NPR: Facebook Valued at $15 Billion, But Will It Last?

Facebook Valued at $15 Billion, But Will It Last?

For a long time, Facebook, a social-networking site originally for college students, seemed to be Avis to MySpace's Hertz (you know, Facebook was always trying harder). So its founder, 23-year-old Mark Zuckerberg, had a little trouble convincing people that he wasn't crazy for turning down a $1 billion buyout offer from Yahoo!

But now, Microsoft has helped prove Zuckerberg's point. After winning a much-publicized battle with Google, Microsoft announced Wednesday that it was buying 1.6 percent of the private company for $240 million.

That, as Andy Carvin, NPR's senior product manager for online communities, told me, "adds credibility to Facebook's argument" about its overall worth. The deal puts Facebook's value at $15 billion — about 500 times the $30 million the company is expected to make in profit this year.

As for how the site's online community will react, Andy says it won't be a big deal. "I'm guessing that the average college student won't care as long as their favorite Facebook apps are untouched," he said.

But will Microsoft's backing make any difference in the long run? As Mik Parekh of the British Internet marketing company Cynergise noted recently on the company's Web site, as popular as Facebook is right now, there is always another, even better social-networking tool just over the hill. Parekh writes that it may be just a matter of time before Facebook is eclipsed.

So, how long can Facebook survive as-is? If it is to make it past the next tide it needs to change what it offers to the users. Add more value so even government agencies and corporations can reap some benefit of having their workers spend time on it.

And Andy says Facebook appears to be moving along those lines. For example, the company also announced Wednesday that it has signed a deal to make Facebook features available on BlackBerries. If there is any modern tool that government agencies and corporations seem to rely on, it's the BlackBerry.

5:15 PM ET | 10-25-2007 | permalink

Comments (Send a comment)

To really understand this deal, it is important to have clarity that Microsoft is *not* a venture capitalist, and this was less about $15 billion valuation than about access to a jewel. My full analysis here: http://therealmccrea.wordpress.com/2007/10/25/facebookmicrosoft-deal-analysis-part-2/

Sent by John McCrea | 5:35 PM ET | 10-25-2007

As a business student as well as Facebook user, I believe that the social networking site has been valued appropriately and is here for the long run. It has become an integral part of student's social lives and is a a online marketer's dream.

Sent by Jeff Duncan | 9:30 PM ET | 10-25-2007

I have come to rely on Facebook as one of my primary modes of communication with friends I haven't seen in years. The ability to find and talk to long-lost friends and acquaintances that Facebook provides is invaluable. I sincerely hope it is not degraded into a marketing tool for businesses that already have multiple ways of accessing the population.

Sent by Erin Hayes | 12:02 PM ET | 10-26-2007

I've used Facebook for quite sometime. I feel that it's turning into bloat ware with all of its applications; I can't imagine that Microsoft will help the situation any. And honestly, why is it significant that Facebook features will be available for Blackberries?

The article says, "If there is any modern tool that government agencies and corporations seem to rely on, it's the BlackBerry." Well, gee, how many government agencies and cooperations do you know that use Facebook? Haha! :-)

The whole thing just makes me chuckle.

Sent by Esther | 4:25 PM ET | 10-27-2007

But Esther, that's the whole point, don't you see. The reason the deal was signed with BlackBerry is that Facebook doesn't just want to be just for college and high school students any more. They want Facebook to take the place of other sites, like LinkedIn, for business contacts.

The days when Facebook was cool because of it was only for a certain group of people are gone, gone, gone. It may be cool, but as a business model, it's a non-starter. And in the end, it's all about the Benjamins.

Sent by Tom Regan | 7:25 PM ET | 10-27-2007

Businesses may have been able to use it before the days of applications, but if they're planning to use it now then the "Jedi vs. Sith" apps. really need to go.

Also, many, if not most, businessmen don't want their personal information accessible. Really, it's a social networking site, not a business contact site. I could see Facebook creating a business offsite for business contacts, but there's no way I would want everyone in my office to know that my status is, "upset that I didn't get that raise."

It's the same story as IM becoming popular in the business world. Some businesses do use it, but they aren't using the standard IM client. They're using AIM professional.

Sent by Esther | 1:04 PM ET | 10-28-2007

Thought you'd like an expert who can address the privacy issues: college students are at great risk for identity theft and fraud by posting personal information to Facebook, says James Bierstaker, an expert in identity theft and forensic accounting at the Villanova School of Business.
Go to http://www.beet.tv/2007/12/forensic-accoun.html to see and hear Prof. Beirstaker in action.

Sent by Kent Holland | 4:57 PM ET | 12-06-2007

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