conq writes "BusinessWeek reports that Facebook has turned down an offer for $750 million and is looking for 2 billion dollars. The article speculates that one possible suitor would be Viacom. From the article: 'A Facebook deal would help Viacom founder and Executive Chairman Sumner Redstone fend off a growing challenge from News Corp. The media conglomerate run by Rupert Murdoch has poured enormous resources into the Internet during the last year. It acquired social-networking pioneer MySpace.com last year for $580 million.'"
i read garbage like this and think we're headed for yet another intenet fall. myspace? facebook? do we hontestly expect these fads to drive an economy? the web is 21st century snake oil.
You obviously aren't in college. Facebook is a marketers wet dream. One of the hardest demographics to reach hits that site literally 20 times a day. And that includes everyone, especially the trend setting popular kids (who are often the most addicted).
Until the average American is nolonger an idiot*, and median income remains high in the US. There will always be great value associated with any tool that eases the separation of a fool from his money.
*Recall the quip, no one ever went broke underestimating the average American's inteligence.
I disagree with the idea that Facebook's registration system is its advantage because it closed--the advantage of the system is that it offers easy searching for people and arranges them in nifty, easy to understand hierarchies. Because Facebook requires registration from a college/high school email address the ease of searching and hierarchical arrangement is retained (whereas most people, I suspect, would default to signing up on Myspace with whatever aol.com or hotmail.com account they have.) This plus is a side-effect of the closedness, but I don't believe the closedness is an advantage all unto itself.
Some suggest that Facebook is somehow more safe for its participants. A surface examination may suggest that, but I think on a practical level it's not. As the security fears of Myspace die down (they're really just the normal internet dating fears that we've always heard except now brought down to 14 year olds plus the current hysteria regarding sexual offenders) I think that Facebook's closedness will be looked upon as a disadvantage.
After all, if you're going to spend $2 billion on Facebook, you'd want a pretty strong potential for growth, and Facebook will get maxed out too quickly, and the only new growth for it will be from new high schoolers who can add themselves in. The brand has to open up to create the value.
(I add, incidentally, that I've thought about this because Facebook, as it was originally designed, was a reasonable concept for a small college like Harvard. I go to Ohio State, where the idea of having so much information about you (until recently the default) presented to what is a mega-city sized student/alumni population is assinine. Though I've got a facebook account, I find the obscurity of myspace more convenient (though I don't post salacious pictures of myself doing stupid things that employers could discover later.)
What does facebook do that it could possibly be worth $750 million dollard (or worse yet, the $2B they think they're worth)?
Usually people buy companies to make more money for themselves. How could Facebook possibly generate enough renevue to reasonably pay off the initial investment?
Why do they need to sell it? Because if they do they can retire to their own private island instead of managing a cheesy yet inexplicably hugely popular website?
Facebook is a cheesy unoriginal idea that became a huge fad, and these guys can reap a huge financial windfall for it. They would be fools not to sell.
I think why facebook s interesting is because it's self renewing. The difference with other social sites is that they quickly die the death most fads do.
Facebook is constantly renewing itself - with a new "class" as students leave and students come in.
So in my estimation, facebook is more valuable than Myspace because facebook has constant and consistent and probably measurable influx of new people. If they can permanently tie facebook to the college experience, then facebook becomes a very valuable long term commodity, because advertisers and content providers can target the entire college age audience at once. That would be huge.
also, from a financial standpoint, college students are even more valuable than high school students, as they all will be wielding credit cards for the first time, meaning they've just acquired their power to spend beyond their means. All my college friends incurred serious debt in college - in fact most of their debt was acquired in school. So advertising to this "new money" as it were, is very important.
At the same time, the population of Facebook is also expiring. The people who are finishing college may stay on, but they probably won't bother to check as often, so they'll gradually stop coming and looking at ads. The people who are on Myspace might stay on for an indefinite amount of time, and they can always bring anyone in.
...but isn't the number of kids turning 12 and signing up for myspace roughly similar to the number of kids entering college and signing up for facebook?
Why do the Facebook people feel the need to sell their company? Come on, just keep running Facebook the way it is. It doesn't need to be sold.
... such sites either make money (i.e. have a working business model) or they try to get bought by some senile billionaire (or the corporate equivalent of one).
