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Robert Scoble
Robert Scoble
A famous VC told me this week that Facebook is raising another round of funding at about the $6 billion valuation mark. I wish I could invest! Would you?
March 7 - Comment - Share
Can't wait to see how big their round will be... - Daniel Brusilovsky
not sure I'd invest as the upside would now be relatively limited - Shannon Clark
He told me he was considering putting in $25 million. Asked me if I would do that with my money, if I had it. I said "yes." Of course it wasn't my money, but Facebook is the success story. Far bigger than Twitter and thanks to Thursday's announcement I can see a way for them to make a ton of money. - Robert Scoble
I'm still not convinced that they will ever make decent revenue. That being said, if they were public I'd probably pick up a few shares. - Blake
Nope. Too late to make the bib gux - Francine Hardaway from twhirl
No i would invest in twitter. - Mark Overy
Blake: I wonder if we thought about that when the yellow pages first came out when the telephone was very new? - Robert Scoble
Is there information involved in that yes that isn't public? Like what the books look like (how much revenue are they generating anyway?) - What is the burn rate? etc - or just because you think they will "get there"? - Brian Roy
Brian: he didn't give me any other information than this. I'm just going over their growth rate, they are growing a service the size of Twitter every 10 days or so. - Robert Scoble
what is their annual profit value? how much of that money would you be likely to get back in real terms - "potential" doesn't count, I would want a real idea on how much money their business is generating before ever considering investing. (I don't have the cash so it'd be a moot point anyway) - alphaxion
I call Facebook "the velcro of social software services." They have tons of ways to hook you onto the service. Far more sticky than Twitter. - Robert Scoble
Invest in a company that lost $8 billion from its valuation 16 months ago? No thanks. - Mark Frost
alphaxion: in 1991 could you have answered that question for Google? No. That's why VC investing is risky. - Robert Scoble
Robert: 25 million seems small for Facebook, considering their last round was $100M, but of course that is only one VC. Did he tell you how many where in this round? - Daniel Brusilovsky
Mark: every company has lost billions in values in the past 16 months. That attitude toward investing seems pretty stupid. - Robert Scoble
Robert - totally agree with the stick factor. My question is how good is the plan to turn lots of users into actual dollars. If that plan is good (in a non-obvious way) I'd invest. - Brian Roy
Daniel: no, he just told me what he was considering. I'm sure if it's a $6 billion valuation there will be a large pool of folks in there. - Robert Scoble
Scoble: Good analogy. I'd like to be optimistic about it, but I just feel in my gut that the whole social networking business model still hasn't been perfected. I definitely agree that Facebook will eventually crush Twitter. - Blake
Brian: you have to read between the lines, but now they are letting brands be full members of the social graph. I see a TON of ways to make money with that. - Robert Scoble
Brian: here's my audio report from the Facebook announcements this week. http://friendfeed.com/e... -- in there I explain a bit about how I think Facebook will make money. - Robert Scoble
No, at least not in long term. - andrei_c
This doesn't seem like a good idea. $6 billion?! Robert, when you say Facebook's announcement last Thursday are you referring to the new page layout for companies? How much money can that bring in? - Nidhi Makhija
Robert - agree. But revenue is about execution. So it isn't just seeing how you might/can do it but being able to get to it effectively. That is Google's genius. I'm guessing they have the team/leadership to do it... which is why I'd invest (once I heard the plan). - Brian Roy
Nidhi: my bet? Over next 10 years? 100's of billions. Look at Google. Facebook is facing an opportunity that's in Google's neighborhood. Of course a lot of implementation is to come and they might not get there. But I see a way that they'll make billions. - Robert Scoble
If they monetized as well/heavily as Myspace, they would only have $1B revenue. Is he really going to get a 10x return with a $60B exit? Common or preferred? - Andy Beard
Brian: right. And who is on executive team at Facebook? They are executing pretty damn well. Just go see Sheryl Sandberg. She was an executive at Google and knows the secrets to delivering value. - Robert Scoble
depends on liquidation prefs, but assuming i got at least 1x preference i'd be an investor for anything south of $10B. at $6B i'd be pretty bullish; that seems like a reasonable number if you look out 3-5 years. - dave mcclure
