Facebook Raises Another $100 Million

50,000 servers sounds like Google c. 2002. However much we love to hate Facebook, they’re on the growth path. What would be their next offering? A news portal without the login walls?

Right.. site getting slow day after day… though not as bad as, hmm, friendster.

How many servers does Facebook operate now?

Main web trend - social one?

Sounds like they keep raising money before the bubble bursts

Advice for facebook, Enjoy while it lasts, because it does not last long.

I guess Mark doesn’t want to give up any more equity. Should keep his venture capital investors happy. No dilution!

Well What can I say. When I first saw Mysapce it looked really cool for kids between 12-15. Then I saw Hi5 and it was not bad as you could surf until you got tired of looking at profiles but that was about it.

Heard of Facebook about 3-4 years ago, and signed up. Still a Luddite to social network never really cared. The I saw 30 million people jumping on and how hi5 and Myspace has so many people yet I had no active user profile. U know friends (0).

I never liked the concept really for hi5 and Mysapce, how could a person have 200 friends much less 1,000. I said to myself waste of time. But then I saw Facebook even closer, I could keep my stuff real private and invite who I want. To cut a long story short I knew based on the features that Myspace is child’s play and Hi5 is just a fad.

Looking to launch all my Internet business I decided to join the crowd. And use what is the best platform to do so. All the applications on Facebook would make any Luddite change their mind.

Facebook is KING. Microsoft made a very wise move, and Facebook a wiser move not selling to Google. Let the tech wars begin.

@Andrew - you’ve hit it on the head. Successful web 2.0 companies will all (if they are not already) be looking to pile up their nuts for the upcoming economic winter not because they need it, but because cash is incredibly cheap at their current valuations. The trick is to differentiate the companies that need cash from the companies that don’t and are just being prepared. If any of us had that ability (we don’t), we’d be rich and not trolling comments.

Clever. It’s all about money…

I don’t undetstand one thing ? Does companies like Facebook keep all their servers in their office or does companies like RackSpace or Verio keep it with them and give Facebook full control over it?

I would love to know

That is a big figure I have to say! Really with so much data it is sure a big thing to manage it all!

Whoopdee friggin doo.

NO ONE CARES ABOUT FACEBOOK.

PLEASE WRITE ABOUT SOMETHING INTERESTING.

facebook/myspace are the new aol and prodigy

Facebook ad nauseum…get a real social life rather than spending an inordinate amount of web time doing mindless consumer social networking that has no to little business purpose.

Keep raising money before it’s fade

Mark Zuckerberg is extremely rich. He’s more famous than anybody around here. It’s wonderful… wonderful…. wonderful…

Facebook is one of those rare media darlings. For some reason the media loves Facebook. They are like Paris Hilton and Brittany Spears = comletly worthless yet always the lead story.

Anyhow, Facebook is the single biggest waste of one’s time ever invented. I predict that in 5 years people will study Facebook and Zuckerberg’s folly - not selling when they had the chance. 22 year old kids just dont have the experience to build a good company. These kids are lucky and full of hubris. A fatal combination.

Facebook Applications are extremely slow. Hopefully will speed them up somewhat, though the structure of apps (calls to different servers), will inevitably be quite slow.

I wish there was a way for me to invest $10k or something in Fb.

@Ad .. you have an outdated mentality. If you think Facebook got where it did because of luck, I’d advise becoming an accountant and leaving the risk taking to those with more vision (no offense to accountants ;).

@Ad - are you serious? How old do you think Bill Gates was when he started Microsoft? Do you think he did okay with that company?

when are they going to actually make some money in the real world?

dead pool 2 years

It would be better if someone were to tell us how much $ they still have. What I’m trying to say is, they originally had $393M, then are they just trying to raise money and use the “newly-raised-capital” for servers and keep $393M untouched? Also, how much do they still have from their original $393M? I don’t really know how their ad sales are or even where and how much they spend… Just curious to know how they’re doing.

To tell the truth, any social network becoming this big is not very good, because maybe in 4-5 years, people will start to realize that it doesn’t really offer anything of value, and everything just starts to come down.

Social Networking is not a survivable business.

Their burn rate must be about $20-40MM/Quarter.

We need to host our own profile..distributed social network.

@Ghaus - Facebook is a big company, so they will never let their infrastructure handle by others.

I use facebook to keep up with what my kid are doing, and also to blog. But I hate the notifications, the stupid apps request etc.

100million uniques / 50,000 servers = only 2,000 unique visitors per server each month?

