Facebook, having turned down at least one verified $1 billion buyout offer, is now saying they aren’t for sale. CEO Mark Zuckerberg and board member Peter Thiel aren’t stopping there, either. They’re also saying the company may build towards an IPO, and is worth at least $8 billion today.
Mark Zuckerberg:
We are not necessarily focused on what the exit is going to be – whether it’s selling the company or an IPO or when that’s going to be,” Zuckerberg said in an interview. “But we obviously think that there’s a lot of potential to keep growing.”
Peter Thiel:
“It’s going to remain an independent company,” Thiel said in an interview last week. “The plan is to actually build it, maybe at some point take it public, but definitely not to sell it.”
In July, the messaging coming from YouTube was nearly identical:
“Right now we’re just concentrating on proving the best user experience possible,” [CEO Chad] Hurley said. “We have no plans to sell.” As for an initial public offering, Hurley said, “If we have an opportunity to go public in the future that would be very exciting for us.” He also brushed aside reports that the value of the company jumped to $1 billion from $600 million because of his appearance at the Allen & Co. confab. “We’re not even focused on that,” he said. “There’s a lot of people talking about that in the blogs and in the media. A lot of this is news to us.”
YouTube sold to Google for $1.65 billion in October, two and a half months later.
Everyone has a price. Everyone.
I’m not sure where Zuckerberg gets his figures but he always seems to be way out of line with what the rest of the world thinks. I’ll give them credit for growing Facebook and also taking stock from Myspace lately, where it looked like they were really fighting an uphill battle, but the idea of valuing yourself more than Youtube is absurd. Especially seeing how they still haven’t figured out a decent way to monetize their site after all these years.
Looks like the Make ME Move Strategy to derieve higher valuations.
God, what would it be like to be Zuckerberg and/or Hurley right now, to have created something so wide-reaching at such a young age.
Is anyone besides Michael cheering for this little twit? What kind of DCF analysis would justify $8B? Although it’s December, I think it’s time for shorts.
Facebook should take the billion $ offer anytime and not be greedy.
This sounds more like the pack has moved on from sniffing around them and them trying to make it seem they never had any interest in selling in the first place. I’ll start my stopwatch now and we’ll see what happens in 2.5 months from now. My guess: not much.
After a series of buyout talks that failed to make a deal, the best way to excuse themselves from being too over their heads about what Facebook is worth and not getting what they think they deserve is to proclaim “YAH, we are not for sale” ….. Brilliant.
The primary difference was YouTube had been suffocating from continuing legal challenges and a whole future. Also, they were just treading water as far as bandwith goes until a suitor put in a bid.
Facebook being worth $8 billion? Well, Yahoo seemed to think they were going to be worth it when they were valuing them. Didn’t anyone see the inside document listing the Yahoo valuation. Whether we agree Zuckerberg is dreaming is not the issue, the issue is do people who have the resources to buy facebook see it being worth billions?
Here’s what I would like to know… How does this affect the morale of people working their asses off for Zuckerberg? People who are working at FB because they got an interest in the company and have been working for the moment that FB sells big and they cash out? I’d be a little worried myself that Zuckerberg’s valuation of the company is too high and will continue to let great offers pass by…
What a great headline! That’s totally true. hehe.
I don’t know. I don’t think that “social networking” is necessarily going to continue to climb but they’ve got a high traffic platform and all kinds of things can be built on something like that. The traffic’s the hard part, believe me and they’ve got enough to make them interesting. Plus, the 2008 election is coming and everybody’s anticipating (of course) that it’ll be huge on the Web – college students are always a hot button for candidates, I would think there could be some good money to be made off a site that attracts such a big, targeted college audience. MySpace as well, but I don’t think “registered voters” comes to mind nearly as much as with Facebook’s audience.
I admire what Mark’s done because this stuff isn’t easy, but timing, the fact that few were doing anything like it when they launched (and EVERYBODY’s trying to do it now), etc., probably played more of a factor in Facebook’s success than people think. I don’t know if he’s a twit but I admit that sometimes when I read his quotes pertaining the business, I think of those little dolls who talk when you pull a string. It sounds so scripted and forced.
I’d take his shoes anyday, though
Dear Mark,
What you in your team have created is next to genius and people who fail to learn from history will repeat it. Epionions back in the day had a 750M offer they turned it down, a few weeks later the bubble popped, offers were retracted and there 250M debt forced them into bankruptcy. America is headed for some very tough times the real estate bubble will have catastrophic cascading effects, bottom line big buyout offers will evaporate. Consider the old farmers quotation (Pigs get fat hog’s get slaughtered.), learn from history.
