Facebook is not worth $33 billion • Hacker News Board

Re: Facebook is not worth $33 billion

#201

Post by run4yourlives » Thu, Sep 23, 2010, 8:57 PM UTC

matwood wrote: post #178

run4yourlives wrote: post #95

Earlier quoted context omitted.

Argument to Authority is a logical fallacy.

That logical fallacy always bothers me especially in cases where experience and inside knowledge are crucial to forming an opinion. The people listed above all have experience, knowledge and are more qualified to value companies than many other people. Of course it doesn't make their opinions absolutely correct, but it does lend some legitimacy to the FB valuation argument.

The people listed above all have experience, knowledge and are more qualified to value companies than many other people.

I've got a dot bomb crash, real estate bubbles and sub-prime mortgages that say otherwise.

No offence to any of them personally, and I'm not about to argue FB's actual valuation, but they all have a vested interest in making us all believe that it is as high as possible.

They are the last people one should be looking at when making an investment decision.

Re: Facebook is not worth $33 billion

#202

Post by TWAndrews » Thu, Sep 23, 2010, 9:00 PM UTC

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…

Right. But unless you think there's someone (or a set of someones) who would pay 33B for all of Facebook, it's not unreasonable to assert that it's not worth that much.

Re: Facebook is not worth $33 billion

#203

Post by TWAndrews » Thu, Sep 23, 2010, 9:03 PM UTC

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.

"rough estimates of 2 billion facebook users"

Right. Because the Chinese and Indian Peasantry is definitely going to be on FB.

Re: Facebook is not worth $33 billion

#204

Post by marclove » Thu, Sep 23, 2010, 9:08 PM UTC

JabavuAdams wrote: post #193

marclove wrote: post #182

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…

Right. The moment Facebook starts charging me money is the moment I stop using Facebook.

Well no reason to worry, cause Facebook isn't that stupid. They'll always make their money through indirect means, either through processing payments, displaying ads, giving companies access to data, etc.

Re: Facebook is not worth $33 billion

#205

Post by portman » Thu, Sep 23, 2010, 9:29 PM UTC

krschultz wrote: post #198

mikeklaas wrote: post #148

Earlier quoted context omitted.

Never use tech-savvy people as representative examples when evaluating advertising. Otherwise, even google would be out of business.

The problem with the comparison of Facebook VS Google is that Google advertising is fantastically targeted. You literally type into Google "I have this problem" and get a bunch of ads solving that problem . It is practically the holy grail of advertising. Now consider that it is a catch all for personal and corporate questions, it is a cash cow. It is perfectly acceptable to google something at your job, click on a l…

Speaking as someone who has spent $30,000 on Facebook ads in the last several months: Facebook advertising is fantastically targeted as well.

Google ads work when there is so-called "purchase intent": I know I want a new waffle maker, so I search for it.

Facebook ads work when there is demographic correlation: I just got engaged, and I might not know that I now need a waffle maker, but a Facebook ad can target me and tell me that I should be adding a waffle maker to my wedding registry.

Different kids of targeting, both extremely powerful.

Re: Facebook is not worth $33 billion

#206

Post by portman » Thu, Sep 23, 2010, 9:33 PM UTC

lovskogen wrote: post #65

spolsky wrote: post #20

Earlier quoted context omitted.

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

Haven't got a dime from me, and they don't have an idea on how to.

Have you viewed more than 300 pages on the facebook.com domain in your lifetime?

If so, they've gotten a dime from you.

3 ads per page, each ad selling at a $0.10 CPM.

Re: Facebook is not worth $33 billion

#207

Post by borism » Thu, Sep 23, 2010, 9:49 PM UTC

just a small point of disagreement here - Forbes is not a serious publication

Re: Facebook is not worth $33 billion

#208

Post by protomyth » Thu, Sep 23, 2010, 9:51 PM UTC

I wonder what the % of message traffic is on Facebook compared to SMS or e-mail?

Re: Facebook is not worth $33 billion

#209

Post by mta » Thu, Sep 23, 2010, 9:53 PM UTC

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…

There are numerous methodologies for valuation. "last share traded" is by no means the ONLY method. Markets by definition are made up of actors who independently value commodities in various ways, none of which are definitively the only valuation method. Is that tautological enough for you?

Perhaps a little more humble thoughtfulness, rather than indignant ignorance, would do you some good.

Re: Facebook is not worth $33 billion

#210

Post by bernardmoon » Thu, Sep 23, 2010, 10:01 PM UTC

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…

Sure, but I would hardly call secondary markets for startup shares a valid market or even try to compare it to public market. Come on, Joel!

So you would agree with the valuation of Slide or Ning a few years ago? Maybe. Would you now? No. Valuation of private companies is not a science but an art. That's startup 101 stuff. Do you really call Sharepost a market most investors would call credible? Please.