I am one of those kids who are a very big fan of Zuckerberg. I have kept a special place for him by putting his poster on my wall. I was accessing #facebookipo on tweetdeck from last 3 days to see all the latest happenings on IPO.
I have seen lot of hate tweets/articles on $104B valuation and YES, they all have a valid point. Facebook has $3.7B revenue and $1B profits last year. They are valued at more than 100x times of their profit and 25x times of their revenue. I don’t know how valuation thing being taught in MBA class but that must be not be more than 5x times of revenue, right? Google has a valuation of $200B and revenue of $40B which is 5x, right? Cool.
I guess here companies get valued not based on their revenue/profit but based on their impact and future projections. Okay let’s take a simple example : If facebook decide to shut the site tomorrow, how many of you are ready to pay $2 (INR 100) a month to keep it alive? What about those big brands who have facebook pages with more than 1 lakh likes. At bluegape facebook fanpage, we have just 1300 likes but still 30% of our traffic comes from facebook. Dude, almost 1/3rd of bluegape.com business is because of facebook. I guess that is true for most of the businesses atleast based on how effectively they are using facebook.
If we just pause for a moment and think that according to Alexa, facebook is the second most visited site on earth even after getting blocked in few countries including China. The valuation of facebook is not based on revenue or profits, It is based on how facebook is actually changing the world. Now I must say this is a safe bet to buy facebook shares at $104B valuation as the company is worth more than that actually. To make you little comfortable just don’t predict anything based on current revenue model of facebook. I mean C’mon, Google had no clue of their revenue model for first 4-5 years. Both facebook and google have 900 million users. You must accept this fact that zuckerberg is smart enough to come up with better revenue model with the current user base.
These are just random musings from this shapeless soul based on what I learned in my Entrepreneurial Journey. I just want to end this post with a big hi5 to zuckerberg and team 
If you are also bitten by the entrepreneurial bug, have a look at awesome gallery of Entrepreneurial Posters at bluegape (Click Here)
P.S. : I still tweet @sbaghla
This was originally posted at bluegape blog !
Nishant Agrawal
Internet startups defy all logics of investing. Some come out of nowhere. And some fade into oblivion.
Ashish Chandra Mishra
Beautiful letter from a father to his daughter… I could resonate with every point you made. Thank you for verbalizing the thoughts I would like to share with my own daughter since everyone may not have gift of the gab as you have…