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Thanks to Chris at rawstylus for the heads up!
Category: Microsoft
Quote – Ben Rowe
I asked marketing polymath Ben Rowe his thoughts on Facebook in 2008 and if it is going to grow or decline…
Response
“Facebook is so 2007…. it’s just p2p spam. I reckon facebook is going to die a fairly fast death this year.”
Sure the jury is still out, but it wouldn’t be the first time Ben’s predicted the future of a brand or launch. It does seem that there was something very wrong when Zuckerberg referred to his ‘army of viral marketers’ he forgot one thing…. viral marketing is always done by people, not companies. Abuse them and lose them.
The gaping void view in December was this
I still think facebook is a great platform (especially the app’s component) which needs to take a few steps back before everyone disappears. It will be interesting to see how this one plays out.
Business valuations & Facebook
The recent deal where Microsoft took a 1.6% stake in Facebook for $US240 Million valued the company at $US15 Billion.
Here’s some numbers:
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Facebook has a revenue of approx $100m per annum.
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Although profit is currently undisclosed, even a generous 50% profit on sales margin would result in a diminutive profit of $50 million.
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This would result in a PE ratio of 300 times!
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Which means, it will take Microsoft 300 years to pay back their investment.
Start up blog view: This could be the most ridiculous sale price anyone has ever paid for a company.
Has everyone forgotten about these start up web 1.0 heroes of the late 1990’s and early 2000’s:
kozmo.com
Global crossing
Worldcom
govWorks.com
eToys
Boo.com
Pets.com
theGlobe.com
Where Investment banks and reputable companies such as Microsoft paid exorbitant prices for many now non-existent companies with zillions of page views, sessions and ‘potential’?
It’s different this time, right?
At some point in our journey we all have to value a business. So we must remember the following:
When selling: Potential, emotion and short memories can get you a great price
When buying: Forget ‘potential’ and focus on ‘current’ earnings and investment payback period.
Bonus conspiracy theory: Microsoft really bought the personal information of the 42 million active Facebook members.