Facebook IPO values company at over 100 billion

Call me crazy but I think the frenzy over Facebook shares is very shortsighted and another example of internet bubble trouble brewing.    Facebook is a fantastic company with an amazing product, but I think people coming in now are probably overestimating the revenue potential for the company.   Note how, in the IPO road show, insiders were cautious about claims for the future.   Smart.   In fact possibly a way to outsmart naive non-insiders who will simply think  1. Facebook is huge.  2.Facebook is growing 3.  Facebook shares are a good value  (BUZZER HERE!).   At this valuation Facebook will have to be very, very good at monetizing traffic, and this is an area in which they have had somewhat limited success so far.

A key factor here is how Facebook will evolve in China and India and Europe.   Major inroads there could mean profits will catch up with expectations, but failures there will make it hard for Facebook to dominate the social media landscape in the same way Google has dominated search.

Facebook IPO to raise about $10,000,000,000. Value of Facebook approaches 100 Billion.

The numbers are staggering as Facebook prepares to launch her initial public offering.   With Facebook share prices expected to be $28-$35, Facebook’s public value will be 77-96 Billion dollars, making the company one ofthe biggest in the world and founder Mark Zuckerberg one of the richest humans ever to walk the planet.  Also one of the youngest rich humans.  At 27, the wiley coyote (or maybe better the roadrunner) of American Internet Entrepreneurs has come to dominate both his company and the social media market niche in a way noone has ever done before.

 

(Reuters) – Facebook Inc CEO Mark Zuckerberg fielded questions about the No. 1 social network’s slowing revenue growth … as he kicked off a cross-country roadshow to promote the company’s $10 billion IPO.   MORE from Reuters

Facebook Facts from Facebook.com

Facebook Facts from Facebook.com as of August 2011:

These are Facebook facts as described by the company in August of 2011 – if you read this post later than that it’s likely most of these numbers have *increased*.       Very notable in my view is the huge number of “active users”, the huge collective time they spend online, and the fact that mobile users are twice as active as non-mobile, though this last point does not necessarily mean that use will increase as far more people flow into mobile use – rather it may simply indicate that early adopters in mobile are more active users and thus mobile use will trend along the lines of regular use as more mainstreamers start accessing Facebook on mobile devices.

Facebook  Facts:

More than 750 million active users

50% of our active users log on to Facebook in any given day

Average user has 130 friends

People spend over 700 billion minutes per month on Facebook

Social Media Activity on Facebook

There are over 900 million objects that people interact with (pages, groups, events and community pages)
Average user is connected to 80 community pages, groups and events

Average user creates 90 pieces of content each month

More than 30 billion pieces of content (web links, news stories, blog posts, notes, photo albums, etc.) shared each month.

Facebook’s Global Reach
More than 70 translations available on the site
About 70% of Facebook users are outside the United States
Over 300,000 users helped translate the site through the translations application

Facebook’s Social Media Platform
Entrepreneurs and developers from more than 190 countries build with Facebook Platform
People on Facebook install 20 million applications every day
Every month, more than 250 million people engage with Facebook on external websites
Since social plugins launched in April 2010, an average of 10,000 new websites integrate with Facebook every day
More than 2.5 million websites have integrated with Facebook, including over 80 of comScore’s U.S. Top 100 websites and over half of comScore’s Global Top 100 websites

Facebook’s Mobile Exposure
There are more than 250 million active users currently accessing Facebook through their mobile devices.
People that use Facebook on their mobile devices are twice as active on Facebook than non-mobile users.
There are more than 200 mobile operators in 60 countries working to deploy and promote Facebook mobile products

Facebook – Myspace = 100% revenue share

Josh at Redeye VC has some *excellent* points about the coming big battle between Facebook and Myspace for web developers:

If you ran a venture-backed company and had to decide whether you wanted to focus your effort on: (a) a property that welcomed you in and let you keep 100% of the revenue you generate or (b) a company with a vague policy that doesn’t let you generate any revenue, which would you choose? I don’t think it’s even a decision. It’s an IQ test.

However, it is significant that Myspace remains far larger than Facebook in terms of a user base and also important is that users, not developers, have driven the success of Myspace.