It’s always tough when it comes to valuation, especially an $8B valuation. However, I am a huge believer in Web 2.0 and any other companies that can drive high traffic and readership has a chance of being acquired for lots of money. In today’s world, it’s all about traffic, because traffic generates advertising dollars. The more eyes on the site, the more dollar made.
http://davidchao.typepad.com
Good way to ease the anxiety among staff. Anybody who is or has been a part of the corporate world knows how unsettling these rumors cand be.
Although if they feel the shop is worth or valued 8 big ones why is there even a discussion about a $1.0B offer? Hmmm maybe its a way to get the real asking price out there…hmmm….
Facebook is either really stupid, or really smart. For starters, they won’t have an M&A for anything north of $2B – not gonna happen… YouTube is more valuable than Facebook and sold for $1.6B.
On the “smart side”, they could be inflating the price to unrealistically high levels just to nudge up their value to that $2B mark, so other companies think they are “getting a deal”. I think the acquisition talks with Yahoo pretty much died when Facebook showed their arrogance.
As for an IPO, you have got to be kidding me (times 10). I envision their IPO to be just like the ones from the 90’s… Their stock will skyrocket on opening, making the founders billionaires on paper, only to tank a few months later. By the time the founders are allowed to liquidate any stock options, their individual value will be far less than what hey would have received with a Yahoo buyout.
The difference is that Facebook is profitable whereas Youtube still needs ways to find revenue.
It could just be that Zuckerburg likes building things and this thing is still really in its infancy? Fb make a hell of a lot of money, and they haven’t even really focused on that yet. If you think about the global market as well, there’s a lot of expansion to be had. As a regular user of facebook, they have brought all these “web 2″ phenomena mainstream to students. Photo sharing and tagging, notes (blogging), facebook-shares etc etc, it really is quite impressive. I’m a big fan and would rather they don’t sell out because they genuinely are building an incredible product, it has some way to go yet.
They will no doubt sell. Mike points out the standard PR language that Youtube was floating out there during their courtships.
Mike you nail this one. Facebook is worth more than YouTube in my opinion.
http://podtech....e-than-youtube/
$8B?? Good F-ing luck. YouTube was in a totally different scenario as they were the market leader in Video Sharing. Facebook isn’t even close to MySpace’s size & scope. Add in the fact that they’ve pissed off nearly every big media company thus far, their allies are running low and if they’re not able to sell more than 10% of their ad inventory they better have an ace up their sleeve or else it’s Friendster Part Deux.
I think there just being greedy!….little kids
Are they crazy? Cash out and buy an island, lay on the beach and sip fruity drinks all day.
“However, I am a huge believer in Web 2.0 and any other companies that can drive high traffic and readership has a chance of being acquired for lots of money.”
I am sure you were a HUGE BELIEVER in the “new economy” too.
It will all end soon enough. Until it does, good luck and congratulations to those who do get the buyouts. But eventually, you have to make money, not just traffic.
Social Networking is an amazing tool and will continue to connect the people of the world. But haven’t we seen this before? This Mania?
It’s the dot com bubble of social networking. There are social networks for every interest under the sun and everyone is chasing after the bandwagon right now because they missed it.
Just like anything else, the cream rises to the top. There will be a big consolidation of social platforms since the supply is way more than the demand. Demand in this case being the total amount of interest (traffic+attention) that exists.
It’s exciting because everyone is finding all these wonderful new toys to play with. But like any new toy it gets played with a lot at first then gets set aside. Psychology of Human Behavior tells us that people might use this, but will eventually fit into their normal patterns of behavior. (ie. less interest as a percentage of their life) Recall the “New Economy”
Mr. Furrier (#18),
Your claim that Facebook is worth more than YouTube was challenged by your star podcaster, Robert Scoble, in the blog post you link to.
I’m a fan of Robert Scoble and I check his blog no less than 5 times a day, but I’ve since visited PodTech, your company, a total of 5 times. Allow me to explain why:
#1 I spent the first 3 visits to your site, PodTech, trying to get the Quicktime player to work, and I’m a tech savvy guy. Other people have complained about it too, but did you listen? No.
#2 Scoble’s fans have tried to persuade him and you to switch to Flash player, which even Microsoft has conceded is a better online video delivery platform and is now using for its Soapbox video uploading site. Were you swayed? No.
#3 YouTube is popular for many reasons, one of which is its under-10-minutes short-clip culture. The length of PodTech’s videos is excruciatingly long, for talking heads, which many on Scoble’s blog have criticized. Did the feedback work? No.
I will say this: you got the “chutzpah” to do exactly what you want to do. Bush and Rumsfeld got the “chutzpah” to say “stay the course” all these years, and look what happened.
