Facebook Fanboys & Naysayers Face Off, Future of Palo Alto Real Estate Market At Stake
One thing has become clear to me as I explore the Facebook world from an individual and business perspective: never, perhaps, in the history of Internet businesses has there been such a rapid and profound polarization of opinion on the prospects for a company.
Why, you ask, is a guy who's been bashing contextual advertising for years, even writing about Facebook? Quite simply, my wife & I are considering moving to Palo Alto (where I grew up) and how many Palo Alto-based Facebook millionaires there might be has a big impact on when we pull the trigger on a house in Palo Alto. If you think Facebook's a fad, then you have time to look for the exact right home in Palo Alto; if you think Facebook rockets to the moon, then you had better buy your Palo Alto home now because being in the middle of a Google/Facebook bidding war for a 3-4BR home in north Palo Alto could get pretty darn ugly.
[NOTE: the Google Map at the top of this post is of all the places I've lived in Silicon Valley; you'll note that I keep getting further & further from Palo Alto, which is not really what I had in mind.]
You literally have people who think Facebook is worth $500M all the way up to $100B, a full 2.5 orders of magnitude difference in opinion, despite the fact that everyone pretty much agrees on Facebook's current size and growth rate.
In case you haven't yet made up your mind, here are a couple key fanboy and naysayer arguments:
Fanboy: Lee Lorenzen, CEO of Altura Ventures, owner of the Adonomics blog which tracks Facebook application usage. Lee's VC fund invests solely in Facebook apps, and he makes the case for Facebook getting up to 200M users by end of next year as well as a $500/user valuation. Laugh all you want (I certainly did), but Google has a >$250/user valuation right now themselves.
Naysayer: Kara Swisher, who's been around long enough and has enough of an investment coverage background to have a legitimate argument for why even a $15B Facebook valuation is f$#%&ng crazy?
Fanboy #2: Vinny Lingham, whose Facebook valuation model is based on comparisons with Google's AdSense business. His model makes sense, but IMO he misses one critical point - people won't necessarily continue to use Facebook to the extent they do today. Remeber Geocities? Friendster, Excite@Home, Netscape, MySpace (a soon-to-be has-been)? You can't assign a $10B valuation to a company *today* based on what you think will happen over the next 4 years, certainly without several years of track record at your back. Vinny's counterpoint to that argument, though, is one that not easily dismissed: the consumer data Facebook has will allow for off-Facebook ad and offer targeting to an [ROI] extent never before seen, and that's ultimately why Facebook's worth $10B.