This morning Facebook announced that it had accepted a $200 million investment at a $10 billion valuation from Russian investment group Digital Sky Technologies. Over the last few weeks there have been reports of the company turning down investments at lower valuations, and debate over if the investors would get a coveted Facebook board seat (DST did not). Facebook is holding a teleconference to talk about the new investment. Below are our notes.
Mark Zuckerberg:
Despite a pretty tough economic environment, our revenue is up and growth continues. Removing barriers to communication across the web.
Advertising products performing strongly. Now have tens of thousands of advertisers. On track to create a nice self sustaining business. Lots of firms have approached us. DST approached us with an investment background demonstrating advanced background in the power of social networks. Getting this money gives us a cash cushion. Not going to talk about how it’s going to be used, but nice to have the flexibility.
Yuri Milner (DST Chief Executive):
Giving some background on DST. Largest internet investor in Russian and European markets. One of largest groups involved in exclusively internet companies. Organized as a holding company, not a fund. Since 2005, have raised and invested over $1 billion. Investment in Facebook underscores belief that social networks change the way people communicate. We’re convinced Facebook has potential to be one of the most valuable internet companies globally.
Q: How does this affect Facebook’s approach with regard to an IPO.
Zuckerberg: We want to take money that will help us realize the long term vision of the company. For lots of startups the IPO is the end goal. That’s not the case for us, it’s a milestone along the way. It’s not something we see happening on the immediate horizon.
Q: About Facebook valuation with common stock.
Zuckerberg: Nothing to report there at this time, we’ve structured a few different transactions. Over the next few months (over the summer) we’ll have more to announce.
Question about the Microsoft valuation
Zuckerberg: It’s important to note that the Microsoft deal was part of a larger partnership with the company. That was a strategic partnership with a lot of different components. That was a year and a half ago when the market was at its peak. This is only taking the form of an investment right now with DST, we’re hoping it can work into other things over time.
Q: How are you going to monetize international audience?
Zuckerberg: I want to let Yuri speak about this, because of his experience with other social networks.
Milner: Advertising and micropayments generated by users themselves. (seems to imply that Facebook will be doing payments soon, which has been long rumored)
Zuckerberg: The different models are advertising, a number of things we’ve experimented with. The bottom line with the other social networks abroad is that they’re doing well, each with a different model.
Q: Idea about projected advertising revenues going forward? What do you see your role as?
Zuckerberg: As a private company we don’t share revenue numbers. I can tell you what we’ve shared so far. A couple of months ago everyone outside the company was underestimating our performance. We expect our rev growth to be greater than 70% year over year. We know that with our current rate of growth we’ll be cash flow positive some time in 2010. This relationship is purely cash buffer.
Milner: *joke about joining management of Facebook* Says that he has his own business to run.
Q: Can you talk about why Facebook is not interested in larger brand ads?
Zuckerberg; We’re actually very interested in it. We’ve got a dedicated team, building out international offices.
Sandberg: We’re working with the largest brands around the world. Our ads are specially designed for the Facebook environment, so they look and behave differently.
Q: Quick question about the preference shares you’re issuing to DST. How similar are these to the ones Microsoft got in 2007?
Zuckerberg; We’re not going to discuss the preference structure of the stock. I’m going to duck that one.
Q: I was wondering if the $10 billion valuation includes any debt, and if the company carries any debt at all.
Zuckerberg: This is an equity investment. There is some information that has been public about debt from equipment, but this is equity.
Q: To be clear on this valuation. The $10 billion doesn’t refer to common stock. So how should we think of the valuation of Facebook itself.
Zuckerberg: That’s really up to you. As a private company there’s not really a market for the shares. One of the reasons we haven’t been as focused on that. The common stock valuation would be different from this.
Q: How many other suitors did you have? Did you line them up and pick from the highest bidder?
Zuckerberg: There were multiple discussions, we were comfortable with DST, felt like I really learned a lot from my conversations with Yuri.
Q: Is this the largest foreign investment in Facebook?
Zuckerberg: There has been other information that has been available, but the size of those things haven’t been public.
Q: There was buzz about Facebook working on a video chat feature, does this investment give you a little breathing room to focus on that kind of feature.
Zuckerberg: We’re testing that currently. Don’t think the investment has much bearing on that.
muah ha ha ha
whats so funny??
B*tch FAIL – funny shirt
http://www.epic.../load/8-1-0-400
lol hatebook
Mark, it’s time walk.
Sunny in Miami Vice: “Just cash out and get out.”
Steve Miller Band: “Go on take the money and run.”
Wow. Talk about “the time they are a changing”. Before the fall of the Soviet Union, who could have ever imagined the Russians investing hundreds of millions of dollars in an American company with capitalistic values whose very mission is to promote the open exchange of ideas and information in an (relatively) uncensored and uncontrolled manner. Now comes millions of investment dollars from a country that not too long ago was regulating every aspect of the Russian economy down to the price of potatoes from a central authority. This story actually brings a big smile to my face.
