4 ms·

"Facebook has been around for seven years. It has 500 million users. If you can’t figure out how to make money off half a billion people in seven years, I’m goi

by ulf 16y ago

"Facebook has been around for seven years. It has 500 million users. If you can’t figure out how to make money off half a billion people in seven years, I’m going to go out on a limb and say you’re unlikely to ever do." This is a strawman. If they wanted to make money right now they would. But they also observed many examples of turning-the-faucet-on gone wrong, especially with the whole privacy issues, that they are moving very carefully in that space. But they will make a lot of money if they decide to start.

Andrew_Quentin 16y ago
what exactly are they waiting for? They have half a billion users. You know, that is more than America and Russia together, or comparable to the entire population of the geographical Europe. They can only go down hill from here I think. Therefore, personally I certainly would not wait. The truth is really that they do not know how to monetize themselves effectively
- pclark 16y ago
  No offense but have you taken more companies public than: * Marc Andreessen * Jim Breyer * Peter Thiel because they are some of the directors on the Facebook board, and I think they know their stuff.
  - run4yourlives 16y ago
    Argument to Authority is a logical fallacy.
    - matwood 16y ago
      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.
      - pbhjpbhj 16y ago
        Of course simply stating that "Argument [from] Authority is a logical fallacy" is it's self an argument from authority, one is trusting the author to have properly researched the fallacious nature. Petty arguments aside... Something being logically fallacious does not make it false, all it is saying is that the premise [that top business minds that have successfully done this sort of thing in the past] does not prove the conclusion [that they know what they are doing/ will be successful now]. Of course it doesn't prove it, no more than knowing someone is Jewish male proves that they are circumcised, it just provides a strong suggestion as to the outcome.
      - run4yourlives 16y ago
        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.
  - code_duck 16y ago
    I can think of a couple fairly lousy companies associated with at least two of these fine fellows. Their being involved does not say anything about Facebook's potential to make money.
- bl4k 16y ago
  My best guess is that they are waiting to book an entire year of platform revenues - which will give investors a better idea of what their business model actually is. This time next year they will have 12months of ads + platform revenue to show off. Their business model hasn't been complete up until now. That is why they opened and sanctioned the secondary market, because of employee pressure and because they had to buy time before going public. Besides companies prefer to remain private, esp because of the amount of overhead being public adds (esp after Sarbanes Oxley). The role of CEO completely changes when you are a public company. If anything the reluctance to go public is a good thing, since it means that Facebook are thinking it through and establishing themselves - not making a dash for cash. Google was also very reluctant to go public, but the SEC and their own employees forced the issue. This is going to be one hell of an IPO.
- mrtron 16y ago
  While the exact numbers are obviously not available - something like 500 million was spent on FB ads in 2009 and in 2010 that number is likely a billion. I don't take David's flawed 'they wouldn't raise money if they were making good revenue' as a valid statement. The revenue they make is all profit - there is no middle man or hidden expenses. They have operating costs which are sizeable, but it as they grow and mature their business and revenue - their profit will grow.
mrtron 16y ago
Facebook makes a sizeable amount of revenue now. Why does everyone talk about them like they don't make a dollar?
- Retric 16y ago
  To be worth 33 billion they should be pulling in ~1.5 billion in profit a year with a reasonable expectation that they will increase over the next several years OR they are going to make significantly more than 1.5 billion a year fairly soon. I suspect FB could start making 1 billion a year fairly soon, but suggesting they are going to be make 3+ billion each and every year within 5 years seems like a significant stretch.

by ulf 16y ago

Andrew_Quentin 16y ago

what exactly are they waiting for? They have half a billion users. You know, that is more than America and Russia together, or comparable to the entire population of the geographical Europe. They can only go down hill from here I think. Therefore, personally I certainly would not wait. The truth is really that they do not know how to monetize themselves effectively

pclark 16y ago
No offense but have you taken more companies public than: * Marc Andreessen * Jim Breyer * Peter Thiel because they are some of the directors on the Facebook board, and I think they know their stuff.
- run4yourlives 16y ago
  Argument to Authority is a logical fallacy.
  - matwood 16y ago
    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.
    - pbhjpbhj 16y ago
      Of course simply stating that "Argument [from] Authority is a logical fallacy" is it's self an argument from authority, one is trusting the author to have properly researched the fallacious nature. Petty arguments aside... Something being logically fallacious does not make it false, all it is saying is that the premise [that top business minds that have successfully done this sort of thing in the past] does not prove the conclusion [that they know what they are doing/ will be successful now]. Of course it doesn't prove it, no more than knowing someone is Jewish male proves that they are circumcised, it just provides a strong suggestion as to the outcome.
    - run4yourlives 16y ago
      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.
- code_duck 16y ago
  I can think of a couple fairly lousy companies associated with at least two of these fine fellows. Their being involved does not say anything about Facebook's potential to make money.
bl4k 16y ago
My best guess is that they are waiting to book an entire year of platform revenues - which will give investors a better idea of what their business model actually is. This time next year they will have 12months of ads + platform revenue to show off. Their business model hasn't been complete up until now. That is why they opened and sanctioned the secondary market, because of employee pressure and because they had to buy time before going public. Besides companies prefer to remain private, esp because of the amount of overhead being public adds (esp after Sarbanes Oxley). The role of CEO completely changes when you are a public company. If anything the reluctance to go public is a good thing, since it means that Facebook are thinking it through and establishing themselves - not making a dash for cash. Google was also very reluctant to go public, but the SEC and their own employees forced the issue. This is going to be one hell of an IPO.
mrtron 16y ago
While the exact numbers are obviously not available - something like 500 million was spent on FB ads in 2009 and in 2010 that number is likely a billion. I don't take David's flawed 'they wouldn't raise money if they were making good revenue' as a valid statement. The revenue they make is all profit - there is no middle man or hidden expenses. They have operating costs which are sizeable, but it as they grow and mature their business and revenue - their profit will grow.

mrtron 16y ago

Facebook makes a sizeable amount of revenue now. Why does everyone talk about them like they don't make a dollar?

Retric 16y ago
To be worth 33 billion they should be pulling in ~1.5 billion in profit a year with a reasonable expectation that they will increase over the next several years OR they are going to make significantly more than 1.5 billion a year fairly soon. I suspect FB could start making 1 billion a year fairly soon, but suggesting they are going to be make 3+ billion each and every year within 5 years seems like a significant stretch.