A little while ago I heard that Yahoo! had offered Mark Zuckerberg $1 billion to buy his creation, Facebook. He turned them down and reportedly wanted $2 billion just to get out of bed. Much of the talk about his refusal of the offer was was that he was crazy to turn down that amount of money, especially considering Mr Zuckerberg is in his early 20s and I believe still at university. For those of you not familiar with Facebook (there are half a dozen people on the Web who aren’t), Facebook is a true social networking site. It was originally established for use in schools and universities as a way for students to keep track of their friends and who they were friendly with. The service was opened up to the general public and although you need to register to see anything on the site, registration is free and the site has taken off like wildfire. In fact it has gotten so big that Facebook is being discussed as the next MySpace.
Anyway, Mashable has a post titled “Yahoo’s Biggest F*ck Up: Not Buying Facebook” which pretty much says it. According to recent data, Facebook has around 21 million registered users who generate about 1.5 billion page views a day. 93% of Facebook’s users are active (around 19 530 000 users) and log in at least once a month and 60% (around 12 600 000 users) log in once a day. Those figures are mindboggling. They also mean that Facebook is worth a bomb in advertising revenue alone. If Zuckerberg placed Google AdSense ads on Facebook he could comfortably buy groceries from some foreign destination. I was told that a large online site can charge 15 cents (ZAR) per page view for advertising on the site. Even if you work with 10 cents per page view you are looking at around R150 000 000 or roughly $21 000 000. I may be off with the numbers but if they are even close, Zuckerberg could be doing quite nicely. In fact, according to Mashable, a purchase price for Facebook could be closer to $3 billion. So yes, maybe Yahoo! should have taken the deal.
On the other hand, the value of these sites depends on the numbers. There is a window of opportunity for the lucrative sale of a social networking site before all the cool kids head off to the next big site and take all their friends with them. The time to bite is when the site is still pumping because when the users move then there goes the value with them because that value is the users.