Tuesday, September 25, 2007

Is the Facebook the biggest Flip Play ever?

In the light of current reports in the Wall Street Journal which suggest that cash-strapped (?) Facebook is seeking about $500 million in cash and values itself anywhere between $10-15 billion dollars, I have finally come to conclusion that Facebook was nothing but a sham, in fact it might be the biggest ‘Made-to-Flip’ play of all times.

It is a perfect case for Harvard Case Study or movie, depending what your preferences are: We have a young founder who makes it a point to appear cool, spout cool new phrase (social graph), who probably took the idea from someone else and focused on making a cleaner-looking social networking site than Myspace and one who understands the value of free Public Relations ala Google.

2007 will be remembered when the Silicon Valley went crazy promoting a social network that was primarily meant for students.

A founder who knew you did not need a business plan to make money, Mark Zuckerberg has read his tech history well. Like a good history student, he knows how to benefit when the giants are at war.

Now that he is reportedly offering 5% of Facebook to Microsoft, he is only doing what Bill Gates did with IBM with DOS – IBM wanted to break big into personal computing and DOS Licensing was going to be it. Today, Microsoft (and Yahoo) will do anything to ward off Google and will go to any lengths, and why not? Thanks to that ATM called the Cash Reserve augmented daily by the Windows Cash Machine.

That brings us to the making money part. It is still not clear how Facebook will make money out of all that traffic.

I am not sure all those Facebook users (note: I have registered but am not a regular user) are ready to be guinea pigs for all sorts of advertising nonsense in the name of innovation. I am not sure whether Facebook will keep my data secure or not.

It is a virtual jungle that Microsoft is buying a pricey ticket to.

Does this mean Facebook is no more the darling of web 2.0?
How will Facebook’s greed play out for the rest of the Web 2.0 arena? Does it herald the onset of the bubble burst?

- Or, will the social networking fad will play itself out in the long run?
- Is Facebook really worth all that money?
- Is Facebook in a better position that Google was in its pre-IPO stage?
- Did the Facebook people know that the IPO would probably wouldn't sell in a subprime-beaten market, with no visible earning pattern to show?

The next generation of social networking is already happening all around us.
The web applications we use on a daily basis; the blog comments we make; our comments on social news site…it is all seamless and it needs no hi-fi plugging.

Updates 28/9/2007
1. Darnell Clayton writes in the Blogherald that instead of investing in an uncertain entity like Facebook (it may still be the next Geocities), Microsoft should invest in Digg and get itself some credentials among bloggers who are heavily into social news.

2. Writing in the Guardian, Charles Arthur says that your Facebook profile is really worth $238 to Microsoft if only it worth $237 (£117) - or even $237.99 - to Google.

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At 10:09 PM , Blogger Tish Grier said...

I'm feeling a tipping-point/jumped-the-shark thing here. Sure, FB might indeed get that $15Bil, but someone's going to feel very "had" at the end of this very long social media day.

At 4:16 PM , Blogger Pramit Singh said...

I am positive it is Microsoft's turn to feel 'had'.

At 1:47 AM , Anonymous Anonymous said...

Facebook is a mess. Whether or not it is Microsoft's turn to feel "had"...the end of this cant come soon enough!


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