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Facebook is not worth $33 billion

37signals.com

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Re: Facebook is not worth $33 billion

#131

Post by ryanwaggoner »

jonpaul wrote: post #113
ryanwaggoner wrote: post #25

Earlier quoted context omitted.

their utter and complete misunderstanding of all the basics of business is starting to grate on me Their linkbait really grates on me as well (though I happen to agree with this post's conclusion, if not the methods), but I think it's pretty unfair to say that they misunderstand all the basics of business. They seem to be doing pretty well for a shop their size. In fact, I'd say there's a good chance they're doing be…

Considering their success, how do they misunderstand the basics of business?

That's my point.

Re: Facebook is not worth $33 billion

#132

Post by adw »

rmah wrote: post #8
jacquesm wrote: post #2

What facebook is really worth we'll know when they IPO and they sell off a majority portion of the stock. Until then it's anybody's guess. I wouldn't buy their stock at any valuation, there are much more solid ways of investing than speculating on something that already feels over valued. And if I would want more risk then I'd rather put my money in start-ups than facebook. The next bubble is here, and it will go the…

Companies rarely "sell off a majority portion of the stock" when they IPO. More typically, they sell an additional 20% to 30% new shares to select investors.

The Betfair IPO about to get off (at a roughly $2bn valuation, which is pretty fair for a category killer in a huge business like sports gambling) is entirely insider sales, no new issues, and will be something like 10%-15% of the company.

Re: Facebook is not worth $33 billion

#133

Post by harryh »

harryh wrote: post #105

Anyone want to help me come up with fair terms for a bet between myself (twitter.com/harryh) and dhh? See our back and forth on twitter.

How about something like this? In the event of a FB IPO within 5 years we look at the valuation of the company 30 days after the IPO and compare it to 33B in todays dollars (with say a 5% IRR).

If facebook goes out of business (unlikely, but want to cover every scenario), you win 10k.

If facebook is purchased outright by another company we take that as a fair valuation and pay the bet out in the same was as an IPO+30 days price.

If facebook is still private 5 years from now it's a push (don't want this to be open ended forever).

We take the difference any multiply it by your "stake" (10k/33B) and the bet pays off.

So, for example let's say facebook IPOs 335 days from today (so IPO+30 = 1 year). With the 5% interest that puts us at 34.7B as the comparison valuation.

So if FB is worth 0 on that day, you win 10k. If FB is worth 20B, you win about 4.5k. If FB is worth exactly 34.7 it's a push. If FB is worth 40B, I win about about 1.6k. If FB is worth 50B, I win about about 4.6k. etc.

1) Make sense? 2) So you in?

Re: Facebook is not worth $33 billion

#134

Post by [deleted] »

dhh wrote: post #111
edw519 wrote: post #33

Earlier quoted context omitted.

It's weird, it's like in Chicago they don't have multiplication or something. Oh, and New York smells. (take that!) Two of my heroes dragging discourse on hacker news into the toilet. What's the world coming to?

Apparently it wasn't obvious from the "New York smells" point that it was a joke. So let me spell it out: It was a joke (even if it's actually, technically true. Many parts of New York really do smell from all that trash on the street!).

[deleted]

Re: Facebook is not worth $33 billion

#136

Post by flyosity »

danieldon wrote: post #54
spolsky wrote: post #5

I hate to leap in with what seems like an ad-hominem attack on the 37 signals, but their utter and complete misunderstanding of all the basics of business is starting to grate on me, and I'm wondering if it has anything to do with Chicago. Is the problem that they're sitting there in a city without any other Internet industry, stewing in their own witty ideas, listening only to the adoring comments they get from the…

Is the problem that they're sitting there in a city without any other Internet industry orbitz, groupon, careerbuilder, peapod, everyblock, skinnycorp, grubhub, the onion, ars technica, to name a few

And Google since they bought FeedBurner a few years ago.

Re: Facebook is not worth $33 billion

#137

Post by dhh »

harryh wrote: post #133
harryh wrote: post #105

Anyone want to help me come up with fair terms for a bet between myself (twitter.com/harryh) and dhh? See our back and forth on twitter.

