“Got kitesurfing on the mind, mixed with some search & classification tech, and a dab of political ranting”

The Facebook news put some Cheerios in the blogosphere’s breakfast

Posted by direwolff on March 29, 2006

It’s always fun to read the blogosphere’s endless speculations on stories that are not usually as they seem, but I guess there’s no harm in speculating.  So with that, I figured I’d throw a few out of my own on this Facebook matter which is garnering so much attention.

IF the news is accurate (though I highly doubt it) that Facebook passed on an offer to be acquired for $750M, and IF it has set an asking price of $2B (all BIG “IF“s that I continue to question, especially after reading report that Tribe received a round of financing recently which was only a year late in being reported…doh!), then I don’t believe that Facebook is on the block at all.  From what I know of the company, they are currently profitable on cashflow, there’s some additional speculation that they have received another round of financing (though I note that this was written by Rafat who also reported on the Tribe funding…wrong again? hmm…), so they don’t really need to be acquired right now.  Any one in a position not to need it can set whatever asking number they want, however unreachable, because it’s simply stating the obvious, “what’s the number at which I’d be willing to part with this business?”.  For Facebook, that number appears to be $2B.  It’s not that they actually need to be shopping the deal, but since they don’t need the exit right away, they can set an unrealistic number knowing that if someone steps up it’s worth selling at that price.

There’s also a subtle difference not well understood by many of the pundits I’ve read who have discussed Facebook’s relative value to MySpace.  MySpace is still about pseudonymity.  In other words, surely you can put your real name and contact info, but most people don’t completely do this or prefer to use an alias of some sort.  As well, their e-mail address is generally of vanilla variety (Hotmail, Yahoo!, Gmail, {name your free e-mail service here}) which are easily disposable.  Facebook on the other hand, I’d liken much more to LinkedIn.  It’s really a directory of real people with their real names and real e-mail addresses.  There’s some level of authentication that has occurred with their registrations.  Sure, kids graduate fm college, but many retain their e-mail for life even as a secondary one.  That means that a Facebook contributed e-mail address has lasting value.  Get’em early and you get’em for life…wonder if they learned that from Apple?

Directories have inherently greater value than pseudononyous services because the lead generation potential comes with better and more accurate information.  It’s less about people pretending to be people they’re not, and more about higher value information on the members.  That’s monetizable value.  Now, this is by no means a justification for the numbers being bandied around, but I wouldn’t be comparing Facebook to MySpace, as these are used for different purposes by different groups of people much like you wouldn’t add LinkedIn or Tribe to this grouping either.

And that’s my $0.02 contribution to the blogosphere punditry.


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