The Valuation Guessing Game
On Mashable tonight, I discuss the possibilities of Yahoo or other buying Facebook.
http://mashable.com/2006/10/27/why-zuckerberg-wont-accept-just-1-billion-from-yahoo/
From Inside Facebook, pg 61:
“In general, social network websites have tremendous latent value, for two reasons. Both reasons are amazing, because all of the value is provided by the community, not by the site, or by anything the social network site does. First, within a social network, users want to demonstrate their status and value, and they will pay money for “pro” badges (flickr) or for virtual flowers (hotornot) or for other virtual digital goods. These, being completely virtual and unreal, have no tangible value whatsoever, but they accrue value from how they are used and viewed within the social network. Second, the members of a social network have a lot of knowledge and skills, which are inherently useful to others in the network and to outsiders willing to pay money for them. “