The investment doesn’t seem that culturally significant to me. Russians have been buying Western symbols since the fall of the Soviet Union and era of “wild capitalism”. Moreover, who knows the value of information and social networking better than Russians after several centuries of heavy state authoritarianism and censorship. I would cite the samizdat distribution systems as a proto-social network (sharing lit, news, music, etc.). It’s all about connections here. That said, I was more interested in the fact that DST seems to have a sizable stake in вконтакте – which in many ways (color scheme included) is/was a Facebook clone.
very funny comments here
if i were american i’d be afraid of russians as well, knowing that FEMA camps of the land of the free are waiting for me in case if i become *too* free (of job, food, home etc)
ups sorry i didn’t want to post that, just hit enter before i changed my mind to post it.. please delete, i really believe in america, it was just a joke but i know some people dont have enough humour to laugh at come things
Holy Shit, Facebook has been sold.
Hey Everyone,
I need some help from anyone out there who has knowledge of getting a facebook account reactivated! My account was disabled a bout a week ago because I believe I was adding to many people to my page. They never sent me an email warning me they were going to do this and I’ve sent them three messages now with no reply.
I operate disabled programs for kids with physical challenges and was using facebook as a social platform to promote our new video and our programs at wamplerkids.org. I thought if you knew the people you were adding to your page you would be ok, any one what to do.
Thanks,
Stephen J. Wampler, Executive Director
Wampler Kids
Steve Wampler
at the hands on the Russians!
It 200$ million @ 10$ Billion???
FAIL
> Now have tends ???
$10 million investment at a $10 million
so they own it
Yeah sorry about that, was a typo I fixed in a draft and then accidently copied/pasted back in. It’s 200 Million at 10 billion valuation.
Hey Jason,
I know you already fixed the typo but other sites that quote Tech Crunch such as the Washington Post are not aware of such changes and might not see Tech Crunch as a credible source.
http://www.wash...9052601507.html
Live Blogging The Facebook Conference Call
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Jason Kincaid
TechCrunch.com
Tuesday, May 26, 2009; 8:56 AM
This morning Facebook announced that it had accepted a $10 million investment at a $10 million valuation from Russian investment group Digital Sky Technologies.
Just wanted tot give you a heads up.
OMG… Zuckerberg is going to sell every piece of Facebook ?
“Zuckerberg: There were multiple discussions, we were comfortable with DST, felt like I really learned a lot from my conversations with Yuri.”
Please. Facebook definitely took money from the highest bidder. All American investment firms were probably placing bids in the $3 to $8 billion range. I doubt any other VC firm was offering an investment at a valuation above $10 billion.
And why should it not happen. Facebook has redefined the ways in which a social networking site should run.
Quite right…not to mention the highest bidder which did not require a board seat.
Any word on why DST didn’t hold out for a board seat? This is a lot of money….
They are probably looking at this as the last chance to get on the Facebook train before the obvious IPO and were probably willing to sell their soul for the chance.
Certainly an interesting development. I agree with Robert that a few years ago nobody would have seen this coming – heck, most people didn’t even know the what facebook was. The internet is truly merging the world, with or without money…
Congrats to the team! It’s really tough to get investment money in this environment. They’ll be in the black soon enough.
Asswipes. This is called the Mezzanine round. In other words this is the last round before they go public. This is done to help establish a price for the scumbag investment bankers to sell to the public.
I’m quite surprised that Zuck is still at the helm. Something still amiss among all the executive departures over the past 18 months. There are some skeletons in the closet.
S1 filing by fall ‘09. Hitting the secondary market by Spring ‘10.
Yes…to set a recent benchmark for valuation before the IPO. This is why the existing venture investors were upset by offers by other investors in the $3-6B range. Zuckerberg is still at the helm because he controls a majority of the board seats. I am guessing that the investors and Facebook senior executives would prefer a more seasoned CEO, but at present Mark holds all the cards.
In Soviet Russia, Facebook invests in you.
The Russians are coming! The Russians are coming!
The Russians are here fool.
They just invested $100Million in Facebook!
Relax fool. Soon they will own Facebook.
But where will the Russians get the money!
They don’t need more money fool. They’re Russians!!!!
facebook ads are not very compelling, i ignore them. most of fb is not very appealing to me and someone will do this better, someday…
Yes,
They know how to build great companies and their market is at least 170 mio users.
Russians do not care about money…face book dosvidania
so does this mean http://vkontakte.ru/ will redirect to facebook?
So facebook takes money from an “investor” most people have never heard of and who also is knocking off it’s product in russia? bizarre. getting in bed with the russians? zuck should use some of that money for an armored mercedes and some israeli bodyguards as he has no idea what will happen when russians “invest”. good luck!
Piece by piece facebook is being sold off.
i wonder if the russians got 100m free gifts along with their “investment” – pretty much worth the same (i.e. nothing).
i wonder if the russians got 100m free gifts along with their “investment” – pretty much worth the same (i.e. nothing).
Did you delete my post where I pointed out your mistake? Seems odd that you didn’t cross out your initial mistake and replace it as a record of the mistake.