I don’t think this is good news for facebook. I know a couple of people from facebook that trying to get their old job back and leave facebook. I think facebook is played out, and Mark needs to step-down and let someone with more CEO level experience run the place before it is too late. I’m sure their investors will start putting pressure on him soon. Very greedy.
If the price is right, then …..
Stay tuned!
“If pursuing profit is greed, economist Walter Williams told me, then greed is good, because it drives us to do many good things.”
http://www.libe...ivemeabreak.php
$8 billion. Ha!
I agree with Wayne Lambright. They’re ignoring history. Peter Thiel is in a position to introduce Zuckerberg to the concept of sanity, and it’s funny that he’s going along with this. The irony is that Peter is betting the farm on an economic doom and gloom scenario with his $2.1 billion macro hedge fund. For every dollar under management, they’re borrowing $3 – $8 so that they can amplify their returns. The two points about this:
- Peter himself is ignoring history because funds betting on extreme scenarios using massive leverage have almost always crumbled when they inevitably made a bad bet. It’s not a question of if, it’s a question of when.
- If Peter really believes in this doom and gloom economic scenario and that it’s coming sooner than later, does he really think that anybody is going to value Facebook at $8 billion? Wouldn’t he be encouraging them to cash out now? In the future he sees, oil goes above $100, the real estate bubble bursts and there’s massive deflation. Needless to say, if he’s right his hedge fund will do very well but the public markets will be chaos and a company like Facebook isn’t going to be relevant given what’s happening to the global economy.
I’m calling BS on this and think they’ll probably sell sooner than later. Or this is a face-saving measure because the companies with the money to buy Facebook have decided to pass.
They make ~$60mm a year and think it’s worth $8bb? Honestly, it’s laughable how immature some of these statements are. Going public? Are you kidding me?
If they analyzed their threats in their marketplace, they’d be wise to sell asap. They are assuming the industry is in a state of inertia, but in the next year I’m sure we’ll see another hip, college-only site come along, and start to eat away at their user base.
Here’s something to consider – a lot of people in college are not addicted to Facebook, their addicted to the social experience it offers. However, Facebook doesn’t do a very good job with this experience. All of their recent launches have failed to garner much positive interest or use. If the experience can be improved elsewhere, people will slowly switch once their networks start to shift over.
Arg, “they’re” :/ Too early for me
If profit in social networks is proportional to traffic then this is very interesting:
http://www.alex...mp;r=2y&z=1
nice headline, Mike. btw why weren’t you in Paris on Tuesay?
i don’t get facebook. i get myspace.
Everyone is always talking about the bubble bursting… Web 2.0 is much stronger than its predecessor, for it was far ahead of its time. Since the first dot com bubble the internet has grown in leaps and bounds. Watch the figures that come out after this holiday season on how much consumers spent online this year. People are turning away from the “SALE!!!” signs at brick ‘n’ mortar stores to find a much better deal online. The internet is growing, and that is what these sites are counting on. The nay sayers speak for themselves… When have you ever seen a nay sayer in the position of Zuckerberg?
I’m sure everything has it’s price but i think this would have been Mark’s deal of life. It’s time to sell Facebook and realize a new idea – or maybe two, three, four…
Facebook is just the next generation of communication on the internet. It’s version 3.0 of email. That’s huge. They could easily slip up and lose it, but I admire them for trying.
I wish them well, I am sick of companies with tons of potential sell out to a bigco and basically slow or even halt development and originality.
Seems like there is some over-valuation in this market.
…famous last words:
“This ship is unsinkable!” (Titanic)
“I am not a crook!” (Richard Nixon)
“We’re not for sale!” (any Internet company about to be bought…or secretly hoping that someone will do so)
Thanks #20
The answer is: Yes; comparing to bush and rummie is weak. You will see flash, short videos, and more stuff soon.
#24: don’t take our inaction to be comparable to not listening. A Flash player is coming.
As to length of videos. Some of my videos are three minutes long. Some are 50 minutes long.
I think you need length to get into depth on a topic. If you don’t want depth, then my show probably isn’t for you. If you want something like “Will it Blend” then, yes, YouTube is a great platform.
@David P
A bubble is a bubble, and it must surely burst one day.
A very important concept is that have people actually integrated facebook or other social networking concepts into their everyday lives?
That may be seen by this time next year.
This is yet another community buiding software package. I took the tour and I notice similarities between this and linkedin.com or a smarter version of myspace.com. But come on…. 8 Billion?
Unless we see what the big picture is, and im sure there is one, it is going to be hard to justify that kind of price.
Facebook will sell. Period. $8 Billion? Only Google would pay that. Maybe Microsoft if they got desperate…. But they have the whole pride thing pretty down, so I’m pretty sure MS holds whatever network they have as more valuable than Facebook.