This is without taking their existing servers into account.

I do not know that much about server capacity, but this does not seem right to me….anyone?

Interesting thing about this is that they are able to hit the debt market. There have been many (publicised at least) debt raisings of late.

@ Ad

22 year old kids don’t know how to build a company? Im willing to bet your company isn’t doing as well….

The $100 million is debt though. I don’t think it really makes sense to add that to the amount they have raised through equity. It does though raise a bigger question of why they are using debt rather than equity. Capital efficiency or valuation issues?

Time to put Servers on the Moon!

We need to figure out how to harness Lunar Power.

What will happen in the event of a Nuclear war?

All human related information will be destroyed!

Have Servers on the Moon for backup!

Michael Arrington can Tweet us from the Moon. lol

If 70M registered users, over 50K servers, gives 1400 registered users/server.

Pretty inefficient

@Nigel
I agree — why add debt to the balance sheet? Doesn’t seem like a smart move, especially with direction of the current economy.

FB: Enjoy the fund raising honeymoon while it lasts!!

What will make Facebook last? Their site is sticky very sticky, via various applications for users to play with. It is a very practical site and almost anyone can use it to do so many things they may be 2-3 years ahead of the market. Mysapce R.I.P as your only option is to become a Facebook clone.

Spot on zoul. we only need one social network - FOAF would be the enabler. I hope that FOAF wins but I would lay money that it won’t.

-Jamie

facebook is the suck. Who cares about them anymore, they’re so 2007.

FB is too vague…I mean it’s a jack-of-all-trades, master of none.

i think the power lies in specific niche community sites.

This is a serious Question now ? Which is the most powerful single server that can host maximum online users ? I mean like 1 million people online on a website’s single server ? Is it possible ? Any detailed answer….. I gotta know.

And oh yeah ! If anyone knows how many servers does plenty of fish use ?

i mean http://www.plentyoffish.com

@3 - Business Week article says they now have 10k servers.

Facebook is trying to be the Internet’s user user directory, storing identities and permissions for us all. Since this is a huge and still undefined task that has thwarted Microsoft and others so far, and since Facebook has shown some pretty dumb mis-steps already, they won’t show success at this soon. So they need another $100m to keep them solvent while they make mistakes, keep upgrading their management and figure out how to make money.

The worst sign for them is the generally low quality of the site. Sure, it does things a lot of people think are cool or fun, but it is inelegant and often difficult to understand and use quickly, suggesting a poor product culture. It’s tough to change culture when the money keeps flowing in (whether from investors or from customers) - think Yahoo! and Microsoft - so acquisition should be the only way they’ll ever earn a successful return for their current investors.

Hey Michael,
Thanks for the shout-out but for the record I broke the story for BusinessWeek Friday night just after 6pm. VentureBeat gives me credit in its item.

Facebook maintains approximately 10,000 servers now, according to a report from Data Center Knowledge that I cite in the story (which is based on comments made by Facebook VP of Technology Jeff Rothschild at a MySQL Conference). After my story came out, a Facebook exec confirmed to me that “we run somewhere around 10,000 servers” and are “growing” that count.

onward . . .

Social networks are only getting started. I firmly believe that Facebook will succeed. Until we have every 3D object on the planet addressable by Internet, we still are in growth state.

1. Everyone is using their number of active users 70+ milion and tieing it with 50,000 servers.. and saying its ineffecient. NO.. the whole point is they are buying 50,000 in order to scale 2, 3 times bigger? maybe more. They are currently serving those users from only 10,000 servers and its getting a bit slow so theoritically they could easily handle 3 times the amount of people with these servers.

2. 100 Million in Debt is tied to the purchase of 50,000 servers so they can offset the 100 million with a physical asset in the balance sheet. They will then have a 5-10% depreciation of value on these servers yearly.

3. This is not equity and hardly affects the investors or shareholders since as long as they can keep to the repayments they have just added 100 million worth of assets in the form of servers.

I see another bubble coming.

These major social networking sites will be around forever, as long as the internet exists. Unless there is a hughe scandall of some type of information conspiracy, that gets aired on the news. I dont know what it would take for the “fad” to stop. Every day, new users are signing up, young and old, for an infinite number of reasons. It can not be stopped!!

Facebook has been luring Google top guys in the last 6 months. It is really exciting and scary at the same time. It seems like they are up to something that has caught the attention of Google VP’s. I mean, these guys aren’t stupid. It has to be big or compelling enough for them to jump Google to Facebook. I am pretty sure these servers are for their future releases (who knows whatever that is)

Hey Spencer Ante,

Is this your blog http://creativecapital.wordpress.com/ ? If so what is your contact?

