Tangentially, I see that Facebook has 550 million users and is valued at 50 billion dollars.
We seem to be reliving the dot-com boom. Anyone remember Freeserve, Dixon's free (well, local-call-cost) ISP from pre-broadband days ?
I remember around float time thinking - "£1,000 per subscriber - and no subscription fee! How in heaven's name can they be worth even a tenth of that ?". I was an early adopter, getting Web access in the early 90s (when there was no local number to dial!), but even I was only spending a few hundred pounds a year online, and I just couldn't see how Freeserve were ever going to make hundreds, let alone thousands, out of each customer. They never did.
Freeserve floated on the stock market in July 1999 (as Freeserve.com plc), at which point they had approximately 1.5 million subscribers and were valued at between £1.31bn and £1.51bn ($2.02bn and $2.34bn). By September 2000, Freeserve had more than 2 million active subscribers. This was vastly more than the incumbent telephone provider BT, something that was unique for a European ISP. Freeserve was bought by the France Télécom-owned company Wanadoo in 2000 for £1.65bn ($2.37bn).
Facebook are valued at getting on for $100 per subscriber - which subscribers include my wife and four children. No way are they currently anywhere near making that sort of money out of them. The valuation is an order of magnitude lower than 12 years back, but it's still much too high.
Does anyone know what the theory behind this valuation is ? OK, there's advertising - but IMHO that's not going to be anything like $10 p.a. per user in post-cost profit - $5 billion a year. And if that were possible, what's the likelihood that it will stay the course and not go the way of MySpace? Up to now - admittedly a short history - Internet social network sites have been popular for a few years then the buzz wears off as something new arrives. Unless Facebook can somehow capture the 'something new' - i.e. make it more likely that new entrants to social networking will choose to implement inside rather than outside Facebook (e.g. Farmville, which my daughter and her friends all played last year but have now stopped), there's a risk that it'll in its turn suffer the fate of Bebo, worth $850 million only a couple of years ago and now worth $10 million as users moved to Facebook.
Let's assume it survives, and Mark Zuckerberg becomes the Bill Gates of social networking. I still can't see it as worth $50 billion - unless they can find a way of sucking in shopping sites, like some black hole of the Web. In which case Google vs Facebook will be a battle to behold.
BTW, is it just me, or has Google become a worse search engine lately ? It doesn't seem to pick up those obscure pages that perfectly match the search criterion any more. Instead you wade through pages of link-farming guff and big commercial sites before finding what you want on page 7.