Tuesday, May 26, 2009

There's a sucker born every $100 million.

Just an hour ago or so it was announced that an investment firm called Digital Sky Technologies has bought 1.96% of Facebook for $200 million, which puts the overall valuation of Facebook at $10 billion. $10 billion is still a lot of money, but it's 50% off Facebook's valuation from just two years ago when Microsoft bought a small slice for $240 million.

Here's what I don't get. Facebook making money. Yes, they have 200 million users. But so does Central Park. I've yet to see an ad, hear about a product or even have my curiosity piqued on Facebook.

What's more with the escalation of Facebook security breaches going around, I can't be the only one who's thinking the connections ain't worth the infections.

Finally, I guess there's a rule of thumb. Don't pay a lot of money for a company that has a lot of users who would likely drop the service if they were charged a fee.

I would not pay $10/month for Facebook or even $5. Would you?

Never the less, someone just paid about a buck a user.

Maybe they should call it Faceschnook.


Teenie said...

Facebook ads are so targeted it's eerie. They don't entice me--they make me feel invaded. I almost want to turn around to see if some Facebooker isn't peering around the corner to see what I'm drinking...

Tore Claesson said...

I'm being ridiculed for failing to understand how facebook will ever start to be a profitable and sustainable business. Other than for those who manage to sell their stakes in it for a price higher than their investment. But, on the other hand, banks and financial companies were not profitable either. It just looked that way for a while, so they could squeeze huge bonuses out of them.

jeaves said...

Years ago I met an Emu farmer looking for investors. Large bird related to an Ostrich.I asked what the market for emu was like. He said at the time all the interest was just in selling breeding pairs to other people who thought this was the next wave of opportunity. I asked "But eventually you will try to develop some products using Emu?" He hoped to have cashed out long before having to worry about that little problem.

Somehow this seems related to me.

Jake Poinier said...

For $1 a month, you *might* get me to sign up. My wife would probably pay twice that. And my daughter (age 12) would probably pay $10.