A $6 billion valuation would make Facebook more valuable than: Salesforce.com, Sun Microsystems, or NetApp. In fact, you could buy Sun + eTrade + Sirius Radio + TiVo and still have more than a billion in pocket change left over. - Louis Gray
Not a chance. I'd run screaming from the building before I invested in Facebook. Sticky does not mean profitable. I remember that 1.0 adage "Get the eyeballs first and then monetize". Lots got the eyeballs - few figured out how to monetize. - AJ Kohn
Andy: the opportunity here is a lot bigger than $1 billion. MySpace is small change compared to what Facebook is going to do. - Robert Scoble
Andy: When I go to MySpace it tells me NOTHING about my friends' behavior when it comes to other businesses. The social graph is very powerful for businesses. Much better than what MySpace built, which is why key executives are now leaving MySpace. - Robert Scoble
I'd invest too yeah - Kaysha
I would invest. I believe Facebook is the OS for social media and something more. They are the White Pages of the Internet. And with an upside limited only to the imagination. - Jeff Pulver
Robert - You'd really feel safe investing in a company whose valuation isn't stable though? - Mark Frost
@Jeff - gawd I hope not .. if that is the case then the net is truly a wasteland - Steven Hodson
Negative. not at $6bn. We have absolutely no idea what it's worth, let's be honest. Nobody does. It's a straight gamble. I'd prefer spend the cash on buying into cloud-enabling companies like Cisco and server manufacturers, and the best placed players in the cloud ie Google and MS. Maybe... - john conroy
"going to do" ... Digg, Facebook, Twitter ... they all say they're "going" to figure it out. Show me a profit stream (even a small one) and I'd invest to help scale it but ... until then Cuba Gooding man ... Cuba Gooding. - AJ Kohn
Mark: that's why it's investing and not a "safe bet." VC is risky. So is buying stocks in companies. - Robert Scoble
Does anyone know for sure - does Facebook lose money every time they sign up a new user? In other words, is the reason they're raising money because their revenues are not growing to cover the costs of their growth? - Simon Brocklehurst
...further to my comment above: I guess what I'm really saying is that at $6bn you're talking about a blue-chip, and Facebook isn't a blue chip. It just isn't. - john conroy
Only tonight I glanced down my 'All Friends' list in Facebook and noticed how many have no status. They have not logged in for 7 days or more. In many cases a lot more. The fascination is on the wane. My money? No chance. - Darren
Robert: Oh I know that, I'm just speaking as someone with a very light wallet. ^_^ - Mark Frost
Darren: tell me how that is any different from this: http://twitter.com/TechCru... -- I bet your Facebook friends are more engaged with you than these Twitter followers of TechCrunch. Click on 100 followers of Techcrunch. How many have more than one Tweet? 2%? 10%? Not more. - Robert Scoble
john: Facebook is signing up 700,000 new users PER DAY. They are growing the size of Twitter every 12 days! Blue chip? Absolutely. Just like Google was. (We had the same arguments over Google six years ago). - Robert Scoble
Sticking the money into GOOG currently would be a better deal, or AMZN - GOOG 2008 revenues were close to $22B http://finance.yahoo.com/q... - based on similar can you see Facebook making $15B yearly revenue? - AMZN is currently worth only 6x gross profit - but then the VC neds to invest his money somewhere, and GOOG and AMZN are not an option - at the end of the day FB is relatively low risk and an easy way to do your job as noone will criticize you for it - Andy Beard
Andy: you probably said that sticking money into Alta Vista back in 1999 was better than Google. Wrong. - Robert Scoble
and yet - the fact they are raising money shows that we have not found a revenue model that can cope with the costs they incur - they could self-implode in 1-2 years unless they find an effective route to making break even - Nick Halstead
Read today in Times magazine an interview with Zuckenberg stating that monetization is not a priority yet while Facebook is not getting break even. By the way, did you notice that the fan pages are changing and look now as profile pages??? - Zack Brandit
Zack, yes. That's exactly what I was talking about here: http://friendfeed.com/e... - Robert Scoble
Chris: that's wrong. Everyone on my forums were talking about Google in 1999. Google didn't have a business model until 2004. - Robert Scoble
The problem Facebook has is that people seem to get bored of it. Most people I know are using Facebook less today than they were a year ago. I never saw this pattern with Google. - Simon Brocklehurst
Scobe: Are you saying that Twitter's model isn't working, so Facebook's will? Twitter v Facebook comparisons are fruitless. - Darren