Yahoo will try again and again to get Facebook, but will likely fail. I doubt Facebook will actually sell for $8 Billion though. They *might* be able to con Goolge into paying $2-3 billion. Otherwise…..
–Jon Z | http://www.jzencovich.com
If they value Facebook at $8 billion, I can’t imagine how much MySpace is worth now using there valuations.
there’s been comments about the advertising dollars not being there because people don’t look at and respond to banner ads on the sides of pages, or whatever…
then the company is dismissed as unprofitable.
$8 billion to me means that they’re thinking about the long-term markets to go after based on their position. the ones that people aren’t talking about too much here (except for TC itself, oddly). i think facebook is thinking about virtually any type of consumer-facing web service/experience imaginable.
socially useful software is generally hard to do right, there’s a ton of potential that’s not being taken advantage of — and facebook is a leader in social software.
that’s the argument that i want to hear refuted by the commenters, not the specific value of banner ad placement.
I think those three YouTube founders just totally lucked out. With the coming economic downturn, large acquisitions will be a thing of the past.
@Drama 2.0, have you considered this may be a hedging strategy on Thiel’s part? If Thiel is wrong about his doom and gloom prediction (which would be disastrous for his hedge fund) then Facebook would still be doing very well, probably. On the other hand, if he’s right about his doom and gloom prediction, his hedge fund will do awesome, and Facebook will crash. In either case, Thiel is set.
Mark Throntveit: Unfortunately, I don’t see a very good hedge here. When you’ve got $2.1 billion in capital and are juicing returns using $3 – $8 in borrowed money for every real dollar on very extreme outlooks, Facebook (a company generating less than $75 million in annual revenues) doesn’t look like much of a hedge. Individually, if he pulls off an $8 billion buyout or IPO for Facebook, which looks unlikely, then he’d have some safety net, but the investors in his hedge fund, which is separate, aren’t going to be too happy. One 7% investment in a company generating such limited revenues, no matter how hyped, does not constitute a strong hedging or diversification strategy for such a large bet on an extreme macroeconomic outlook. If Thiel actually thought it did, the investors in his hedge fund would be wise to find somebody else to invest their money with. I could never imagine a guy like George Soros claiming that his hedging instrument was an investment in a private company like Facebook.
what makes an internet company valuable?: what position? For the most part, all of the other “long-term markets to go after” already have very strong competition. International college social networks like Univillage swooped in on the college markets overseas because Facebook didn’t expand internationally fast enough. MySpace and Bebo dominate with high schoolers, and newcomers like Piczo seem to be gaining traction with tweens and teens. The corporate market is locked up by LinkedIn and Xing. Facebook has tried expanding into these markets and I think it’s clear that it hasn’t had much success. Just look at the Alexa comparison Flavio Rump posted. Facebook’s opening to the general public didn’t really generate much mainstream buzz. By that time, most people were already on open social networks like MySpace and I suspect that most of the signups from general users were just to check it out, not to use it on a daily basis.
As I’ve pointed out before, Facebook from a technology standpoint does not have anything incredibly special, and its clean, simple interface that can’t be customized by users is in fact a heavy disadvantage in many markets where users want to express their individualism and identity.
There is no “big picture” for Facebook. They have little to no advantage in any market outside of the college market in the US and this is a finite market. There’s no guarantee that they’ll maintain a dominant position here (people may tire of social networks, something better might come along, etc.) and significant growth prospects look tenuous at best.
No one’s got that kind of dough to waste, not AOL, not even Yahoo who’s now semi-officially back into the dollar-stretching era. Didn’t AOL say something along the lines that they couldn’t afford youtube though they’d been eying it? It’ll come down to MS and Big G., both of which won’t touch it because besides the integration nightmare, who says it won’t turn into another orkut, or worse friendster. Sites like facebook stand on shaky grounds, anyone can offer better (3 free itune songs for every sign up, 5 for referral, 1/week for staying active? Anyone?)
@46, 47
Thiel is a smart dude – he’s not hedging his hedge fund & FB, but he’s hedging FB & LinkedIn. Am sure there is pretty much strong correlation between people who are likely to sing-up for FB and then sign-up to LinkedIn once they graduate (they are used to being ,,out there”). So even if FB crashes, who cares, they have stimulated a market for college social networking, which feeds into LinkedIn. Win win.
There might be many competitors to FB, but how many are there to LinkedIn? They are much better positioned than FB – professionals aren’t going to switch their 100 contacts into some new network overnight… But I wouldn’t be so sure with college kids.
# 37 – So by reason it must mean Digg will be bought soon too