At the Graphing Social Patterns conference there was a guy who said that Facebook was worth $100 billion. He was properly derided, in my view, by most of the people at the conference.
But, one of his arguments was “would you have said that Google wasn’t going to be worth $100 billion back in 1999?” Yeah, I probably would have said you were smoking good crack if you told me that back then.
Problem is that if you said that back then you would actually have been right.
Now, in eight years will Facebook be worth $100 billion?
Well, let’s go back and study the conditions that caused Google to get there.
1. They shipped a real ad platform that opened up a new kind of advertising: contextual advertising.
2. Search turned out to be one of the best ways to concentrate people with intent to do something together. Think about it. If you search for, say, baby strollers, aren’t you being concentrated into a pool of other people who are looking for baby strollers? That’s what made Google’s ad platform so potent. Does Facebook concentrate people who have intent to do something together? Not as clearly.
3. Microsoft and other major players left them alone. Ballmer admitted to the company employees in a meeting I attended that he had made a mistake by ignoring Google. His belief probably was that Google would never be a $100 million company, much less one with a $194 billion market cap.
So, will these three things happen for Facebook?
No. #3 definitely won’t. Already there are tons of companies jumping into Facebook’s waters.
#2? We don’t yet know if that will play out. I think it might. Many other people who are far smarter than me don’t think so.
#1? Yes, that one will definitely happen.
Translation: I agree with Henry Blodgett (damn, never thought I’d say that) that Mark Zuckerberg should take any money being offered to him at a $15 billion valuation. Yeah, the planets might align for Facebook to get to a higher valuation but there are very real risks that it won’t.
On the other hand, Zuckerberg has turned down such advice to “sell out” before and so far he’s been right. Is he still right? I wouldn’t be making that bet.