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Facebook: High and Mighty




As instigator of the unofficial Facebook rumor blog, I figured I should cover this story (better late than never)! According to TheDeal.com’s David Shabelman, there’s a good reason Facebook isn’t being acquired: they want way more than they’re really worth.

Yes, we knew that. But it’s not just Zuckerberg that’s pushing for the big bucks: the VCs who funded Facebook are holding out for a better offer as well:

‘We’re so far apart with what we think it’s worth and what other people do it doesn’t make sense for us to have conversations,’ [Facebook director and investor Peter] Thiel said. ‘Either they’re underestimating it or we’re overestimating it, but given that disconnect, it would be a complete waste of time for the company to be talking with people.’

In addition to putting up $500,000 for Facebook, Thiel is president of Clarium Capital Management (a hedge fund) and managing partner of VC firm Founders Fund Management. He obviously has plenty of experience in investments and acquisitions.

However, if Facebook ever had any intention of being acquired, they’re pricing themselves right out of the market. Thiel says if they were talking, they’d be asking between $7 and $10 billion. If they went public instead, it wouldn’t be until 2009 at the earliest. But at least they’re realistic:

Observers have ‘read too much’ into a recent job listing on Facebook’s site for a stock administration manager to manage its options program, he said, adding that this did not signal the company was on track to go public.

‘I think the preference we have would to do neither — to neither take the company public or sell it,’ he said.

If it were to consider a sale, it would take a large number to get the company’s attention, Thiel said.

‘If we got an offer from someone for $10 billion, we probably would listen to them,’ he said. ‘I don’t think we’re going to get that offer, and we’re not going to solicit it.’

In his conversation with TheDeal.com, Thiel also emphasized that Facebook understands exactly where their strengths lie: with the vast amount of user data they collect.

  • http://www.phooblog.com Eduardo Fenili

    10 billion?? haha, they are nuts.
    I realize they said the market is said to be worth upwards of some $190 billion but I can’t see one company commanding that kind of price.
    I don’t know about the numbers and what not, but I doubt even MySpace could get a price like 10 billion even today and its more than twice as big as Facebook.

    I think Facebook is getting a little ahead of themselves.

    Also, there are literally hundreds if not thousands of these sites popping up all over the place, so Facebook is hardly only competing with just MySpace and the like. Why wouldn’t a company spend $200 million on a much smaller company with the exact same system and use the other 9.8 billion to market it like no other product on the planet? I mean how many companies in the space can even afford 10 billion on a “maybe” venture?

    I don’t know, I could be totally wrong:) just my thoughts.

  • http://www.marketingpilgrim.com Andy Beal

    This time next month, they’ll want $20 billion. ;-)

  • Jordan McCollum

    I agree with you guys, although I did want to point out that Facebook does have one thing going in its favor vs. all those $200M startups–an established network. And in social networking, that is pretty important to your success.

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