Bi-Coastal Facebook Spat: We Pick Winner


Boomtown Valley writer and celebrity Kara Swisher is playing fisticuffs with Fortune media man David Kirkpatrick.  Swisher started the fight a few days back by throwing a bucket of cold water on giddy Facebook boosters who were shouting that $10-$15 billion wasn’t nearly enough.  Kirkpatrick then insulted Swisher with the ultimate tech put-down–she didn’t get it.  The feisty duo have had their say.  Now, it’s time to pick a winner.

ANNOTATED SUMMARY OF SWISHER POSITION: Facebook’s ability to generate revenue is vastly overrated, just as it was for AOL, Yahoo, etc.  [but not Google].  $10 billion is “ludicrous,” a “ponzy scheme.” $15 billion is “even more laughable.”  The company could collapse at any minute.  Logic:

. Facebook is not Google:  [It doesn’t have to be Google.  Google has a $175 billion market cap, Zuckerberg just wants $15]

2. Potential is not actual: …Let us try not to be too jaded when we say we have seen this story of spiky growth followed by less than spiky growth before.  One need only to consider the bloom that has fallen off the MySpace rose to realise this, but the list of fast-growing and quickly wilting tech phenoms is long. PointCast! GeoCities! Netscape! AOL! Yahoo!  [Want a sure thing?  Buy Treasuries.  Yahoo hit $120 billion market cap before falling back to today’s $35.  Either outcome presumably fine for investors who buy in at $15B.  So not enough to say Facebook “could” collapse.  Which is Facebook?  Yahoo or PointCast?]

3. Most techies were not popular in high school [translation: Facebook a fad.  Our take: world needs one of these things.  MySpace a dump.  Linked-In hopelessly uncool.  Facebook has best chance to sustain.].

4. A sucker is born every minute: Thiel initially invested $500,000 in 2004 in the company, which was followed by two more rounds, for a total of about $32 million. The last one was more than a year ago for $25 million, giving Facebook a $525 million pre-money valuation.  [Sorry…past rounds are irrelevant.  Google worth $85 at IPO?  Most people appalled at mere suggestion.  Went straight to $500.  All that matters is what is happening now, and what happens from here.]

ANNOTATED SUMMARY OF KIRKPATRICK POSITION: Mark Zuckerberg is the next Bill Gates. [Wow.] There’s no way Facebook is worth $10-$15 billion–anyone who pays that is “insane.”  [Next Bill Gates not worth $10-$15 billion?]  Facebook is the closest thing the world has to a next-generation Internet. [Next-generation Internet not worth $10-$15 billion?].  Facebook may be best place for marketers to experiment with [amazing new targeting techniques.]  Zuckerberg smart enough to take the money. [No question about that]


Kara Swisher, Boomtown! Why?  Because Kirkpatrick wants to have cake and eat, too.  Takes easy and popular position of pooh-poohing Facebook valuation while also suggesting it’s the next Microsoft/Google.  Grow some cojones, David! Which is it?  Microsoft or PointCast?

We think Kara’s wrong about the valuation–Facebook’s revenue and growth rate make it at least possible that the company is worth that (today–not at some future date when everything is obvious), but we credit her for staking out a clear position.  Should Microsoft pony up?  Why not?  No guarantees, obviously, but probably worth a few hundred million to Microsoft to get in Zuckerber’s bed.  If goes to zero, whatever.  Microsoft’s got a lot where that came from.   


The real winner.