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When it came to monetizing search, Google was lucky in that someone else already figured out how to do that (GoTo.com). No comparably effective model exists for
by bostonscott 14y ago
When it came to monetizing search, Google was lucky in that someone else already figured out how to do that (GoTo.com). No comparably effective model exists for monetizing high traffic websites (social media or otherwise), despite many attempts over the past two decades. Not even close.
If Zuck took Facebook public 5 years ago, they would have gotten much less money, and they would have been distracted by investors calling for them to focus on building out that business model rather than attracting users - and Zuck may have lost controlling power in the company (less money + less users = less leverage for Zuck).
- cube13 14y ago>If Zuck took Facebook public 5 years ago, they would have gotten much less money, and they would have been distracted by investors calling for them to focus on building out that business model rather than attracting users - and Zuck may have lost controlling power in the company (less money + less users = less leverage for Zuck). Would this be a bad thing? The entire reason that Facebook needed to go public was because they needed the money to pay off their investors.
- AznHisoka 14y agoSo who's gonna pay off the public shareholders of FB now? Where's the greater fool?
- marvin 14y agoWell...Facebook's IPO valuation was about 100 billion US dollars. So if Facebook generates 100 billion dollars in profits throughout its history, inflation-adjusted, IPO investors who hold onto their shares will get their money back. Otherwise, their gamble will not have paid off. There won't necessarily have to be any fools anywhere.
- RichardKim 14y agoYou are not taking into account risk premia i.e. discount rate for investing in a highly volatile tech stock such as facebook. So to be net present value neutral it would need to generate over 100 bn in profits. And not only that, the market cap (at ipo valuation) is based on a stock price * number of diluted shares outstanding. Diluted shares increase on avg of about 1% per year for tech companies. Next. Stock price is based on nothing but forward earnings. If in year 10 facebook earned 100 total amount in profits but is declining then stock price will not imply a 100bn company. greater fool? it's the public shareholders who bought facebook at ipo v. some other public company with better risk adjusted prospects. I mean everything should be based on risk adjusted investment. right now fb is worth 50bn so who's the fool for taking a 50% loss in less than a 3 months? answer: everyone who invested at ipo.
- rustynails77 14y agoI'm not so sure about that. Facebook is WAY overpriced. It will take years to recoup the costs and they have very few prospects of making money in the forseeable future. I support your theory that Facebook will make 100bn back, but by the time Facebook does, the 100bn will be worth far less than that amount, due to potential earnings. As an example, I bought Qantas shares a while ago - and held them for 10 years. Their value didn't go up much in 10 years, so the "potential" earnings of that money was not realised - so despite the shares not going backwards, I lost out. Facebook is a losing proposition, unless they pull a rabbit out of the hat - and there's nothing on the horizon at all that even indicates they will come up with something.
- ramirez60 14y agoThat's not why FB went public. They went because they had to...
- uptown 14y agoGoing public wasn't required by their investor count, but they would have had to have audited financials, so the benefits of remaining private would have been reduced anyway: http://www.quora.com/Why-does-Facebook-need-to-go-public http://www.quora.com/Why-does-Facebook-need-to-go-public
- muzz 14y agoNo. No company "has" to go public
- viscanti 14y agoThere needs to be some liquidity event for employees who own stock. Equity is a big part of compensation in a startup. No company "has" to go public, but they could lose a significant portion of their workforce if they don't.
- RichardKim 14y agoYes companies are "forced to go public" if you are private and have over 500 shareholders than you have to register its stock. you can trade otc markets but no legit company with bn+ valuation is going to do that. it was inevitable outcome.