After traveling from a small dorm room in Boston to major countries all over the world, Facebook has now set eyes on its next big destination, The Wall St. There is so much commotion around the upcoming Facebook IPO that I thought it would be appropriate for me to also put some views forward on the topic.
My journey with Facebook has been a long one. I first became a user of Facebook in Spring 2005 when it opened its doors to the student body of a few U.S. universities only one year after the site was founded at Harvard. At the time, I was required to use my official Penn State email address to become a user. There were few people on it and the idea of sharing photos from college parties and get togethers and seeing what your friends were up to in their dorms or classes was absolutely amazing. It was fun and the best part was it was safe and exclusive. Being a Facebook user made you feel part of something elite that was for a selected few. It felt special!
Seven years has gone by since and here we are today with every Mary, Dick & Jane all around the world now owning a Facebook profile. I mean no discrimination intended but the exclusivity is gone. It's a website now for the masses. Think about it. My 85 year old relative owns a Facebook profile now and has recently sent me a friend request. This change over seven years makes the personal me grin but the professional me wants to stand up and salute the persistence and vision of Mark Zuckerberg to be able to make Facebook what it is today. A company with 3000 employees and a $4.2 billion revenue whose upcoming IPO is being valued at somewhere between $80 - $100 billion!
Courtesy: Google Images
To get a realistic idea of what this valuation really means, let's compare it to some figures here in India:
On a different note, with Facebook going public, it reminds me of the hype that the IPO's of other technology companies such as Apple, Microsoft, Yahoo & Google created during their times. Apple valued at $1.7 billion in 1980, Microsoft at $640 million in 1986, Yahoo at $300 million in 1996 & Google at $23 billion in 2004. However, it is interesting to note that where Facebook is seeking a multiple of up to 27 times its annual revenue or up to 100 times earnings, Apple, the most successful technology corporation, in comparison, debuted at 25 times revenue or 102 times earnings and Google was valued at almost 218 times earnings. That means, for Facebook to replicate the gain in Google stock, it will have to become the world's largest $700 billion company. Achievable or not? Only time will tell.
In the meantime, I continue to put my trust in Facebook and wave my pom poms high in the sky for its team. Perhaps will buy some of its stock too when the time comes. If Apple & Google could do the near-impossible of living up to the hype that was created around their stock debuts, Facebook most certainly has the potential to do the same. After all, there are 843 million users backing it up with several million loyal fans like myself who have made their personal journeys and grown & matured with Facebook over the course of the last seven years. So, all I can say is 'Good Luck Facebook....Way to Go!'
My journey with Facebook has been a long one. I first became a user of Facebook in Spring 2005 when it opened its doors to the student body of a few U.S. universities only one year after the site was founded at Harvard. At the time, I was required to use my official Penn State email address to become a user. There were few people on it and the idea of sharing photos from college parties and get togethers and seeing what your friends were up to in their dorms or classes was absolutely amazing. It was fun and the best part was it was safe and exclusive. Being a Facebook user made you feel part of something elite that was for a selected few. It felt special!
Seven years has gone by since and here we are today with every Mary, Dick & Jane all around the world now owning a Facebook profile. I mean no discrimination intended but the exclusivity is gone. It's a website now for the masses. Think about it. My 85 year old relative owns a Facebook profile now and has recently sent me a friend request. This change over seven years makes the personal me grin but the professional me wants to stand up and salute the persistence and vision of Mark Zuckerberg to be able to make Facebook what it is today. A company with 3000 employees and a $4.2 billion revenue whose upcoming IPO is being valued at somewhere between $80 - $100 billion!
To get a realistic idea of what this valuation really means, let's compare it to some figures here in India:
- India's two most valuable companies Reliance & ONGC put together have market cap worth that of Facebook
- Facebook's expected valuation is nearly twice the amount of money that Indians spent last year buying bread and cereals
- India's GDP at the constant prices of Rs. 48.9 lakh crore is just 10 times Facebook's valuation
- Facebook's valuation rivals the total savings by India's private corporate sector worth Rs. 6 lakh crore in FY 11
- Indian internet companies received a total of $430 million worth of investments last year which is 20 times lesser than the Facebook valuation
On a different note, with Facebook going public, it reminds me of the hype that the IPO's of other technology companies such as Apple, Microsoft, Yahoo & Google created during their times. Apple valued at $1.7 billion in 1980, Microsoft at $640 million in 1986, Yahoo at $300 million in 1996 & Google at $23 billion in 2004. However, it is interesting to note that where Facebook is seeking a multiple of up to 27 times its annual revenue or up to 100 times earnings, Apple, the most successful technology corporation, in comparison, debuted at 25 times revenue or 102 times earnings and Google was valued at almost 218 times earnings. That means, for Facebook to replicate the gain in Google stock, it will have to become the world's largest $700 billion company. Achievable or not? Only time will tell.
In the meantime, I continue to put my trust in Facebook and wave my pom poms high in the sky for its team. Perhaps will buy some of its stock too when the time comes. If Apple & Google could do the near-impossible of living up to the hype that was created around their stock debuts, Facebook most certainly has the potential to do the same. After all, there are 843 million users backing it up with several million loyal fans like myself who have made their personal journeys and grown & matured with Facebook over the course of the last seven years. So, all I can say is 'Good Luck Facebook....Way to Go!'
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