Facebook rejects funding at $4 billion valuation, may not raise more

http://venturebeat.com/2009/04/15/facebook-rejects-funding-at-4-billion-valuation-may-not-raise-more/

by drusenko • 17 years ago

25 27 17 years ago

ctingom• 17 years ago

Facebook made under $300 million last year, was a little shy of breaking even, and at first expected to make towards $400 million in revenue this year. But the company said in late March — incidentally at the time that chief financial officer Gideon Yu left the company — that it was beating projections by 70 percent. I’ve confirmed that this run rate has the company possibly breaking half a billion in revenue by the end of the year.

If that's true, it's remarkable.

ajju4• 17 years ago

What are they making money off? I have never heard of anyone clicking an ad on facebook. (conversely I have met few Internet users who have NOT clicked a Google ad)

They could be selling data/information. If so, I hope it's anonymized.

drusenko2• 17 years ago

i have clicked on facebook ads, when at times they are actually really interesting to me. not often, but a few times. i probably click on google ads about the same amount (rarely) and otherwise never click on other ads across the web.

fizx• 17 years ago

I'd tell you what I'm getting insane clickthrough on, but I don't want the competition, thanks. Some ads target REALLY well.

cellis• 17 years ago

full disclosure: I build/make money from facebook apps

Facebook made under $300 million last year, was a little shy of breaking even...

Why is this surprising to so many? There are dozens of developers that are netting 100k+ a month (yes i actually talk to one of them quite often), and at least half of this is from ads. Facebook is the largest social network in the world and growing at about 1 million users a day; why is it a surprise that they are actually almost break even?

randy2• 17 years ago

I don't understand what everyone's so surprised about. Myspace makes nearly $1 billion in revenue, and Facebook is larger, has better technology, has a more affluent audience, of which they have more information about, has multiple revenue streams (billions of CPM ads [I estimate 6B by Quantcast numbers, they also have a lot more space for them since the re-design], tens of thousands of targeted ad campaigns [many of which I've seen, some of which I've clicked], newsfeed insertion partnerships [youtube charges in excess of 200K for front page ads], gifts [obviously not the core of their revenue stream, but I guarantee they pull in a few million], platform [they aren't really monetizing it yet, but developers are making hundreds of thousands to millions a month on it, so I wouldn't be surprised if FB eventually gets in on some of that action]), etc.

I know it's fashionable to hate or doubt Facebook nowadays, but if you look at the numbers instead of your own personal experience with Facebook (which, since your on Hacker News, is probably not very similar with their core user base), I think you'll come to the conclusion that the demise of Facebook is not just around the corner.

bigbang• 17 years ago

"I don't understand what everyone's so surprised about. Myspace makes nearly $1 billion in revenue, and Facebook is larger, has better technology, has a more affluent audience,"

Probably thats the problem. More affluent(generalizing to educated) people and people who use better a network for technology, dont click on ads.

JabavuAdams3• 17 years ago

Why? It's revenue, not profit.

If Facebook is actually "almost profitable", then my little 8-hour iPhone app is more profitable than Facebook.

Think about that. All those people; all that effort; all that busy-work. It's just wealth redistribution.

Now, investors expect that Facebook will scale (financially) better than Jaba's little iPhone app that you've never heard of -- once it starts making money it'll make heaps of money.

Thing is, if they're wrong, it's just a huge misuse of capital. OTOH there is a value to having subsidized geek nirvanas (to the geeks, not the investors).

tokenadult• 17 years ago

It's revenue, not profit.

Yes, the distinction between revenue and earnings is what makes all the difference. Investors invest to end up with more money than they put into a business enterprise.

omouse• 17 years ago

They're subsidzing the training of several programmers who otherwise might not have had to deal with such huge databases and systems. This is valuable because whenever Facebook dies or when the programmers leave, other companies will be the richer for it. So not a completely huge misue of capital if you're thinking about the whole of society, but definitely a misuse if you're an investor in Facebook heh.

nreece• 17 years ago

Facebook made under $300 million last year...

How?!

elai• 17 years ago

Facebook apps and ads appeal to a market very far away from us tech guys so it can be hard to think of how it works. Think of things as random as bored at home fat housewives and Swedish people as your money makers. Also facebook ads can be hyper local, because people in facebook tend to actually put accurate information in! Imagine local businesses and organizations advertising their cancer runs, concerts or what not.

gaius• 17 years ago

Hmm, yes and no. Facebook ads are generally well targeted, I think. I get ads mainly for diving and snowboarding (which I have followed), dating (I am single and looking, not quite ready to take the plunge into online dating yet tho') and fitness (and I know those "get a six pack" ads are all scams, but showing them to me is a reasonable decision by the algorithm). I also get "become a fan of X" as sponsored ads which is just plain stupid.

Google's ads seem to be simple keyword matches and are context-free, I think Facebook could have the edge here, but they really do need to get rid of the scammers and actually pay attention to feedback (e.g. if I flag an ad as uninteresting, FB is wasting my time and its advertiser's money by showing it to me ever again).

fiaz• 17 years ago

Interesting...does this mean that Facebook will only accept funding for nothing less than $15 billion?

psranga• 17 years ago

I'm a little puzzled by the skepticism about Facebook's utility. I don't know about you guys, but losing touch with old friends is something I feel bad about all the time. Facebook let's you keep informed in a shallow way about people who you don't meet often (enough). That's certainly better than being uninformed.

I would actually pay a small amount for something like Facebook.

If you build something with utility, usually it's possible to derive value.

Facebook rejects funding at $4 billion valuation, may not raise more

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