UPDATED 19:44 EDT / MAY 17 2012

Facebook IPO Mania – Intoxicating Yet Elusive – Similar to the Netscape Moment for Silicon Valley; Bubble? No; Future Yes!

On the eve of the Facebook IPO which will be the largest in technology IPO history. Living in Palo Alto, California I can’t help feel proud and excited about the big day tomorrow. I love when an entrepreneurial venture hits the big time. For Facebook’s founders, early employees, and investors it’s a massive pay day.

Since its founding in 2004, the company has seen its valuation soar from $4.9 million in 2004 to $104 billion based on today’s IPO pricing.

My friend Dan Primack at Fortune has a great summary of who makes what in the watershed moment for a new generation of internet companies.

This IPO has been compared by many to Google’s historic IPO. My angle is that this IPO is more like the Netscape IPO where it’s so obvious that the future is social yet many can’t figure out how to justify the valuation. The browser from Netscape ushered in the Internet boom then bust. Why? Because Netscape and the web were so intoxicating in terms of possibilities. That spawned a massive bubble. Facebook has many similarities to that Netscape moment. Facebook is intoxicating yet elusive in its’ value.

I was at the SAP SapphireNow annual conference and I talked publicly on theCUBE (SiliconANGLE.tv flagship video telecast) that Facebook is what the web would have looked like if Tim Berners-Lee privatized the World Wide Web. Instead, the World Wide Web was open sourced. The web then went on to define the internet generation and its’ value for decades. To me Facebook is what the World Wide Web would look like if it went public rather than free and open.

So here’s a quick list of who made what, based on the assumption that underwriters exercise their entire over-allotment, plus the value of their remaining position (based on $38 price):


Mark Zuckerberg: $1.5 billion ($19.14 billion)
Dustin Moskovitz: $285 million ($4.8 billion remaining)
Peter Thiel: $848 million ($852m remaining)
Mark Pincus: $4.1 million ($158 million remaining)
Sean Parker: $38 million ($2.27 billion remaining)
Reid Hoffman: $412 million ($138 million remaining)
Jim Breyer: $125 million ($320 million remaining)


Accel Partners: $2 billion ($4.72 billion remaining)
DST Global: $2 billion ($3 billion remaining)
Goldman Sachs (GS): $1.25 billion ($1.25 billion remaining)
Greylock Partners: $332 million ($1.06 billion remaining)
Elevation Partners: $202 million ($1.32 billion remaining)
Mail.ru Group: $857 million ($1.28 billion remaining)
Meritech Capital Partners: $306 million ($1.23 billion remaining)
Microsoft Corp. (MSFT): $287 million ($959 million remaining)
Tiger Global Management: $1.03 billion ($1.02 billion remaining)

Where Does Facebook $100 Billion Value Compare To Other Public Companies

Hewlett-Packard: $46 billion (-$54b)
IBM: $228 billion (+$128 billion)
Microsoft: $250 billion (+$150b)
Oracle: $130 billion (+$30b)
SAP: $60 billion (-$40b)
Salesforce: $18 billion
Amazon: $98 billion (-$2b)
Google: $203 billion (+$103 billion)
Yahoo: $18 billion (-$82 billion)

My Angle:
Being close to Facebook since they moved to Silicon Valley and within the core tech circles, I have a unique perspective. I am “long” on Facebook. I think the analysis of the pundits this week are completely missing the boat on the analysis. Facebook’s revenue model has nothing to do with online advertising because reach advertising is dying. It’s about data. If you look at Facebook’s revenue since Timeline was introduced Facebook has taken a massive hit in operating revenue. Their Timeline moves shows that Facebook is winding down display advertising. They will move to a contextual data model that is not yet “baked out’. I can assure you that they will have something because the user base is too massive.

Big advertisers are going to market with direct advertising business models. Big advertisers are executing huge large-scale social media campaigns streamed online using social and mobile marketing with Facebook, Google Plus, YouTube, and Twitter being the primary vehicles not TV or magazine ads. This flys in the face of the General Motors story going around that Facebook isn’t a good ROI for them. Maybe GM is just foobar on social not the other way around.

My analogy to Tim Berners-Lee inventing the Web is how I see it. Question is this: what would the value of the World Wide Web be if it wasn’t open sourced (donated) by Tim Berners-Lee. Cough Cough: It would be like Facebook’s IPO.

The big opportunity for Facebook is about the future. Think about transactions that are possible. I’ve documented signs of this with the recent success of the Hunger Games and Thismoment.com. Think about it all and any kind of transaction (direct advertising, online and offline sales) can happen in the Facebook (and Facebook Connect) network. So the value per user could be as high as $5000-$10,000.

Yes it’s a bubble so pop the champagne and enjoy. Then buckle up and go for the ride because social is the new web.

(side note: this is what I wrote about in 2007 about Facebook – I called them a money machine when everyone was doubting Facebooks prospects)

Other SiliconANGLE Original Facebook Coverage

Exclusive: Facebook’s VP of Engineering Michael Schroepfer – Part I

Exclusive: Mike Schroepfer on Cloud Collision and Scaling Facebook [Interview]

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