How about something like this? In the event of a FB IPO within 5 years we look at the valuation of the company 30 days after the IPO and compare it to 33B in todays dollars (with say a 5% IRR). If facebook goes out of business (unlikely, but want to cover every scenario), you win 10k. If facebook is purchased outright by another company we take that as a fair valuation and pay the bet out in the same was as an IPO+30…

I like the basic concept and would definitely put money on it. But making internet bets in comments on HN seems unlikely to pan out in the future. You ready to escrow that $10K?

Re: Facebook is not worth $33 billion

#138

Post by tgriesser »

lovskogen wrote: post #69
biznickman wrote: post #30

Earlier quoted context omitted.

37signals is great at understanding the laws of small business, however arguing with those same laws doesn't always work when scale is involved. This would have been a valid argument 2 years ago if Facebook was trading at this valuation, however Facebook has a reasonable valuation given their rapid revenue growth. They may surpass $200 million this year and their user base is still about to double (yes, to beyond 1 b…

What if there's not faucet to open?

There is a faucet to open, and a big one at that.

The fact that they have gotten to the point where other companies are able to build majorly successful (Zynga) businesses based on their platform, and the fact that they have become ubiquitous with many business' marketing and online presence speaks for its self.

The fact that the total amount of time spent online is greater for those on Facebook than Google (including Youtube) is also important. http://news.cnet.com/8301-1023_3-20016046-93.html

But what is more important is Facebook's pursuit of pushing the envelope and being willing to innovate and lead as the online landscape changes.

The posts above which mentions that people were saying the same thing about MySpace having the user base and then not being able to monetize is like comparing apples to rotten tomatoes. MySpace was not a technology company, Facebook is. MySpace was primarily a media company with little to offer technologically (see: http://paulgraham.com/yahoo.html), Facebook is building a social web that has deep horizontal integration with the Social Graph Protocol, mobile communication, and is actively trying to optimize it's infrastructure for both scalability and user experience. Look as far back to their decision to go with AJAX and not base everything strictly on page loads (as MySpace did), or as recent as their open sourced internal projects... (I don't think MySpace ever worked on any HipHop PHP or Cassandra)

Facebook is in it with the right mindset, to be the leader and game changer in the "social web," and with both the value and quantity of data they are constantly amassing I wouldn't be surprised to see them on par with Google in a few years.

Also, as they grow they can continue to optimize and decrease costs on their end... I'd say they have both a big faucet to open and probably a few leaks they could plug as well, the combination of which makes for a large valuation to be expected.

It's always easier to look at something we don't quite fully understand from the outside (not many people understood the true value of those little text ads on Google until later) and then make blanket assumptions on valuations based on other companies that were inflated but not even on the same playing field as the company being discussed.

Re: Facebook is not worth $33 billion

#139

Post by spolsky »

dhh wrote: post #111
edw519 wrote: post #33

Earlier quoted context omitted.

It's weird, it's like in Chicago they don't have multiplication or something. Oh, and New York smells. (take that!) Two of my heroes dragging discourse on hacker news into the toilet. What's the world coming to?

Apparently it wasn't obvious from the "New York smells" point that it was a joke. So let me spell it out: It was a joke (even if it's actually, technically true. Many parts of New York really do smell from all that trash on the street!).

people don't have a sense of humor. obviously my comments about chicagoans not knowing how to multiply was a joke, too. They multiply like bunnies.

Re: Facebook is not worth $33 billion

#140

Post by harryh »

dhh wrote: post #137
harryh wrote: post #133

Earlier quoted context omitted.

How about something like this? In the event of a FB IPO within 5 years we look at the valuation of the company 30 days after the IPO and compare it to 33B in todays dollars (with say a 5% IRR). If facebook goes out of business (unlikely, but want to cover every scenario), you win 10k. If facebook is purchased outright by another company we take that as a fair valuation and pay the bet out in the same was as an IPO+30…

I like the basic concept and would definitely put money on it. But making internet bets in comments on HN seems unlikely to pan out in the future. You ready to escrow that $10K?

> You ready to escrow that $10K?

Sure. As long as you do the same.

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