And the people who sold it became filthy stinking rich.
What would you rather do: Work on a site that's populated by ego-ridden teens and young college students who whine a lot and make some money off of adverts and sponsorships, or get a (very) large suitcase full of money and go do drugs off a hooker's ass in Vegas?
If you're still thinking about this, just ask yourself: What Would Bender Do?
You know... I've seriously thought about this myself. I just have to figure out how to make a site that generates a lot of hits with no real income and then sell it off to the highest bidder.
You know... I've seriously thought about this myself. I just have to figure out how to make a site that generates a lot of hits with no real income and then sell it off to the highest bidder.
Actually it has a lot of income....it is called relevant advertising.
That is why if you put your favorite movie as fight club, a poster store (and ad) for fight club posters will show up.
If all websites had that sort of advertising people wouldnt be so annoyed by banner ads.
Facebook doesn't release revneue figures, but as recently as Apr'05 they were valued at around $100mil, which tells me that they have significant revenues.
Facebook generates revenue from banner ads, local sponsored links, and sponsored groups. Considering that 85% of the college population [techcrunch.com] (which, BTW, is a very sought-after demographic) uses Facebook, I'd say their ad revenues could be extremely significant.
Sure, its' alexa ranking is 62 but $2 billion for a site created two years ago? WOW! You would think a billion worth of investment into engineering and marketing could easily recreate facebook.
Recreate the following and population behind the site? Not likely.
Yeah, because all THAT takes is two years and a web-based IRC. Come on people, teenagers are notorious for following the "fads". Come up with your own "super facebook, now with more Xtremeness" and watch them all flock in.
That may sound like a huge amount of money, especially when you consider that the company was launched just two years ago by a group of sophomores at Harvard University, led by Mark Zuckerberg
with such insane amounts of money pouring into overhyped dotcoms again, I can see the next crash coming... show me the myspace.com business model please - I mean, I'm all for sites driven by user-generated content (it works for slashdot and many others), but such large investments should have at least a tiny chance of being made back eventually (i.e. in the next 10 years or so);-)
Facebook has a captive audience that is in a consistent demographic and has all of the users verified as real human beings. Or close enough to that. This means that advertisers can make very focused advertising campaigns to a large group of people in the ever so popular 18-24 demographic.
Ok chicken little, the sky is still up where it's supposed to be. Do your understand the difference between what's occuring today and what occured six years ago? Viacom is a huge company, as is Rupert Murdock's news company; seven hundred fifty million is not nearly as much money to Viacom as one might think. These are niche websites that DO NOT CONSTITUTE AN ENTIRE INDUSTRY.
The point of the investment is for market infiltration; Viacom is going "Oh shit, Murdock is kicking our ass on the internet we need
Tell that to Google. It's not like money can be made from ads.
I believe the last stats I read had MySpace user registration doubling every six months. They are rated number 8 on Alexa [alexa.com], only behind companies like Google, Yahoo, MSN and eBay.
Perhaps the apparent business model of a social networking site isn't immediately obvious. That is, until, you think about what a media conglomerate like News Corp can do with such an active community. News Corp has holdings like Fox News and primetime shows like A
Facebook has their college side set up where faculty and staff can create an account as well as the students. On the high school side, only if you're a student; no option for faculty/staff.
I e-mailed them once, since I administer an Internet filter in an educational environment, asking them if they would allow an option for high school staff to create an account just like they did with college faculty/staff. I've never received a reply.
> BusinessWeek reports that Facebook has turned down
an offer for $750 million and is looking for 2 billion dollars.
BusinessWeek reports that Facebook has turned down an offer for
$750 million and is looking for 2 billion dollars.
Great. So the future of business looks like this:
sumredrok: yo
facebk: yo!
sumredrok: asm?
facebk: 2/lots/watugot?
sumredrok: 750m?
facebk: up urs n00b
sumredrok: wtf?
facebk: 2b
foxyrupert: pwn3d!
"Capital, capital, everywhere, and no VCs who think."
Facebook features a userbase of millions of sticky eyeballs which can be readily monetized using contextual advertising solutions that transcend the superficial and target the user's behavior. For example, they use their users' Google tracking cookies to determine which web sites they visit. Facebook can then deliver targeted advertisements that result in a very high clickthrough percentage relative to ordinary bannervertising.
