People have been doing that crazy Silli valley investment dance and when the music finally stopped it was Microsoft who eventually overpaid for a 1.6% stake in Facebook to the tune of $246 million. Giving a rough valuation of the company at $15 billion dollars.
To give you an idea about how retarded this is, ALL of Myspace.com was bought not to long ago by Rupert Murdochs News Corp. for $580 million. That would give a rough estimate of $5 a user.
With the Facebook deal, Microsoft basicly paid $272 per user for a minority stake in the company.
These companies are based on advertising revenue. Which means when the site is not cool anymore, which could be in 15 minutes, the advertising dries up and the company is hosed. Remember Friendster? is anybody talking about how much Friendster is worth? The actual difference between any of these companies is negligible, so why is one worth nothing and one is worth $15 billion?
Because one is popular…..