Most liked posts in thread: Twenty-Three Year-Old Facebook Founder worth $5 billion
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Facebook is the real deal. Trust me. Advertisers can reach out to 100s of millions of people via this social networking website. It has a wider reach than any other medium. Think how much advertisers will pay for spots on FB. Zuckerberg is going to keep his billions and more. He's the 21st century Bill Gates. This may sound crazy but, I believe he will be richer than Gates in a few years.
People today spend more time online than watching TV. The internet is bigger than TV. FB is the internets top dog. Worth every penny. You have millions of people who sign into Facebook every single day and spend hours. Imagine how much advertisers will pay to reach these people ? Imagine how many goods and services you can sell via FB. Facebook has it own economy with people being able to buy gifts to post on their friends profile pages. Its crazy. U guys need to join FB and see for yourself.
Peter2, I recommend you sign up on FB and you will see what I mean.
"Rapidly rising Internet star Facebook has sold a 1.6 percent stake to Microsoft Corp. for $240 million, spurning a competing offer from online search leader Google."
Microsoft has to pay $240M and as far as I know, it doesn't go to Facebook, it goes to the founder(s) who sold shares - he is liquid that amount at least until the IRS hits him for the capital gains on it.
That makes Zuckerberg worth 240M liquid and 15B illiquid.
Im not privy to his ownership stake, but I'm sure it was more than 50%.
$120M isn't exactly pocketchange.
Point I'm making is: A 1.6% sale was a liquidity event that would be substantial to anyone, especially a kid in his early 20's.
Microsoft doesn't pay $240 million and that money goes no where, or is put into some special account - it goes to whomever sold the shares. As far as I know, Zuckerberg was the primary shareholder.
Forgive me for resurrecting a thread from 2007, but I thought it was interesting to see how people viewed facebook. It has now been 5 years later and facebook is still around and it is a giant. I personally do not use it and can’t stand it, I had it for a while but the constant stalking by ex’s and people who I may have passed by the hallways in high school really freaked me out.
Mark Zuckerberg’s current wealth is roughly $9.4 Billion, I am not sure if that was taken before or after FB’s disastrous public offering.
Facebook Inc. (NASDAQ:FB) has a market cap of roughly $65 billion.
Can we do another poll and see where we think FB will be in 5 years? Personally I think it will go the way of the dodo, but what do I know.
Admin PostAndy Black likes this.
Here is what I think about Facebook.
First, advertising. I heard a lot about it not being a good deal. I tried it out, the traffic is high quality. Just today I was looking at one of my Google ad campaigns and noticed that what appears to be a third-party Facebook application was sending me the best converting traffic of the day. I am not over-paying for any of my advertising. This tells me that Facebook has enormous room for boosting their advertising revenue.
Facebook may very well turn out to be "the Google" of social networking web sites. A lot of search engines came before Google. Other than Yahoo, they are all history. Google got it right, at the right time (post-dot com bust.) Facebook is doing a lot of things right and users are happy. The same can not be said of either Friendster or Myspace.
If Facebook does stick, that $15 billion isn't a crazy number by any stretch.FT1 likes this.
Second, the $15B valuation is meaningless. If I were to sell .00000001% of my company to you for $1000, that would give my company a $100B valuation. And by the same reasoning you use above, I'd be worth $50B (since I own 50% of my company). But, since there is little reason to believe that I could sell the other 99.99999999% of my company for the same amount, it really is meaningless.
Likewise, Facebook most probably couldn't find another company(s) to purchase the other $14.76B of it's stock anytime soon (do you think they could?).
By the way, it's also important to note that when you use the phrase, "on paper," it implies an unrealized gain. In the case of an investment valuation without any true financial backing (like in this case where we have a $15B valuation without $15B actually existing), there is no realized or unrealized gain.
So, even saying he's a billionaire "on paper" would be incorrect.
At best, since he controls about 1/3 of the $240M investment, he has $80M "on paper."Suzanne Bazemore likes this.
Just to clarify for anyone else who may still be confused...