Facebook has also enabled rich media advertising for those who have tired of the
The only thing I can think of, is that it offers insight into the pulse of the youth community. Think of it as a gigantic data mining tool. They can know what is popular by running some queries.
There's only going to be one big winner in the 13-25 community space. Look at the massive inroads made by myspace.com. Hold out too long and the execs will end up delivering pizzas alongside the first wave of dot-com execs.
2 Billion for facebook!?! Holy crap, the era of the dot com is back! I mean, seriously, facebook? You could completely duplicate that entire site with two college students working part time for a month, so maybe $10,000... THAT is the barrier to entry. Please let them spend 2 billion on this... That way my plan to sell pet food online won't seem to crazy.
users in a demographic that is notorious for not having any brand loyalty and are willing to jump onto the next big thing with flashing neon lights and lots of shiny colors... Get a good marketing company to come up with a sweet interface full of Apple-like bubbles and plastic-liiking shapes and you'll have all of facebook's users in a month... but you'll lose them all again next month for somone else.
Don't bet your money on mindshare when your demographic is teens.
2 billion dollars? 750 million and they turned it down?
This is the very cause for the Social Networking Backlash Techcrunch covered [techcrunch.com] like snubster.com [snubster.com] and isolatr.com [isolatr.com]
So here's what companies see when the learn about sites like Facebook or MySpace:
- Huge number of people
- Vast majority are under 25
- Rapid word of mouth and hype spreading
Now they think to themselves: "WOW, it's just like a TV show that gets millions and millions of teenage viewers---imagine the advertising potential! We'll make a fortune!"
Unfortunatly for them, they're wrong. Commercials and product placements on TV are wildly different from those on the internet. TV requires you to watch them, and things can be soaked in subliminally with relatively little effort on the advertiser's behalf. Why is this? It's because people's attention is focused on what's going on, and the advertisements just slip in there most of the time. It's a fairly benign form of advertisement if you're engrossed in the program.
Websites like Facebook on the other hand would require advertisements to distract the users from what they want to do. Banner ads and flash animations don't blend into webpages like a race car driver wearing 800 different brand names or a supermodel drinking a soda on TV. All internet ads do is to cause frustration and resentment among the users towards the product.
So, while I'm sure advertisers wish that they could keep the same strategies and ideas that they have been using in TV, film, and radio for the last 100 years--sorry, you can't. The internet doesn't work that way.
---
Just my 2 cents.
Anyone here remember PointCast? What, never heard of them?
They were going to be the next big thing 10 years ago. If I remember correctly, they were offered something $500 million for their company and turned it down. They said they would be 10 times that amount in a few years. Well, a few years came and went, and suddenly they were worth less than a tenth of that amount.
Way to go, idiots. Newsflash: You're riding on a fad. Sell out when the fad is hot, because when it's gone you'll have nothing.
Friendster was one of the earlier social networking attempts (its name derived from napster's brief file sharing success). When I first tried to use Friendster its servers were as slow as molasses. Facebook launched on Harvard's InterNet-2 capacity servers before going private.
Second, Facebook has a simply defined social network- the school. On Friendster you have to build your own.
Third is the luck of fads and momentum. Kids are notorious for following fads. Facebook was in the right place at the right time.
After reading some comments on here, it seems that some of you put facebook in the same category as myspace. Facebook is much better than Myspace and here is why.
1. All facebook profiles are uniform. They are the same color and can only have one profile picture. This makes everything so much easier on the eyes. The pages load quicker and relevant information is easy to acquire. There aren't a million pictures, animated gifs, songs, videos all over the page.
2. The majority of ads are text. Most of the ads are google type text ads, and only 1 or 2 ads are shown at a time. And here's the best part: The ads are usually bought by a student or local business. So instead of seeing huge flash ads for some shitty movie or band, you see relevant ads about a local bar special or someone who has a sub-lease available in their apartment.
3. You have to be in College (or now high school) to join. Facebook requires you to have a college e-mail adddress to join. While I'm not saying every college student is perfect and a big winner in society, you have to face the fact that most people that are on myspace are huge losers. I'm talking about all of the people who work the dead-end minimum wage jobs, do drugs every night, just take webcam pictures of themselves, and are going nowhere in life. There is none of that on facebook.
