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Facebook is not worth $33 billion

37signals.com

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Re: Facebook is not worth $33 billion

#141

Post by points »

dhh wrote: post #18
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…

1. Thanks for the word correction, updated. 2. Publicly traded companies have instant liquidity on many more shares, which makes using "last share sold" an meaningful metric. 3. When only 3% of the money a company is supposedly worth has been moved around, it's a poor indicator of what the other 97% would go for. 4. They haven't figured out how to make much profit yet. And it's still questionable whether they will. M…

I'd bet they make a lot more profit than 37signals.

Re: Facebook is not worth $33 billion

#142

Post by far33d »

paul wrote: post #91

I bet it's worth more than that.

Facebook is one of the few companies in the world with unbounded potential. It's a cultural phenomenon that has changed the way people use the internet and, more importantly, has changed the way people interact with their real friends. Very few companies change culture and daily interaction like this.

Is it worth $33b today? Not sure. Could it be worth $200b someday? Could Facebook be bigger than Microsoft? Bigger than Google? Bigger than Exxon? Maybe. I can't think of any other company for which "maybe" is a reasonable answer.

That's why investors value it so highly.

Re: Facebook is not worth $33 billion

#143

Post by grandalf »

dhh wrote: post #18
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…

1. Thanks for the word correction, updated. 2. Publicly traded companies have instant liquidity on many more shares, which makes using "last share sold" an meaningful metric. 3. When only 3% of the money a company is supposedly worth has been moved around, it's a poor indicator of what the other 97% would go for. 4. They haven't figured out how to make much profit yet. And it's still questionable whether they will. M…

If you take #3 to its logical conclusion, any company's shares, if sold all sold at once, would be worth far less than the price at the nexus of supply and demand (the market price).

Price is simply a function of supply and demand. It's not customary to use a fire sale price as the sole basis of a company's valuation.

http://en.wikipedia.org/wiki/Valuation_(finance)

Re: Facebook is not worth $33 billion

#144

Post by jlgbecom »

I'm surprised this isn't bloody obvious. At one point AOL was worth $247 billion, and then an open internet steamrolled over it.

The same thing will happen to Facebook with the open web. At least AOL had subscription revenue.

Re: Facebook is not worth $33 billion

#145

Post by mattlanger »

If the supposed billion dollars Facebook is allegedly pulling in this year was happening at anywhere a decent margin, they wouldn’t have needed a series E round of $120 million from Elevation Partners just three months ago.

It's actually not at all uncommon for wildly profitable companies to take an additional round so they can continue to ramp up at accelerative rates.

Re: Facebook is not worth $33 billion

#146

Post by bl4k »

richcollins wrote: post #126
bl4k wrote: post #34

1. The company has supposedly taken just under a billion dollars in venture capital and small secondary-market sales of stock. So the actual money that has changed hands is just 3% of the total evaluation of the company!" Not true. Sure they have raised $1B themselves, but a lot of stock has changed hands on the secondary market. Facebook sanctioned employees being able to sell stock up to a certain amount, in lieu o…

> Facebook sanctioned employees being able to sell stock up to a certain amount, in lieu of going public Does Facebook approve the sell price? If so then it's likely biased up.

They do not approve the price, but they have to approve the transaction and it can only take place within one of the allowed trading windows (Facebook has non-trading periods leading up to major events to prevent insider trading).

They also have to make sure that they remain within the 500-shareholder rule, which would otherwise force them to go public (which is what happen to Google).

Re: Facebook is not worth $33 billion

#147

Post by dhh »

harryh wrote: post #140
dhh wrote: post #137

Earlier quoted context omitted.

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.

I'm in. Email me at david at 37signals.com with the details and we'll go from there.

In fact, I think this would be a great little business. Allow people to place long-term bets with money on the line on predefined, objective results. Then hold the cash in escrow until the resolution day.

Re: Facebook is not worth $33 billion

#148

Post by mikeklaas »

krschultz wrote: post #86
spolsky wrote: post #20

Earlier quoted context omitted.

They're almost certainly making $2 per user. Another dime is gonna be easy.

I think their CPM is in the $30-$40 range, but the key missing piece of information is how many views they get per user. I know my Facebook use has gone from multiple views per day (20, 40?) to 1 page every other day. Still lets say each user looks at Facebook twicer per day, each user is about 1/2 a CPM per year, or $20 revenue per year. But CPC, well I've never clicked on an ad on Facebook in my entire life.

Never use tech-savvy people as representative examples when evaluating advertising.

Otherwise, even google would be out of business.

Re: Facebook is not worth $33 billion

#149

Post by pchristensen »

bl4k wrote: post #34

1. The company has supposedly taken just under a billion dollars in venture capital and small secondary-market sales of stock. So the actual money that has changed hands is just 3% of the total evaluation of the company!" Not true. Sure they have raised $1B themselves, but a lot of stock has changed hands on the secondary market. Facebook sanctioned employees being able to sell stock up to a certain amount, in lieu o…

when dhh says "make $X", he means profit, not revenue.

Re: Facebook is not worth $33 billion

#150

Post by haseman »

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!).

Just came from San Francisco to NY. If you think it's bad here...walk around downtown SF sometime ;-)
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