Facebook is hard to analyze because until very recently they had a much more restrictive policy on new accounts, opening them only to groups associated with businesses or universities. To join Facebook I initially had to contact my old alma mater – University of Wisconsin – to get an alumni email set up, then redirect that to my current mail. No big deal but certainly a barrier to entry. Facebook now (wisely) has opened itself up to everybody and (also wisely) is pursuing a very open approach to API usage and social media. Most importantly Facebook is going to allow those who build applications around Facebook to keep 100% of the revenue those create.

I think this “100% revenue share” is a brilliant approach because the Facebook “whole” will be much greater than the sum of these parts. Thus Facebook can make a *lot* of money through the extra traffic and advertising created by websites and developers and users gravitating to the Facebook social media ecosystem. The loser in this equation would be Myspace and other sites (that would be MOST sites) that try to create social media environments but don’t share much of the revenues.

Facebook Rules with Social Tools

Today Facebook launches a social media initiative that is significant enough to possibly become a web milestone, depending on how the developer community views and uses all the new capabilities that Facebook is offering to them.

Rafe Needleman‘s got a video of the conference today and Techcrunch will, as usual, have insightful summary of the implications of all this.

Based on my quick first look into what they are up to this really looks like a brilliant move, and a sign they won’t be selling to a bigger player, rather trying to rise up and eat the bigger fish.

If Facebook can capture the imagination of enough developers and become “the” key platform for social media they’ll likely be very glad to have turned down the billion+ dollar buyout offers earlier this year.

At the least Mark Z and his crew deserve huge props for going for the gusto and offering to take the development community along for the ride.  This is not only great stuff for Facebook and social media evangelism, this appears to be consistent with the grand and open internet community vision that one hopes will ultimately prevail.

Bebos, billions, and why Yahoo is starting to piss me off.

Yahoo may buy Bebo, the British “Myspace”, for a billion dollars. That is a LOT of money – about 3% of Yahoo’s market cap. Presumably this, like Yahoo’s unsuccessful Facebook aquisition attempt, is Yahoo’s approach to recapturing the market dominance it enjoyed back in the day. Dominance through the aquisition of a social network rather than developing their own.

They should know better than to trust their existing criteria for decisions about aquisitions. Yahoo is the company that aquired Overture’s pay per click technology years ago, and then managed to cede dominance in that area to Google. Ever heard of Google? Yahoo probably could have *owned* Google, but it seems higher management didn’t think search had the monetization potential of … broadcast.com which was purchased for billions.

Isn’t it time for top management at Yahoo to let innovation, not aquisitions, rule the day? This approach has worked very well for Google, who’s main mistakes now appear to be in aquiring things like YouTube which in my opinion is unlikely to recover YouTube’s 1.6 billion price tag and will certainly pester Google with big money lawsuits for decades. Yahoo’s still got a LOT of great technical people, especially in the developer and new business divisions. More importantly, the world is producing hundreds of thousands of new, brilliant innovators every year, most of whom are chomping at the bit to bring new and exciting innovation to the hungry online world. Why not devote the billions to this rather than purchasing companies with marginal revenues and long term prospects that are more hope and prayer than reality?

With the latest flurry of high priced aquistions it almost seems like, to the big players, the billion dollar deal is the new million dollar deal. I remain skeptical that deals of this size pay off in the long run – certainly very, very few of the early pre-bubble ones did not pay off for companies. I’d suggest that the smaller deals (e.g. Flickr) do have potential, but that Yahoo’s top management is looking for a killer deal that simply does exist while the innovation approach (ie much, MUCH more support to the core values and teams at Yahoo) is starting them in the face. Traffic? Yahoo’s got plenty of it. Modest changes can send millions of Yahoo users to any new idea, so why not do this *a lot more* and test *a lot more ideas*.

Edison suggested that there is always a better way, and it’s time for Yahoo to ….. find it.

More Bebo-logy from Techmeme:

Yahoo may net Bebo owners $1bn

 

 

Bebo/YHOO: My Rumor’s Bigger Than Yours

Yahoo May Be Bidding For Social Network Bebo: Report

Yahoo: When You Can’t Buy Facebook, You Buy Bebo

Bebo is not for sale