4. Information is not readily available to anyone who wants it. To view someone's profile you have to go to the same school as them. If you don't go to the same school you can still see that they have a profile, but you have to be added as their friend before you can actually see the profile. This greatly cuts down on all of the stalkers out there.
5. Facebook is a legitmate communication tool. Many professors have embraced the technology and joined facebook. Even my college president (at the u of Iowa) is on it. I know many friends who now send messages to others on facebook instead of e-mail, citing the fact that most students will check their facebook messages more often than their e-mail. Myspace can't be used for communication except for saying things like "thanx 4 the add", "check out my new webcam pix", "damn baby u r so hot"
There are probably even more comparisons I could make but I'm running late for class. Facebook hasn't been around quite as long as myspace, so I'm sure it doesn't have as many subscribers. I'm bettting though as years go and more people go to college the site will become much bigger than myspace. It's just so much cleaner and easier to use.
I think selling facebook would be a huge mistake. The way it stands now, the site is run by a couple of students (or former students, they may have graduated) They've added many features, but have done it subtly. It seems like every time more functionality is added on myspace it just makes the profiles that much uglier. When it happens on facebook, it makes it that much more usable. I'm only afraid that if the wrong company buys the site, they will try to compete with myspace and try to turn facebook into another myspace. Sorry for the rant, but I hope that this post will enlighten some of the people who have just read about these sites but haven't actually been able to join the facebook.
I see so many questions about why 2 billion dollars is being asked for the ownership of facebook... it's really quite simple. Aside from the pictures and messaging, each member of facebook can list interests, favorite quotes, books, movies, albums, etc etc etc. There is SO much information going around on facebook, and though it may appear useless by looking at just one individual site, the information from every facebook site is pretty meaningful to a marketer. Information is money, just look at google. Will all that data you'd be able to see trends, what products will work where, what's important to this generation, etc. The possibilities with facebook are enormous, and I'm actually surprised that it's not higher than 2 billion.
It's like myspace (social networking internet site, if you've lived under a rock at the bottom of a cave in the middle of Siberia for the past couple years), only themed more towards/integrated with college (and, more recently, high school, but not so much and separated from the college portion).
You can't learn too soon that the most useful thing about a principle
is that it can always be sacrificed to expediency.
-- W. Somerset Maugham, "The Circle"
oh brother (Score:2, Insightful)
Re:oh brother (Score:5, Insightful)
Parent
Re:oh brother (Score:3, Insightful)
Drunk idiots (Score:4, Funny)
Re:Drunk idiots (Score:3, Insightful)
*Recall the quip, no one ever went broke underestimating the average American's inteligence.
Most investors can't register (Score:4, Informative)
I'm not sure how long that will last (Score:5, Informative)
Some suggest that Facebook is somehow more safe for its participants. A surface examination may suggest that, but I think on a practical level it's not. As the security fears of Myspace die down (they're really just the normal internet dating fears that we've always heard except now brought down to 14 year olds plus the current hysteria regarding sexual offenders) I think that Facebook's closedness will be looked upon as a disadvantage.
After all, if you're going to spend $2 billion on Facebook, you'd want a pretty strong potential for growth, and Facebook will get maxed out too quickly, and the only new growth for it will be from new high schoolers who can add themselves in. The brand has to open up to create the value.
(I add, incidentally, that I've thought about this because Facebook, as it was originally designed, was a reasonable concept for a small college like Harvard. I go to Ohio State, where the idea of having so much information about you (until recently the default) presented to what is a mega-city sized student/alumni population is assinine. Though I've got a facebook account, I find the obscurity of myspace more convenient (though I don't post salacious pictures of myself doing stupid things that employers could discover later.)
Parent
Why? (Score:4, Insightful)
Remember what happened when they sold mp3.com? It died a horrible death. If that happens to Facebook... a lot more people will be upset.
Re:Why? (Score:5, Funny)
Parent
Re:Why? (Score:2)
Usually people buy companies to make more money for themselves. How could Facebook possibly generate enough renevue to reasonably pay off the initial investment?
Re:Why? (Score:3, Insightful)
Re:Why? (Score:2)
I mean, how freaking interesting can running that site be? I'd be happy to dump it and get on to something more worthwhile.
