid the shares, just a reason to be realistic about any idea of Facebook having a lofty mission.

Is Facebook selling out by going public? Let us know what you think in the comment space below; I personally promise not to sell your observations to the highest bidder.

[Barrister]

I don't get how it is the IPO that means Facebook is selling out.  I mean - Facebook is doing all of that stuff already.  It's just going to do more of it.

Also they're still counting on increasing its user base.

[garbon]

I don't get how it is the IPO that means Facebook is selling out.  I mean - Facebook is doing all of that stuff already.  It's just going to do more of it.

Also they're still counting on increasing its user base.

I wasn't really think about it in terms of selling out although that's the terms the article uses. I just want to know what methods are suggested for tapping these untapped opportunities.

[garbon]

Fuck Facebook. In the face.  You need to find me, I'm in the phone book.

I don't even bother picking up my copy of the phonebook that they leave in the entry way.

[Martinus]

I don't get the moral indignation at Facebook "selling users" or whatnot. It never claimed to be a charity.

[CountDeMoney]

Fuck Facebook. In the face.  You need to find me, I'm in the phone book.

I don't even bother picking up my copy of the phonebook that they leave in the entry way.

What the hell do you use for door stops then?

[garbon]

Fuck Facebook. In the face.  You need to find me, I'm in the phone book.

I don't even bother picking up my copy of the phonebook that they leave in the entry way.

What the hell do you use for door stops then?

Why would I need/want a door stop?