Starting from the beginning, and speculating in some cases since there's no way of knowing if this deal may have deviated from standard operating procedures (it may have):
- The founders of Facebook create a corporate entity (a "C" Corporation) to hold their asset (the business)
- The corporation issues shares of stock (this is done on paper, and there are likely multiple "classes" of stock issued)
- The founders grant themselves some percentage of the Class A stock (the kind that gives voting rights, etc)
- The founders probably granted themselves somewhere between 50-80% of the company stock, with the rest going into a pool used for other equity needs (employee stock options, investment rounds, etc)
- The corporation appoints a Board of Directors, who likely have control over the major financial aspects of the company (allocating stock, granting more stock, etc)
- As the company hires employees, they give the employees stock options out of this additional pool (likely Class B shares, without voting rights, etc). Every options grant must be approved by the BOD, and the founders likely no-longer have final say over approval of equity distribution
- Microsoft comes along and wants a piece of the pie. After a lot of negotiations, they all agree that MS will buy 1.6% of the company for a total of $240M
- The Facebook BOD approves the private equity investment, and allows 1.6% of the company stock to be distributed for the $240M investment
- The company now has $240M in its bank account (or however Facebook and MS agree to deal with the cash), and MS now has 1.6% of the Facebook stock. Depending in whether MS got Class A or Class B shares (or potentially a whole different class of shares), they may or may not have voting rights, veto rights, etc
- The $240M is now subject to the same financial rules and regulations as any other money in the company, meaning it's likely that any major expenditures must go through the BOD
- This means that the founders can't just sell off their shares in return for a portion of this money, unless they either get BOD approval or its already addressed in the company by-laws
- This means that the founders are likely no more liquid than they were two days ago, and while they are potentially worth $80M "on paper," it's very possible that they could never see any of this money unless/until there is a real liquidity event
- In fact, I'm guessing that Facebook has already laid out for MS what the money will be used for and how it will be spent (there may even have been agreements signed)
- Lastly, this is not considered a liquidity event for the company (based on any definitions I'm familiar with), as it's likely the only shares purchased by MS were previously unallocated and controlled by the Facebook BOD (i.e., no-one made any money other than the company itself)
Now that I think about it, it's likely not a taxable event for the company, as investment funds aren't taxable going in...only coming out...I think...others would know the tax stuff much better than I...
By the way, the above is just speculation, but as I've now been part of two acquisitions by MS (including a recent one that was about 4x the size of the Facebook investment), I'm guessing it's along these lines...andviv likes this.
Microsoft is forced upon user and Facebook is a choice. Could be a here today, gone tomorrow story (with a blink of an eye).
Microsoft wasn't and isn't going anywhere fast because you MUST use the software. This will change as time moves forward but Facebook is not a must. A new Zuckerberg could appear tomorrow and take every one of his users.
Peopel have been trying to do this to Gates for 20 years and it still hasn't worked!
If I was a betting man, The Google guys are the ones that will make Microsoft and Gates look like a mild success, not Facebook.michael515 likes this.
Depending on the percentage ownership you have in the buying company, whether the buying company is public or not, and whether you have material knowledge of the business, you may be susceptible to specific SEC regulations that determine if/when you are allowed to sell your shares.
Other than that, it's a personal decision between you and your accountant on whether you'd rather have the stock or the cash.
Of course, your mileage may vary...
He was completely non-descript, and you probably wouldn't have noticed him in the crowd. In fact, I would have described him as a typical PhD (though he wasn't working on his PhD at the time)...
I agree with your assessment of FB vs. Windows. But, I think you'd be surprised how many people feel the opposite way these days (they could live without Windows but not without FB)...
My point is, making a random comparison of FB to Geocities (or Y! or Amazon.com) is meaningless. If you really believe FB won't be around in 10 years, let's hear a well-thought-out analysis of why you believe that.
Do you know something about FB management that leads you to believe they aren't smart enough to keep their business relevant? Do you know something about the business model that leads you to believe it will fail at some point? Do you know something about the customers that indicate that will migrate away at some point?
I know quite a bit about FB (including a number of senior employees), and even I have no idea where they'll be in 10 years (and have yet to hear any convincing arguments one way or another).
Wow, a thread from 2007. A blast from the past.
Turns out....most of the folks who commented in 2007 were wrong....B. Cole likes this.
Last edited: Feb 11, 2019ZF Lee likes this.
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