Facebook Is Worth 100 Billion

Yup, 100 billion, at least, in the not too distant future.  And please, let me just preempt anyone out there who believes that things are worth something different than what they currently trade at.  An asset is worth what you can get for it today, unless you plan to hold it in perpetuity (not many of you).  Facebook isn’t worth 100 billion today, it’s worth whatever you can sell it for, whatever someone is willing to buy it for, and yes you have to factor the size of your lot into that.  One share of Facebook may go for 80 billion right now on Shares Post, but try and sell one million shares, take that valuation down 10 or 20 billion.

Why is Facebook worth 100 billion eventually?  Very simple, the web is moving from thing centric to people centric.

Why is it so easy to do what Phil Pearlman calls search arbitrage?  Because Google is stuck in a thing centric world.  Google built its search business on the back of thing centric internet.  At the time, content on the web was largely published by companies attempting to sell things, or publish general information, not by individuals.  It’s hard to remember, but not so long ago there was no WordPress, Facebook, Twitter, even Blogger or MySpace.

The idea of the individual being able to publish content on the web about themselves is an extremely new phenomenon.  And there should be no surprise by anyone that it has taken off like this.  People love to share and connect with other people, social media is not a fad, it is a revolution which will tint each and every thing you do and consume going forward.  Life is better when you can share it with people.

Facebook was first to understand what was taking place.  They were not the first social network which allowed people to publish information about themselves easily on the web, far from it.  But they were first to understand that the web was undergoing a huge fundamental shift.

Facebook is worth 100 billion dollars, at least, because Google still does not understand what has taken place.  Either that, or they have made the strategic decision to stick to what they do best, which is thing search, not people search.  Their forays into social have been shallow and short.  I find this really interesting given the fact that so many people have Gmail accounts, including myself.  This should have been the starting point for everything social given that they already have so much information about you, and you were already spending so much time there.  They missed their chance obviously as Facebook came along, and despite a very ugly and clunky interface, Facebook owns the social presence of just about everyone on the web these days.

Go and test something for me when you’re done reading this.  If you have a Facebook page and don’t publish a ton of content anywhere else on the web under your own name, go do a Google search for your name.  What do you think is going to come up in that search?  Yes, your Facebook page.

But let’s go back to people search, because as more individuals are able to post content to the web, it won’t be about searching for things, it will be about searching for the person.  The thing that is so significant about Facebook is, they have indexed the social web.  Based originally on your school, and now on your home town, or affiliation to different groups and friends, you are indexed and searchable.  Does Google do that?  Didn’t think so.

What do you think all of that information is worth to a marketer?  Well on the old thing centric web, you would have to buy ad words at Google and hope the person searching for that word was also looking for your product.  You couldn’t target a specific demographic.

Because you have shared all of your info with Facebook, they can serve you local ads for wedding venues the second you pop the question to your girlfriend and change your status.  Imagine how much these marketers are willing to pay for just that group of leads, it is absolutely amazing.  Facebook has 500 million registered users, they can give a local, regional, national, or international marketer a specific pool of leads for just about anything on earth these days.  And you bet your ass they are paying more for it.  Would you rather advertise on Google?  Didn’t think so.

Yes, Facebook is vulnerable, just as every platform that ever was and ever will be is vulnerable to being usurped by a better platform.  Facebook is extremely sticky, and they have done an amazing job of making sure you come back, and stay there, every day.  But that doesn’t mean they don’t have to innovate.  Other platforms will attempt to break Facebook’s hold on the world of people search.  People left AOL remember, they left Friendster, they left Myspace, they will leave again if given a reason to do so.

What I find really interesting is how Twitter differs from Facebook.  While Facebook is the phone book for the internet, Twitter is the telephone.  The messaging platform on Facebook is not meant to do what Twitter does.  Facebook is a commenting system, and to some extent they have integrated status updates, but no one sits on Facebook waiting for people to update their statuses.

While Facebook is the phone book, Twitter is the medium through which we consume, find, and produce short form content with the world.  It is a far more natural way to share than Facebook.

At the end of the day, Twitter is a tool, it is a pipe, it is a protocol, it is a platform, but not the same kind that Facebook is.  That leaves a large conundrum for Twitter as the pipe is a much more difficult business to monetize.  My view is that Facebook should probably buy Twitter, and use it as its real time messaging protocol.  Facebook would significantly enhance Twitter by making it easier to find both people and content, something Twitter has miserably failed at thus far.  Try searching for a person on Twitter, it’s just about impossible to find them.

Facebook is worth 100 billion, at least, because they own social search, and as the web shifts from things to people, indexing and search is that much more important.  I remember only a few years ago when people were bemoaning the fact that there was just too much content out there on the web and no way to find it.  The meme of the day was, how are we going to simplify the web.  Facebook did it, and for now they will reap the profits of that victory.

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