@Ghaus Facebook keep their servers in various datacenters and plenty of fish have less than 10 servers.

Hey Arrington,

I think the BIG STORY here is the fact that this is debt financing. I think Arrington should post an analysis on this. Why debt financing? Could be a number of reasons. Could they find further equity financing? or are current stockholders not wanting further dilution? Either way, it’s a big change on the balance sheet.

@49, and others:

Its a debt financing because it *can* be, duh… why give up equity when you don’t have to? Debt can only be used for infrastructure charges (like servers) but not on things like payroll.

For a startup/tech blog no one seems to actually know anything about running a business in the tech industry.

cultureslurp, et.al.:

Re: Debt v equity

Equity isn’t always the best choice…in some cases it’s more “expensive” than debt.

If investors are expecting a high return, say 20% annually, the company will have to generate that return and will take as much of the company to do that.

More importantly in this case, additional shares can dilute existing investors and decrease their potential returns.

Further, debt, while tough to get, is generally cheap…presumably cheaper than equaity.

I use Facebook and Second Life, but i prefer to use Second Life, coz it is a powerful business and social platform, an online 3d virtual world imagined and created by its residents.

@50 I don’t think it’s nearly that simple. It strikes me that if they could have gotten another $100 million and give up perhaps a percent of equity for it like they did in the Microsoft deal… That would be far more favorable than taking on $100 mil of debt. My guess from reading the business week article is that they want a big cushion of cash, but are unable to secure the kind of venture deals that were available to them last year. Duh!!!

Marc - Venture debt is almost always a preferable mechanism for financing capital expenditures. Its restrictive but in the long run much cheaper. Your inability to understand why “a percent” of one’s company matters demonstrates the fact you have never owned one… But your deep knowledge of the industry garnered from Business Week is respectable.

milliion is spelled million

Duh….. So you are telling me that a $100 million of liability on the balance sheet is favorable to $100 million of equity for the dilution caused by 1%. That’s what you are saying. There is a very slight chance you are right, but I seriously doubt it.

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Fakebook is all hype and no substance, never used it before, never will.

“plenty of fish have less than 10 servers”

Hey FB, you got a change these * and maybe add some indexes ha?

Let me know if you need any help with those database quires!

@49

Thanks reggplant for the plentyofish tip !

The source of this story is “Facebook: Friends with Money” by Spencer E. Ante, BusinessWeek, 9 May 2008. Answering some questions raised above is the following quote from that article.

“Facebook does not disclose the number of servers it operates. But research firm Data Center Knowledge puts the tally at about 10,000. [Facebook is rumoured to be buying 50,000 more servers with a recent debt raising of US$100 million.] …

Forrester Research’s [Frank] Gillett estimates that Google, owner of the world’s biggest Web search engine, is buying half a million servers each year, while Microsoft’s annual consumption is as much as 200,000 servers.”

$493M in funding. If anyone wanted to find conclusive proof of Bubble 2.0, there you go.

The shark has been jumped. The Facebook Fade begins.

wonder what those servers do? They don’t index the web. Must be to store user photos.

Google: a snapshot for dummies (click below)

http://neoviky.blogspot.com/20.....thing.html

and this one is for the relatively smart ones….

http://neoviky.blogspot.com/20.....again.html

Vikram

a million servers, wow.

Guys I am going to put my 2 cents here.

Given the size that facebook is and the amount of users it has it baffles me that they have to beg for money from outside sources. They either must be stranded for cash and are not making enough as it is with the current business model or they are stupid and are selling the company away for peanuts. I think the former makes more logical sense.

100M is not a drop in the bucket but when you are talking about the #2 or #1 social website in the world then if they can’t fucking make +100M in a year from advertisements then their future does not look bright.

You can give it whatever spin you want.

Google + Microsoft + Facebook = 750k servers.

How much energy and CO2 does that translate to?

Do we need a CO2 tax on social networks?

Looks like they are trying to raise money before the bubble bursts

FACEBOOK SERVERS ACTING UP

E-mail to feedback at Facebook

“I sent a few e-mails (I have less than 65 contacts) today and I am being told I may be kicked off. Why is that?

I used my group e-mail feature to send e-mails to the group 191 total very small.

Can you tell me why your system is acting up? It looks bad for business.”