Tuesday, September 26, 2006


A few days ago when the NY Times broke the news that Yahoo! was offering Mark Zuckerberg around $900 million for Facebook, there was buzz and questions around whether Facebook was worth that much.

Fred Wilson has a good post and discussion about this on his blog here.

Without going into a detailed analysis, my gut says Facebook isn't worth $1 billion. Maybe half? Who really knows, but the core of their site are college students so it's a limited market versus MySpace. Of course, I believe social networks are moving towards smaller affinity groups versus large aggregation plays, so Facebook should just stay in their current positioning.

I think it's a dangerous move to open their environment to non-college users to better deal with the pressures of maintaining rapid growth rates. The security and comfort of a college-only user base is a factor in their success, so maybe they should stick with this market and focus more on generating revenue from their current user base. Expand to book sales, campus coupons, or whatever else works within the online world. I believe this is regardless of whether they get acquired by Yahoo! or not.

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