Facebook aims higher
If you’re a Facebook user — which you probably are — you’re worth $125. That calculation is based on the social networking site’s total valuation, set at a stratospheric $100 billion, not bad for something born just eight years ago as a fun idea in a Harvard college dorm. Mark Zuckerberg, the website’s youthful founder, is selling $10 billion of the company in an Initial Public Offering, for which investors are already beginning to line up.
These numbers clearly suggest that the era of humungous valuations of online companies, once thought to be over, is very much around. During the dotcom rage at the turn of the century, companies with little more than an idea and a few bright techies sold for unheard-of prices, based purely on their notional promise of making money in the future. That dream went sour and investors stayed away from the Internet, not sure whether online businesses would make money. LinkedIn, Groupon and others have gone public recently, but what makes Facebook different from the others is that it makes cash profits right now.
This is good for the company and investors, but users are constantly worried that it sells personal information to advertisers. Ad revenue is one of the ways it makes money and the amount of information out there — posted by people voluntarily — is a veritable gold mine. Will the pressures of meeting the expectations of new investors make Facebook mine this lode is a question that is bound to come up now.
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