Darren: no, I know that Facebook has 175 million who has signed in in the past 30 days. How many does Twitter have? - Robert Scoble
Chris: OK, I'll grant you the 2003 Google. Same points still hold. You're not feeling it? I look at how addicted my wife is to Facebook (and all her friends). This is the Google of this time. - Robert Scoble
VC is certainly risky.. but a good VC wouldn't fritter their money away on something that wouldn't give even a little bit of ROI. Otherwise they simply wouldn't be a VC for very long. It's all well and good saying "I can see a lot of ways to make money", but visions and actual money making are 2 different things. So again, please answer the question and say how much they're currently making. - alphaxion
"Everyone on my forums", is exactly what White said, "hardly anyone" and he is correct. - coldbrew
I am not saying it is a bad investment, but just imagine Facebook had already IPOed last year, and had managed to figure out their revenue to bring it up to Myspace level, which would then make a $6B valuation on $1B revenue in line with GOOG and AMZN current market valuations. - that isn't necessarily a VC deal - unless they were looking to use the money for a cash purchase of Twitter at a much lower valuation than $500M - Andy Beard
coldbrew: this whole conversation sounds exactly like the ones we had about Google in 1999-2004. - Robert Scoble
I seem to remember a company called Netscape was all the rage once. - Jan Simmonds
@Robert: No, Facebook is not the Google of it's time. Why? Because Google had a very clear business plan. Sell relevant ads on search results. Direct marketers (me) got it and ran with it. It took time to build but it was a clear business plan. Facebook doesn't have that. Unless of course they turn Facebook into a search portal - if they did that then the size and stickiness of the site benefits them. Outside of that, SocNet advertising doesn't seem like a viable business plan. - AJ Kohn
I have concerns about Google if I'm honest. They too fritter their money away on investments that fizzle out to nothing (look at how many companies they've bought for massive amounts of money), they're limited by the size of the advertising market (think as to why they've been slashing their returns on adwords). Now, their positioning as a content delivery caching network is a far more promising one. - alphaxion
Robert - "no, I know that Facebook has 175 million who has signed in in the past 30 days. How many does Twitter have? "- you're still doing it! Comparing Facebook favourably to Twitter does not mean Facebook have a good long-term model. I'm not saying they don't, but if a Twitter comparison is the best these dudes can come up with then "I'm out" as they say on Dragons Den. Using your sort of comparison, who is to say that Facebook is now Google 2003, whilst Twitter is Google 2000. Which one has more upside? - Darren
AJ: you are totally wrong. Google didn't have a clear business model until 2004. I know the guy at Exodus who almost shut down Google because Google couldn't pay its bills. - Robert Scoble
I think most of you people hang out mostly with technophiles; I do not. - coldbrew
Chris: I'll never been that rich. I'll buy you a mojito at the Ritz, though! - Robert Scoble
@Robert: Just because they couldn't pay their bills doesn't mean they didn't have a model or plan. It took time to build the momentum ... the world of search had to 'tip' - and when it did Google was well positioned *because* of their plan. I just don't see that with Facebook. What are they positioning for? - AJ Kohn
I can say most of my 30-something friends only found FB w/in the last 6 months. - coldbrew
Facebook fatigue has certainly been kicking in for myself over the last few months whereas as my Twittering has been increasingly steadily; it is just more "useful". That said, they certainly do appear to be functionally converging, so who knows where we'll end up... - Kevin Bluer
Who cares about Facebook or 6 billion. What are your plans after Fast Company? Is it true they fired you? - Bruce Curley
Kevin: I can see an argument about why you're right, too. On Gillmor Gang right now is Paul Buchheit of friendfeed and he points out that Twitter's API is far easier to develop on. That ease is turning into all sorts of interesting apps which make Twitter more useful. Well, we'll see. That's why VC is risky. - Robert Scoble
If I were a VC I would definetly ask for a clear plan of privacy policies before investing. This might be an issue. I would also ask for some guidelines on future updates since FB seems to change its homepage very frequently, which might result in a potential failure. - denizoktar
Bruce: I was not fired. I resigned my video show to do something else. I still am working part time for Fast Company. I have plans, but will not disclose them in public until SXSW on Monday. - Robert Scoble
@Robert: BTW - this famous VC you mention ... are *they* investing or not? - AJ Kohn
