Intruders.tv’s interview with Blake Chandlee triggered this post. Blake is Facebook’s first European employee. Ex-Yahoo employee and serial entrepreneur:

Eugene at the end of the interview asked him: “So what are your thoughts on Facebook’s evaluation ?”. Blake very wisely dodged the question. So there is obviously a lot of speculation on why Microsoft value Facebook at $15bn.

I think the evaluation represents Fb’s major plans for the future! Microsoft in my opinion saw the potential of Facebook’s global expansion. Facebook is a goldmine for user data. There is so much information stuffed into Facebook and many bits are still unexplored. Have you seen this page on Facebook :

Its called the Social Timeline and its neatly tucked away in Facebook. It allows you to see your Fb friends sorted by how/when you got to know them. Once Facebook localises its services, which according to the interview will be achieved by March 2008. At that point Fb can generate valuable data for marketers based on friendship. Lets try and compare this with how Google started back in 1999. Google a search engine company with loyal usership managed to create other tools for pictures, shopping (Froogle now called Google Products), ads etc. Obviously Adsense is what really made Google’s business model clearer. After which it was a race to get more real estate on the web. Thats when other products like Google Maps, Orkut etc were born.

Similarly Facebook experimented with Social Ads (Facebook Beacon), which obviously didnt go that well. But I’m confident Fb will keep working on it till they get it right. Once thats done it will be another race, this time initiated by Facebook, to buy starts-ups even vaguely relevant to Facebook. Facebook might be interested in buying startups built on Facebook platform. So in my opinion investing in Fb platform by star-ups is a wise decision (Can’t believe I’m saying that).

There are some clear suggestions that Facebook is going down this path:

Facebook Apps now spidered by Search Engines (This makes Facebook relevant to user’s who are not yet on it and obviously helps its online marketing campaign), Bebo now supports Facebook Platform (Indication that Facebook’s platform will be used as a standard social networking service)

With the cash it has in its bank at the moment ($240m) I think we can expect big things in terms of product development globally. Regarding its current evaluation of $15bn, I’m confident that it will continue to rise to about $100-200bn. 1.5 - 2 years from now you and me will be buying Fb shares

In the coming 3-4 years we might see the Big 4: Google, Yahoo, Microsoft and Facebook. They will compete to be the dominant publishers, adservers (Facebook will continue using Microsoft or might build their own) and continue buying startups left right and center.

Microsoft’s strategy is not to miss this opportunity, given that it already missed on some cutting edge online technologies, which Google and Yahoo were producing over the last 7-10 years. So from Microsoft’s point of view Facebook’s 1.6% is an excellent buy. When the Big 4 are established Microsoft will have an upper hand over Google and Yahoo!

Blogged with Flock

Tags: FacebookEvaluation, Microsoft, Yahoo, Big 4, Google, Buy Startups