Facebook worth $15B

2007.10.26 12:12

Facebook

I don’t usually chime in on business news in the dollar sense, but I had to shout about the recent scandal concerning Facebook. The social network was recently valued at a whopping $15 billion, that’s more than twice was YouTube sold for, and towers over MySpace’s measley $580 million pricetag paid by Newscorp back in July 2005. (don’t gimme that inlfation nonsense, it wasn’t that long ago). Techcrunch points out how Facebook is now the 5th most valuable internet company.

So now Facebook is courting investors. Not potential buyer-outers, but folks like Google and Microsoft who will provide 3rd party ads, and drop a chunk of cash for a minority stake. GigaOm reports on how Microsoft secured a 2% percent share of Facebook for a price of $240 million. So let’s examine this from a branding point of view…

Microsoft is paying a ton of money for something that they have been unable to manufacture themselves for over 20 years: cool. Facebook not only has eyeballs, but it as a loyal user base who is enthusiastic, faithful and proud of their online network. FB users actively recruit their friends and contribute to the community in the way of applications and plugins. Very cool. Very un-Microsoft.

Facebook recently opened up their platform for 3rd party developers to make applications. And while in practice that means that I get a ton of requests to become a Ninja, or something, it’s very significant from a philosophical/brand point of view. This level of openness and inherent trust means that users feel like participates, rather than victims — something we’ve felt about Microsoft since the early days. Facebook is young, friendly, open and relaxed; Microsoft is old, imposing, secretive and uptight.

One could look at this deal as strictly business; Microsoft needs eyeballs for its ad services so the cash is an investment. But I like to think that big softie is buying an injection of cool. And like so many frat boys at private universities, they are using their cash to buy surrogate friends.

Which way will the brand halo expand? Will Facebook’s hip image help Microsoft appeal to younger net users or will the Microsoft’s massive beaurocracy and stoginess tarnish the virgin reputation of Facebook? Only time will tell.

For the record, when NewsCorp bought MySpace it was the beginning of the end. I haven’t logged into MySpace in about 3 weeks.


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