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But the people that use facebook pay facebook $0 The people that use BMW pay BMW $50,000 Lose money on every customer but make up for it in volume is not a su

• muhfuhkuh 16y ago
  Somehow I highly doubt facebook is losing all that much money, hence their valuation. They're making it up on volume ad sales.
• justin 16y ago
  ... aggressive use of basic arithmetic is required to understand Facebook's model compared to high cost, physical goods. If Facebook makes $.10 in advertising off 500m people a month, and each person costs $.05 to serve, that is $25 million / month. If BMW makes $50,000 / car but only sells 1,000 cars a month, and each costs $25k to make / ship / sell then they are only making $2.5 million / month. Clearly both companies make more than that, but this is an illustration of how selling high cost goods might not be as profitable as a website used by 10% of the world.
  • ijuhyftgreduy 16y ago
    Facebook has revenues of $500M/year - which allows them to be cash flow positive, no word on how much profit. To be worth $50bn, 100x as much, it needs to find 100x as many users or earn 100x as much per user. BMW has $50Bn of earnings for selling 1M cars/year to make twice as much it simply has to sell 2M cars
    • gsmaverick 16y ago
      Citation for Facebook revenues? Recent rumours have it at ~$2 billion.