Re:Why? (Score:5, Funny)
Parent
Re:Why? (Score:5, Insightful)
Facebook is a cheesy unoriginal idea that became a huge fad, and these guys can reap a huge financial windfall for it. They would be fools not to sell.
Parent
Re:Why? (Score:5, Insightful)
Facebook is constantly renewing itself - with a new "class" as students leave and students come in.
So in my estimation, facebook is more valuable than Myspace because facebook has constant and consistent and probably measurable influx of new people. If they can permanently tie facebook to the college experience, then facebook becomes a very valuable long term commodity, because advertisers and content providers can target the entire college age audience at once. That would be huge.
also, from a financial standpoint, college students are even more valuable than high school students, as they all will be wielding credit cards for the first time, meaning they've just acquired their power to spend beyond their means. All my college friends incurred serious debt in college - in fact most of their debt was acquired in school. So advertising to this "new money" as it were, is very important.
Parent
Re:Why? (Score:2)
Re:Why? (Score:3, Insightful)
well, usually... (Score:2)
Re:Why? (Score:2)
What would you rather do: Work on a site that's populated by ego-ridden teens and young college students who whine a lot and make some money off of adverts and sponsorships, or get a (very) large suitcase full of money and go do drugs off a hooker's ass in Vegas?
If you're still thinking about this, just ask yourself: What Would Bender Do?
The new business model. (Score:5, Insightful)
Re:The new business model. (Score:2, Funny)
Then party like it's 1999...
Re:The new business model. (Score:2, Interesting)
Re:The new business model. (Score:2)
Facebook doesn't release revneue figures, but as recently as Apr'05 they were valued at around $100mil, which tells me that they have significant revenues.
Facebook generates revenue from banner ads, local sponsored links, and sponsored groups. Considering that 85% of the college population [techcrunch.com] (which, BTW, is a very sought-after demographic) uses Facebook, I'd say their ad revenues could be extremely significant.
2 bn is probably excessive, I wouldn't be able to
The internet bubble is back in force! (Score:5, Interesting)
Re:The internet bubble is back in force! (Score:2)
Recreate the following and population behind the site? Not likely.
Re:The internet bubble is back in force! (Score:2)
Yeah, because all THAT takes is two years and a web-based IRC. Come on people, teenagers are notorious for following the "fads". Come up with your own "super facebook, now with more Xtremeness" and watch them all flock in.
Add to Friends (Score:5, Funny)
Hmmm...
/ Adds Mark Zuckerberg to his friends.
go ahead, inflate that bubble again (Score:5, Insightful)
Re:go ahead, inflate that bubble again (Score:2)
Re:go ahead, inflate that bubble again (Score:2)
Viacom is a huge company, as is Rupert Murdock's news company; seven hundred fifty million is not nearly as much money to Viacom as one might think. These are niche websites that DO NOT CONSTITUTE AN ENTIRE INDUSTRY.
The point of the investment is for market infiltration; Viacom is going "Oh shit, Murdock is kicking our ass on the internet we need
Re:go ahead, inflate that bubble again (Score:2)
I believe the last stats I read had MySpace user registration doubling every six months. They are rated number 8 on Alexa [alexa.com], only behind companies like Google, Yahoo, MSN and eBay.
Perhaps the apparent business model of a social networking site isn't immediately obvious. That is, until, you think about what a media conglomerate like News Corp can do with such an active community. News Corp has holdings like Fox News and primetime shows like A
I still find it interesting... (Score:2)
I e-mailed them once, since I administer an Internet filter in an educational environment, asking them if they would allow an option for high school staff to create an account just like they did with college faculty/staff. I've never received a reply.
How the negotiations went down (Score:5, Funny)
Great. So the future of business looks like this:
sumredrok: yo
facebk: yo!
sumredrok: asm?
facebk: 2/lots/watugot?
sumredrok: 750m?
facebk: up urs n00b
sumredrok: wtf?
facebk: 2b
foxyrupert: pwn3d!
"Capital, capital, everywhere, and no VCs who think."
Dot com boom days? (Score:2)
What kind of wealth does it generate?
What kind of assets does it have?
