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7 Responses to “Facebook for a billion dollars”

1. 1 Ravi Venkatraman Apr 7th, 2006 at 6:15 am

   I guess, Bubble 2.0 is not far behind.

2. 2 Kevin Chou Apr 7th, 2006 at 7:07 am

   Let’s say you were a TV producer and you created a 30 minute television program that aired once a week. And let’s also assume that you had 90% of ALL college kids in the US watching it, as well as a decent slice of high school kids. Moreover, you paid $0 for actors, filming, post-production and network access. How much would that show be worth?

   I don’t know, but I would assume a lot. Apparently Viacom (the rumored buyer) did so too. Facebook had 5.5 billion page views in February 2006, which is 5.5 billion opportunities for ad impressions. If you compare that to a hit TV show that airs once a week to 15 million Americans and has 20 thirty-second ad slots, you can quickly do some rough math on why Facebook’s numbers are so impressive. Of course, a static ad does not have the same weight as a full motion video advertisement, but then again, have you seen some of the ads on appearing on sites like http://www.nytimes.com?

   A billion $s is probably too rich, but I do think they are worth several hundreds of millions.

3. 3 Rajan Apr 7th, 2006 at 8:04 am

   Ravi IMHO Facebook is inflated at 2 billion but definitely is no indication of a bubble. Face book is as Alok pointed out true web 2.0. If we work out the numbers facebook should be valuated at less than .75 billion.

   Alok in India we are about 18+ months behind the valley in web 2.0 infact already there is now 2nd generation of web 2.0 entrerenuers in valley. In india atleast a few new ideas need to pop up. There is hardly any and still many in India don’t get web 2.0 at all

   Rajan
   http://rajan.wordpress.com

4. 4 Abhishek Apr 7th, 2006 at 2:40 pm

   while “web 2.0″ (though from what i understand, facebook uses little of what constitutes web 2.0) is surely rocking, the $2b price tag appears too inflated. I think it has more to do with Viacom trying to desperately balance out aquisition of myspace by Murdock empire. On other note, myspace gets more traffic than amazon, so you never know.

   However, what needs to be cogitated upon, and what hasnt been apparent as yet, is whether a stand alone social networking site can become that valuable on its own. It does start making sense when acquired by a Biggie; but by definition, there are only these many Biggies and there are only these many aquisitions that they can do. With time, delta gain from additional aquisitions would become too small for such high number deals to make sense.

   However, in indian context, there are several other dimensions to this issue. While it calls for a detailed discusison, the skewed agewise demographic distribution is certainly one aspect strongly in favour of these models.

5. 5 Alok Mittal Apr 8th, 2006 at 10:10 am

   The media argument to web 2.0 businesses is perhaps a good one, only if you can sustain the audience interest. The widespread belief in silicon valley seems to be that Myspace has gone cheap and is doing very well (even on revenues)

6. 6 Abhishek Apr 8th, 2006 at 1:32 pm

   Interesting thought there Kevin, and i am certainly not challenging it. Just pricking you with some addtional thoughts and emphasing what Alok said.

   If there is a free to produce tv program, there would be several others on other channels and some with overlapping broadcast time. Sustaining user interest and differentiating from other similar sites is thus most critical; and that calls for a lot of investment. Moreover, while you can always replace a less popular serial with a new one on your channel; you dont get to do that on internet. On internet, your site is the only program you have. So if one fine day, your ‘kyonki saas…” is not cool anymore, then thats downhill from there.

   Why this becomes even more important in the context of school/college networks is because from what i understand, most users will either migrate to professional networks such as linkedin once they move out of college (and when actual purchasing power begins) or get too busy with their own lives to take interest in others’ lives (profiles) at all. Afterall, your interest levels in pretty juniors is likely to fall once you get married. If that is correct, then we are here talking of a small user life span. Every new academic calender means new users (15-20% of exisiting userbase) for grabs. User aquistion thus beceomes very expensive. Note that here user lifespan is small too.

   So that you can better relate to what i am saying, this may help:
   http://en.wikipedia.org/wiki/List_of_social_networking_websites

7. 7 Sandeep Apr 9th, 2006 at 9:43 am

   On a web 2.0 related note, here’s something cool that is being built by some of my friends. Proaxys can parse RSS/Atom feeds and convert them to speech. And some of the names that it could pronounce were really cool!

   I blogged about it here - http://sandeep.wordpress.com/2006/04/08/web-20-podcasting-and-proaxys/

   Even though I am not usually taken up by the podcasting hype, I thought this was pretty cool.
   -Sandeep

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