AJ: they didn't say, they said they were considering it, but sounded like they were going to the way they were talking. - Robert Scoble
At this point, I would not invest in anything except gold. Do I sound like a nut? Just check out this video. Actually look at a bunch of his video over the years. Peter Schiff called it all. http://www.youtube.com/watch... - Dan Cornish
I'll point out again that while VC is an inherently risky business, it's still not a case of blindfold and a dartboard. A real VC would do at least a bit of research and see if they're likely to make a return. If not then they're not a real VC and would either be someone who can afford to lose the money as it's merely a diversion (kinda like how some people will play the lottery) or a fool. - alphaxion
Dan: Gold and Guns sounds like a good investment strategy over next year. Me? I'd rather be in Facebook, but then I have a front-row seat. - Robert Scoble
Chris: that's funny! But no. :-) - Robert Scoble
@Robert: Interesting. Always appreciate the information and opinion. I disagree and don't see it myself but ... I've been wrong before. Been right before too though ;) - AJ Kohn
You all need to read this: http://www.techcrunch.com/2009... Indie Facebook Developers are making over $700,000 per month. Like I said, there were billions and billions here. - Robert Scoble
Chris: I do not have any compensation or investments coming from or going to Facebook. I was invited to a press conference on Thursday and I have a front row seat because I know many of the players involved and I read a lot of RSS feeds. :-) - Robert Scoble
YES, I would invest!!!!! - Susan Beebe
how many of the indie developers are making those figures compared to the rest? also, advertising revenues, again, are the core of it. How about revenues that don't involve advertising, as in real and repeat direct spending of the users not the whim of other companies? And of this, how much money are facebook themselves making, since this money fountain could all vanish should facebook itself fold. - alphaxion
I bet the sum of the people advertising using Adwrods are making more than Google in total as well - the people using Paypal owned by Ebay are most certainly making bank, but for some reason Ebay isn't even worth 2x their revenue. Facebook developers making $700,000 is nice, great return, invest in the app developers if there is longevity. - Andy Beard
@chris that's my fault.. I called it adwords in a previous comment - that's what 5 beers does to my word association skills! >.< - alphaxion
coldbrew: sorry, I just fixed it. NO need to keep an error in my comments here. - Robert Scoble
Was just watching you on TWiT Live, streaming to my 52" TV via my PS3. Look fwd to seeing more of your stuff on TWiT Live in the future Scoble. - Jason Cartwright
am I the only one who seems to feel a certain air of "ponzi scheme" when your questions are met with answers of "look at these people, they're making money from it" without actually answering your question? And don't think I'm being snarky for snarks sake. I'm really trying to gain an idea of why people are yelling "buy this!" without really backing their claim up beyond "trust us". - alphaxion
I'd rather buy Citi stocks. - Mona Nomura from fftogo
alphaxion: when you are getting 700,000 new people a day you'll figure out a business model, especially since you know so much about each of those people. People who understand media understand the very real value that Facebook is aggregating. - Robert Scoble
again with the vague "well, we'll figure something out... just keep pumping us with money" answer. It doesn't matter how many new people you are getting onto your service if there's no tangiable sense of where the money to pay for it all is going to come from. It is very similar to youtube. They were burning through cash, plenty of people were saying "it'll make loads of money somehow" and yet google are *still* looking for ways of making it profitable. It's the kind of economics that leads to bubbles. - alphaxion
there simply aren't enough people that sit down and ask "so, how much money are you making and how much do you project this to grow realistically". Which is the basic tenet on which all companies have been founded upon. - alphaxion
@scoble... yes, people who understand media understand the real value that Facebook is aggregating, but not if they understand it in the OLD way. if this just turns out to be another advertising play, because they've 2 billion+ eyes, another way to sell people products they don't need, then, hell, I may as well pull the plug and turn Amish... not really, but all of the stuff I've been hearing so far doesn't make be feel confident that FB will end up being anything we haven't already seen... time will tell. - .LAG liked that