Re:Dot com boom days? (Score:2, Interesting)
For example, they use their users' Google tracking cookies to determine which web sites they visit. Facebook can then deliver targeted advertisements that result in a very high clickthrough percentage relative to ordinary bannervertising.
Facebook has also enabled rich media advertising for those who have tired of the
Re:Dot com boom days? (Score:2)
I'd take the money and run (Score:2)
Dotcom is back baby! (Score:2)
Re:Dotcom is back baby! (Score:2)
Don't bet your money on mindshare when your demographic is teens.
Social Networking Backlash (Score:2, Interesting)
the value isn't in the tech... (Score:2, Insightful)
The problem with their thinking (Score:4, Interesting)
And in other social networking site sales news... (Score:3, Funny)
Google will pay someone to take Orkut off their hands, in Brazilian currency too!
frighteningly familiar... (Score:5, Insightful)
They were going to be the next big thing 10 years ago. If I remember correctly, they were offered something $500 million for their company and turned it down. They said they would be 10 times that amount in a few years. Well, a few years came and went, and suddenly they were worth less than a tenth of that amount.
Way to go, idiots. Newsflash: You're riding on a fad. Sell out when the fad is hot, because when it's gone you'll have nothing.
Oh well, their loss.
Irrational exuberance has returned (Score:3, Funny)
Apparently in 7 years peoples memories have fallen by the wayside.
why did friendster not succeed? (Score:3, Insightful)
Second, Facebook has a simply defined social network- the school. On Friendster you have to build your own.
Third is the luck of fads and momentum. Kids are notorious for following fads. Facebook was in the right place at the right time.
Why facebook is better than myspace (Score:5, Informative)
1. All facebook profiles are uniform. They are the same color and can only have one profile picture. This makes everything so much easier on the eyes. The pages load quicker and relevant information is easy to acquire. There aren't a million pictures, animated gifs, songs, videos all over the page.
2. The majority of ads are text. Most of the ads are google type text ads, and only 1 or 2 ads are shown at a time. And here's the best part: The ads are usually bought by a student or local business. So instead of seeing huge flash ads for some shitty movie or band, you see relevant ads about a local bar special or someone who has a sub-lease available in their apartment.
3. You have to be in College (or now high school) to join. Facebook requires you to have a college e-mail adddress to join. While I'm not saying every college student is perfect and a big winner in society, you have to face the fact that most people that are on myspace are huge losers. I'm talking about all of the people who work the dead-end minimum wage jobs, do drugs every night, just take webcam pictures of themselves, and are going nowhere in life. There is none of that on facebook.
4. Information is not readily available to anyone who wants it. To view someone's profile you have to go to the same school as them. If you don't go to the same school you can still see that they have a profile, but you have to be added as their friend before you can actually see the profile. This greatly cuts down on all of the stalkers out there.
5. Facebook is a legitmate communication tool. Many professors have embraced the technology and joined facebook. Even my college president (at the u of Iowa) is on it. I know many friends who now send messages to others on facebook instead of e-mail, citing the fact that most students will check their facebook messages more often than their e-mail. Myspace can't be used for communication except for saying things like "thanx 4 the add", "check out my new webcam pix", "damn baby u r so hot"
There are probably even more comparisons I could make but I'm running late for class. Facebook hasn't been around quite as long as myspace, so I'm sure it doesn't have as many subscribers. I'm bettting though as years go and more people go to college the site will become much bigger than myspace. It's just so much cleaner and easier to use.
I think selling facebook would be a huge mistake. The way it stands now, the site is run by a couple of students (or former students, they may have graduated) They've added many features, but have done it subtly. It seems like every time more functionality is added on myspace it just makes the profiles that much uglier. When it happens on facebook, it makes it that much more usable. I'm only afraid that if the wrong company buys the site, they will try to compete with myspace and try to turn facebook into another myspace. Sorry for the rant, but I hope that this post will enlighten some of the people who have just read about these sites but haven't actually been able to join the facebook.
2 billion is about right (Score:3, Insightful)
Re:Caspar Weinberger, dead at 88 (Score:2, Offtopic)
http://www.msnbc.msn.com/id/12050783/ [msn.com]
But dude, pulling out a clique like that for a deal death is just sick..
Re:Never heard of it (Score:4, Informative)
http://facebook.com/ [facebook.com]
Parent