Facebook Will Sit Tight, As It Should
At the iMeme panel last week I had the opportunity to sit next to Jim Breyer and watch him take some tough questions from Adam Lashinsky about why Facebook doesn’t sell at the huge numbers that are being whispered in the blogs and on the street.
Jim said something important that really wasn’t picked up in the chatter about his comments. He said that all this attention on what Facebook is worth isn’t doing the company any good. I commend Mark, Jim, and Peter for their obvious intentions to keep Facebook independent and private for now. I think Facebook will make a great public company at some point, maybe in the next year.
But selling the Company would be a huge mistake. First and foremost for the users. Any buyer will screw up Facebook. It’s greatness comes from the fact that the people who run the company live inside the service, they built if for themselves and it works because of that. They have their pulse on the community and they are not likely to screw it up too badly.
If you look at most web services that have been bought, they’ve lost their mojo once they were acquired. What has YouTube done lately that is so great? Skype? MySpace? Delcious? Flickr?
I really don’t see what a large portal/media company does for a web service and its users. I totally see what a large portal/media company does for a "monetization service" like FeedBurner or Right Media. Look at how successful the advertising.com transaction was for Time Warner/AOL. But social web services/social media is different. I believe these services do better as independent entities.
So why do companies sell? Because of fear, boredom, and personal financial issues. It seems to me that Skype’s founders got bored and wanted to do something else. Billions of dollars and boredom is a good reason to sell. YouTube’s founders knew the copyright issues were going to be a huge distraction and that Google was a much better entity to fight that battle. Fear and billions of dollars is a good reason to sell.
Personal financial issues lead a lot of companies to sell. But in Facebook’s instance, that’s not an issue. If Zuckerberg wanted to sell a piece of his company, I’d buy it. So would any number of people. They’d be lined up. But it’s unlikely that his shares would go any further than Peter Thiel, Accel, or Greylock who would likely snap them up at any reasonable price. So if Zuckerberg had personal financial issues, and I suspect he doesn’t being so young, he could easily deal with those in a private sale transaction.
Bottom line is everyone should stop wondering about how much Facebook is worth in a sale transaction. Because it’s not going to happen. Look for the IPO next year.