Robert this question sparked such interesting comment you should ask more like this. FB to me is a fad unless they buy Twitter which with Twitter Search could be a new Google. Agree with Chris White MS-Facebook is a likely outcome. Google must acquire Twitter before Vodafone wise up. Keep leading the debate Rob. - Thomas Power
What are they spending all that money on? Or is just banking money to survive the future? - Brian Sullivan
@chris actually, I'd say google was all about weaving themselves into the sites they lead you to and the apps you use to access this info. Having dealt with administrating systems, it's scary just how many apps and system builders integrate their toolbar and desktop apps and how many sites use their services that then collect data on the visitors/users. A question I don't see asked and answered often enough is "why?" - alphaxion
@ChrisWhite I certainly meant Adwords not Adsense - people advertise to make money (well unless they are Auto manufacturers) - I look on the Facebook App platform in many ways as an advertising platform, though the transaction that takes place between Facebook and the App developers isn't currently a financial one. Maybe things would be different if Facebook had their "FacePal" payment system working http://www.insidefacebook.com/2008... - Andy Beard
Chris: that's an interesting question. CEOs should never say never when it comes to future business decisions. - Robert Scoble
Social networking seems like a commodity to me. Glorified address book + activity stream. Long term, why is it likely that one company will continue to command a proprietary premium on this? Do we not forget the staggering claims for these companies made doing the last bubble? Lots of similar claims by many companies in the 90s about # of user signups, stickiness, etc. If social networking platforms are so valuable, they're gonna get commodified. Wordpress isn't the only way to host RSS now is it? - Ray Cromwell
I can feel a Metcalf's law retort coming. :) It's like Godwin, but for business model debates. - Ray Cromwell
Chris: really? I don't agree with you. If you can survive through a depression you'll come out of it with rocket burners on. Google gained steam through the dotcom bust. Facebook is gaining steam through this downturn. - Robert Scoble
Chris: agreed. Facebook is not going to have an IPO this year. I can assure you of that. The investors will keep them going for two more years at minimum. - Robert Scoble
Can I buy Twitter instead? - Patrick from twhirl
@Robert: You're thinking "aggregated rich user data" is going to be the Facebook gold mine? Advertisers and brands I chat with think it's of marginal value. Big brands already have deep databases with multiple reporting lines. Prizm data gets you 75% of the way there most of the time. Facebook might be another reporting line but it's not going to be a game changer. Search re-targeting has more value IMO. - AJ Kohn
@AJ .. I would have to agree with you. Just think of all the data that things like those Air Miles cards collect, or credit card companies or even national brand shopping cards ... one would think that the data collected that way would be a lot more valuable than anything that FB could produce. Makes one almost think that this whole Social Media as a marketer and advertising goldmine might not turn out to be Fool's Gold - Steven Hodson
Nope, two reasons. First, I won't invest unless I agree with the core mission of the company. Second, FB may do well in its early times after going public, but it's not at all clear to me that it will be a great company in the 5-10 year range. - LogEx
@Steven: Exactly! Air Miles. Grocery Cards. Credit Cards. Warranty Information. Rebate Information. (You'd be amazed how many people register their stuff!) It's a bit scary what can be obtained from credit bureaus as well. Facebook is the corner, the stoop - it's where people stop to talk and shoot the breeze. Not much gets sold there. I need to connect with them when they're walking past the mall. - AJ Kohn
Think about the data a company like Mint.com or Quicken Online collects and compare it to the data that FB has on spending patterns and interests. They know enough (but currently don't use this info) to definitively tell you that you're spending $50 a month on BlockBuster, and could reduce it to $20 a month if you change to Netflix, saving you $30. - Ray Cromwell
How many more rounds of funding would you expect? It seems like you might get washed out by later rounds. - Todd Hoff
Everything you hear lately makes it sound like he's had to change that point of view about $15b if he wants capital. - Hutch Carpenter
Great discussion. Some points: the "No one can monetize this space" argument is false. As an advertiser (and a top 3 one at that), We are. And, quite well. #2--However, I wouldn't discount MySpace just yet. FaceBook is a wonderful white pages, it's possible MySpace will be a wonderful Yellow pages. We'll see. $6B is steep, but one difference this data has from the others mentioned (credit cards, gas cards, etc) is it's voluntarily provided--which is a much different data stream. - Alan Edgett
