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Facebook is not worth $33 billion

37signals.com

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Re: Facebook is not worth $33 billion

#181

Post by ankimal »

Facebook has "demand". Once you have that the rest is just keeping your head on your shoulders. 500 million users and still counting. It would be interesting to see the number of internet users in the world, I think might become their biggest problem. Can you monetize each user more, maybe not a whole lot more without pissing 'em off, but 1c more per user for almost a billion users (should happen soon) is helluva lot.

Basically, a lot of people DONT wanna be on facebook, they probably detest the very idea! But they ARE! As a business owner what else could you want? And would someone pay $33b to get 500 million+ users, Absolutely!

Re: Facebook is not worth $33 billion

#182

Post by marclove »

Facebook’s biggest weakness is that its core value proposition to users is that everybody you know is on it. Any business whose core value proposition is that “everyone is doing it” is essentially a fad. Its success and usage is driven primarily by peer pressure.

Sure Facebook is a decently designed site that makes sharing your photos, videos, comments, links, etc. easy. But that’s not hard to replicate (the backend scaling parts are hard, but invisible to the end user). When people find the new social network that all the cool kids are using, they’ll flock to it and abandon Facebook in an instant, leaving shareholders dazed and confused. I doubt Facebook will die as quick & horrible a death as MySpace (in addition to being more fad-driven, MySpace was also centered around a fad-ish industry and had horrible usability), but it will die a similar death.

Google on the other hand has developed revolutionary technologies that other companies find nearly impossible to find the talent & resources necessary to replicate and improve upon. They provide a real, unique, non-fad value proposition to the end user. Same with Amazon, Apple and many other established tech companies.

Facebook investors' problem is, will they be able to get a return on their money before a new social network becomes the trendier place to be.

Re: Facebook is not worth $33 billion

#183

Post by scottymac »

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…

On behalf of

Groupon.com Orbitz.com Feedburner.com CareerBuilder.com TicketsNow.com Peapod.com Apartments.com Restaurant.com ShopLocal.com Legacy.com GrubHub.com EveryBlock.com Apoolicious.com Threadless.com Newser.com Songza.com ViewPoints.com Timelines.com SitterCity.com BlockShopper.com CarePages.com SurePayroll.com OneWed.com

...and many other Chicago-based internet companies

Fuck off.

Re: Facebook is not worth $33 billion

#184

Post by mikeryan »

mrtron wrote: post #58
nadam wrote: post #31

Earlier quoted context omitted.

My gut feeling is that Facebook is somewhat overvalued at $33billion. (This is $66 for their average user.) But I don't think it is overvalued by orders of magnitudes and I think the 37signals article is very demagogue.

People are horrible at taking variables like growth into account. It isn't 66$ per user. It is 33billion/expected number of total users over the lifetime of facebook. So if you throw in rough estimates of 2 billion facebook users and give them a decade of profiting from an average user...3$ per year per user.

2 billion active users is almost 1/3 of the worlds population. That seems like a strech.

Also you can't link the 33billion to expected. 33billion is their "valuation" now with 500M active users. There's a certain expectation that your valuation should go up as users increase.

Personally I think the per-user deal is kind of a red-herring. Revenues and Profits are the only things that really matter. Users are just a one (good) dataset for estimating growth - but hardly the only one.

Re: Facebook is not worth $33 billion

#185

Post by commanda »

sspencer wrote: post #55
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?

Agreed, kind of depressing that neither appears to have anything better to do.

Not really. They are both professional writers of online publications. This forum is the perfect place for them to stir up controversy to entertain their target audience. I'm entertained, at least.

Re: Facebook is not worth $33 billion

#186

Post by scorpion032 »

edw519 wrote: post #33
dhh wrote: post #18

Earlier quoted context omitted.

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…

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?

You should take a chill-pill and go check out reddit sometimes.

Re: Facebook is not worth $33 billion

#187

Post by JabavuAdams »

kwamenum86 wrote: post #71
timr wrote: post #26

Earlier quoted context omitted.

"Secondly, EVERY SINGLE COMPANY IN THE WORLD that has shares that trade is valued by taking the last share traded and multiplied by the number of shares outstanding. It's just the DEFINITION of valuation. It's TAUTOLOGICAL." Indeed. And Pets.com was worth $100 million on the day of its IPO. And tulip bulbs were worth more than a man's annual salary in 1637. And that house down the street was worth a million dollars l…

Value is determined by what someone- anyone- will pay for something. And it makes sense if you think about it. The goal is to find out how much you can sell that something for and it is the exact same problem as figuring out how much someone will pay for that something. Company valuations are messier than tulip bulb valuations though. With tulip bulb valuations you are saying that since someone will pay x the bulb is…

Value is determined by what someone- anyone- will pay for something.

This is unexamined Econ 101 dogma. See the other posts on intrinsic value.

Re: Facebook is not worth $33 billion

#188

Post by parfe »

sabat wrote: post #42

Troll.

I agree completely. The blog post was poorly written and reeks of the same style of Rush Limbaugh or Glenn Beck. The point isn't to be informative or insightful, but to get the 37signals name out there by saying anything. 37signals has put out some decent software that serves a purpose, but I feel they're fairly hype driven and I think they're starting to jump the shark.

Re: Facebook is not worth $33 billion

#189

Post by indiejade »

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…

Secondly, EVERY SINGLE COMPANY IN THE WORLD that has shares that trade is valued by taking the last share traded and multiplying by the number of shares outstanding. It's just the DEFINITION of valuation

Facebook is not (yet) public, which is a massive factor relative to the calculation of its book valuation. Presumably, at least on the surface, all of this facebook hype of late would indicate that what used to be a closely-held entity is quickly becoming ripe for the IPO market. What the actual valuation is (or will be) cannot be determined until the free market goes to work on it.

But then again, speculation, anticipation, and fear . . . these have all been attributed to major market fluctuations, crashes, overnight millionaires . . .

Re: Facebook is not worth $33 billion

#190

Post by bad_user »

kwamenum86 wrote: post #71
timr wrote: post #26

Earlier quoted context omitted.

"Secondly, EVERY SINGLE COMPANY IN THE WORLD that has shares that trade is valued by taking the last share traded and multiplied by the number of shares outstanding. It's just the DEFINITION of valuation. It's TAUTOLOGICAL." Indeed. And Pets.com was worth $100 million on the day of its IPO. And tulip bulbs were worth more than a man's annual salary in 1637. And that house down the street was worth a million dollars l…

Value is determined by what someone- anyone- will pay for something. And it makes sense if you think about it. The goal is to find out how much you can sell that something for and it is the exact same problem as figuring out how much someone will pay for that something. Company valuations are messier than tulip bulb valuations though. With tulip bulb valuations you are saying that since someone will pay x the bulb is…

> Value is determined by what someone- anyone- will pay for something.

Not "someone", but THE MARKET ... when you buy a piece of Facebook, but won't be able to sell at least at the same price, then you're the loser ;)

When multiple losers gather and start buying stupid shit with no value to THE MARKET, that's called a BUBBLE, that will burst sooner or later.

The trick for estimating if "the valuation goes up" is to see if that company actually provides value (i.e. actual profits, since that's the only goal of a company) ... and in that light, DHH's opinion makes a lot of sense.

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