7 ms·

Facebook's Thiel Explains Failed Twitter Takeover

41 points by markbao 18y ago

tokenadult 18y ago
"Thiel won't say precisely where he values the company other than to say, 'It's worth more than people think it is.'" I suppose that most investors desire a greater degree of specificity about a company's valuation before investing, especially in today's market.
- tritchey 18y ago
  I laughed out loud when I read that quote. Facebook's valuation is ENTIRELY based on what other people think it is worth.
  - moonpolysoft 18y ago
    All companies are valued entirely based on what other people think they are worth. See also: the stock market.
  - prospero 18y ago
    It's based entirely on what people think it is worth, given disclosure of the relevant details. No one outside of Facebook (and, presumably, its investors) has that information. That being said, I don't think Facebook is being honest with themselves or anyone else with respect to their valuation.
djahng 18y ago
I think Twitter handled the issue of being bought with 80% Facebook stock very well. After all, how does Facebook even determine their own value? They have revenues, but not enough to justify a valuation as high as $9 billion. Facebook probably bases that valuation on the marketability of their user base. But how do you place a dollar amount on a number of users?
- Devilboy 18y ago
  I believe that marketing firms have some sort of price gauge per person depending on how much information you have on each person (and other factors)
- jupiter 18y ago
  Same question applies to the valuation of Twitter. What's even more delicate: should same methods of valuation be used for both?
- jeroen 18y ago
  I think this says a lot about that $9B valuation: Twitter agreed on one condition: that the Facebook stock it received be valued at the price company shares garnered on the open market. Facebook blinked and the deal talks ended.
JulianMorrison 18y ago
Twitter would be stupid to allow their company to be bought by yesterday's men at Facebook. FB is a fad amusement for extroverts, Twitter is a communications medium. One is vastly more of a long term proposition than the other.
- briansmith 18y ago
  Unfortunately, mocking of delusional fanboyism is hard to discern from actual delusional fanboyism.
zandorg 18y ago
Reading between the lines, they're not avoiding revenue solely to get/keep more users - I think they're doing a last man standing, and waiting for all their competitors to run out of cash and go out of business. Then they bring on the adverts, because there's no competition by then, and nowhere to jump to.
- briansmith 18y ago
  Technologically, it is very easy to start a competitor to Facebook/Twitter (the scaling is the hard part, not the starting). So, there will always be competition until the biggest players can somehow raise the cost of entry by a few orders of magnitude. Socially, I don't think it is that hard for people to migrate from Facebook/Twitter or something else. I think a lot of people think about competition in this area happening like a huge number of people stop using Facebook/Twitter and start using a competitor almost simultaneously. That is kind of what happened in the past, but only because the old social networks had serious problems. Now, significant shifts will still happen but they will be a lot more gradual. A lot of people are on multiple social networks already (e.g. Facebook, Twitter, GitHub, Mixi, Linked In, Flickr). Over time, each user's the proportion of page views on each site changes gradually but often significantly. Facebook/Twitter might remain the site (almost) everybody has in common, but I doubt it will continue to enjoy the huge share of users' attention it has now.
  - omouse 18y ago
    >the scaling is the hard part, not the starting The scaling isn't the hard part when you have some cash to hire ex-Facebook, ex-MySpace, ex-<insert large website here> employees.
- rokhayakebe 18y ago
  That scenario is not likely to happen because the same Facebook users are also members of other social networks. It is not as if you are Facebook user, you won't have an affair with Brightkite. Ultimately Facebook will end up being two simple things: the biggest address book (maybe) and the biggest photo sharing site. Everything else will go on to sites that specialize in one area. Users will go to Twitter to share links and update their status, they will use Gmail for messaging, I'll keep using HN for Discovery and not the FaceFeed etc...

41 points by markbao 18y ago

"Thiel won't say precisely where he values the company other than to say, 'It's worth more than people think it is.'" I suppose that most investors desire a greater degree of specificity about a company's valuation before investing, especially in today's market.

tritchey 18y ago
I laughed out loud when I read that quote. Facebook's valuation is ENTIRELY based on what other people think it is worth.
- moonpolysoft 18y ago
  All companies are valued entirely based on what other people think they are worth. See also: the stock market.
- prospero 18y ago
  It's based entirely on what people think it is worth, given disclosure of the relevant details. No one outside of Facebook (and, presumably, its investors) has that information. That being said, I don't think Facebook is being honest with themselves or anyone else with respect to their valuation.

djahng 18y ago

I think Twitter handled the issue of being bought with 80% Facebook stock very well. After all, how does Facebook even determine their own value? They have revenues, but not enough to justify a valuation as high as $9 billion. Facebook probably bases that valuation on the marketability of their user base. But how do you place a dollar amount on a number of users?

Devilboy 18y ago
I believe that marketing firms have some sort of price gauge per person depending on how much information you have on each person (and other factors)
jupiter 18y ago
Same question applies to the valuation of Twitter. What's even more delicate: should same methods of valuation be used for both?
jeroen 18y ago
I think this says a lot about that $9B valuation: Twitter agreed on one condition: that the Facebook stock it received be valued at the price company shares garnered on the open market. Facebook blinked and the deal talks ended.

JulianMorrison 18y ago

Twitter would be stupid to allow their company to be bought by yesterday's men at Facebook. FB is a fad amusement for extroverts, Twitter is a communications medium. One is vastly more of a long term proposition than the other.

briansmith 18y ago
Unfortunately, mocking of delusional fanboyism is hard to discern from actual delusional fanboyism.

zandorg 18y ago

Reading between the lines, they're not avoiding revenue solely to get/keep more users - I think they're doing a last man standing, and waiting for all their competitors to run out of cash and go out of business. Then they bring on the adverts, because there's no competition by then, and nowhere to jump to.

briansmith 18y ago
Technologically, it is very easy to start a competitor to Facebook/Twitter (the scaling is the hard part, not the starting). So, there will always be competition until the biggest players can somehow raise the cost of entry by a few orders of magnitude. Socially, I don't think it is that hard for people to migrate from Facebook/Twitter or something else. I think a lot of people think about competition in this area happening like a huge number of people stop using Facebook/Twitter and start using a competitor almost simultaneously. That is kind of what happened in the past, but only because the old social networks had serious problems. Now, significant shifts will still happen but they will be a lot more gradual. A lot of people are on multiple social networks already (e.g. Facebook, Twitter, GitHub, Mixi, Linked In, Flickr). Over time, each user's the proportion of page views on each site changes gradually but often significantly. Facebook/Twitter might remain the site (almost) everybody has in common, but I doubt it will continue to enjoy the huge share of users' attention it has now.
- omouse 18y ago
  >the scaling is the hard part, not the starting The scaling isn't the hard part when you have some cash to hire ex-Facebook, ex-MySpace, ex-<insert large website here> employees.
rokhayakebe 18y ago
That scenario is not likely to happen because the same Facebook users are also members of other social networks. It is not as if you are Facebook user, you won't have an affair with Brightkite. Ultimately Facebook will end up being two simple things: the biggest address book (maybe) and the biggest photo sharing site. Everything else will go on to sites that specialize in one area. Users will go to Twitter to share links and update their status, they will use Gmail for messaging, I'll keep using HN for Discovery and not the FaceFeed etc...