I would, in an instant. Many Facebook apps alone have 10 times the number of users Twitter has. - Jesse Stay
If they gave me a way to keep certain people unaware of my presence, I'd go back - Aaman (Clone of FF)
If I had the choice, I would rather invest in LinkedIn. Facebook has a phenomenal growth there are still a lot of open questions: You talk about businesses creating pages in facebook. This is probably a good idea in the sort term but in the long term as a company you probably want more control and ownership over your community and like AOL had to open up the walled garden, Facebook will have to do it to or someone else with do it for them. In that more open world, monetizing the graph will become even harde - Edwin Khodabakchian
wow...another around... - Kenyth
Interesting. Most seasoned entrepreneurs will tell you funding isn't an ideal expansion, that multiple rounds is not a good sign. Means it isn't making money. Social networks are nothing more than message boards with different user features - and have always been very hard to monetize. New competition is coming fast into the market from places none of y'all are looking at, and we're literally one development away from the whole dynamic of the web changing. I'm not saying FB is or isn't going to make it - I could care less. But, I'd be cautious to assume, history if nothing else has already proven that. It'll be interesting to see how things play out, indeed. - Patricia
Patricia: Google had multiple rounds. So did many other big Silicon Valley companies. - Robert Scoble
Chris: I know all about dilution. The reason Zuckerberg is so smart is he's taken a few rounds without getting diluted much at all. Got $300 million from Microsoft and only gave up, what, 1% or so of Facebook? That's brilliant. - Robert Scoble
Robert, yes, i know. it can be an asset. it just depends on if they can find a way to make money. google found it. let's hope facebook does too. i root for all businesses to succeed! - Patricia
still all I am seeing is the taking of money with no idea on how it'll generate money back, which is the whole point of investment. It seems to be the whole mantra of web apps "get users, then figure out how to make money" instead of the way every other industry functions. Do you really think this is a lasting way of doing business or will the web have to mature and show they can make money with their creations before investors will part with large sums of money? - alphaxion
when thinking about it, it is a particularly Valley way of doing business - I don't see this kind of investment internationally, they demand to see what will happen with their money and how it is likely to generate its own revenue instead of going cap in hand back to the investors. - alphaxion
and I do agree that this way of investing does lead to some really innovative things that ordinarily wouldn't stand a chance of making it. But, it is a big concern that the sites can't stand on their own without VC's propping them up by pouring round after round into them with nothing more than "it's gonna be huge!" as the reason. It'll only ever be huge if a cogent business plan exists, otherwise the only huge thing will be the bill VC's nurse at the end of it. - alphaxion
Facebook is finished - paul mooney
FB has the most chance of success because that's where non geeks go. It's the one service they want to use. - Richard A.
I don't get what non geeks has to do with FB's sucess ? - Asankhaya Sharma
Asankhaya: one word: "mainstream" - Claudio Cicali ♋
Interesting to note Apple could pony up $6 billion for Facebook and still have some $18 billion left over. - Mike Reynolds
@Mike .. maybe so but if there is one thing you can say about Steve Jobs is that he is a smart businessman who doesn't like to lose money - Steven Hodson
well i would not invest, fb has been for sometime now in a few years what ever profit could be made should have been made by now, the next big idea will kill fb forever, with the investment totally sunked in - briandsouza
UPDATE on this: Investors in Facebook are telling friends of mine that Facebook is not raising another round. It's possible that this is an opportunity that's being offered by someone who has stock already and is looking to get out. I'll try to find out more and report back. - Robert Scoble
I definitely would! - Pico Seno
Robert - whoa, "someone ... looking to get out." wow. yes, more info please. What is their rationale? - Susan Beebe
I wouldn't. I would rather invest in something simpler like twitter or friendfeed. - Siddharth Mitra
Interesting that the round is at $6 Billion. I heard that Facebook are supposedly only accepting external investors providing they are investing at the valuation of Microsofts investment. - Nicholas James