Facebook Loses $14 Billion In Value
Facebook has lost $14 billion in value in less than a year. With a 140 million users and growing Mark Zuckerberg’s social network company has gotten a reality check.The value of Facebook has been a hotly debated topic.
Last October Microsoft solidified Facebook’s value to the world, $15 billion. Microsoft got a paltry 1.6% stake in the company for $240 million. Some thought that Steve Ballmer had lost his mind. But what people didn’t realize is how smart he really was. To Microsoft, $240 million is a rounding error, so if they were really crazy they would have bought more of Facebook at an insane valuation. What was brilliant about this move was it established a public valuation for Facebook that was so high and unjustified no one on the planet would touch them. Unless you are Li Ka-shing the Chinese billionarie that put up $60 million at that valuation. Essentially it was a poison pill for anyone that would try to acquire them. (hint, hint, Google)
Even Facebook internally didn’t believe the $15 billion valuation. According to inside sources they were offering employees options at $10 billion and some employees got options at $5 billion. Mark Zuckerberg recently canceled a employee stock buying program when no company would agree that Facebook was worth $4 billion. So what is it worth now? Valleywag was reporting rumors of of people willing to sell their stock at $2.50-4.00, that would put Facebook’s valuation at $1.3 billion. If you look at the numbers Facebook is worth much less. Read more
Interview with Mark Zuckerberg
TechCrunch’s Michael Arrington, recently interviewed Facebook CEO Mark Zuckerberg. They talked about a variety of topics, but there were a couple things that were interesting. Facebook has but a lot of investment behind its platform and it recently launched its Facebook Connect service which we wrote about. Zuckerberg talks about the ways he views first party applications verses third party applications.
Zuckerberg says, “There’s this big question about whether we’ll compete with applications. The approach that we take isn’t that there’s some rule that we won’t compete with applications, but we just think that in general it’s not good for us to.”
What he is really saying is I will build first party applications when it’s in Facebook’s best interest. Anything that is really, really important to the community will be strategic to Facebook. Like music, Zuckerberg goes on to confirm that Facebook is working on a music application. Read more
Facebook Connect the New “Hailstorm”
Facebook is starting to stir up some noise around their Facebook Connect service. The New York Times said within a few weeks a number of prominent Web sites including Digg, Hulu, and CBS properties would weave Facebook Connect into their sites.
This is a lot like circa 2001 when Microsoft launch “Hailstorm”, a set of XML Web services that were going to give people more control over their personal information regardless of device or platfofm. “Hailstorm” later launched as a set of .Net services that were part of the Microsoft Passport service. It even launched with prominent Web sites like eBay and Expedia adopting it. Many of the people working at Facebook were probably enjoying college too much to remember. Facebook Connect is nothing more than “Hailstorm” connected to someone’s social graph.
