Facebook's recent valuation of 50 Billion USD, has created quite a lot of commentary - mostly centred around it being way too high (from most commentary I have read). The valuation is based on what Russian (and part South African) venture capitalist firm Digital Sky Technologies and Goldman Sachs were willing to pay for a share in Facebook. In essence, most commentators have argued, that they paid too much.
In terms of classical economics, that is true, or at least based on given information. Afterall, Facebook is a private company, and thus its financial results are not public information.
However, valuations can also be based on the net worth of Facebook's assets. And its biggest assets have currently no real means of being objectively evaluated - personal information. Facebook has over 500 million active members; which in turn translates to personal information including likes, dislikes, freinds, connections, activities, photos, and a whole lot more of 500 million people on the planet.
If one ignores Facebooks' traditional assets (servers, datacentres, offices etc) and liabilities, it means that the personal information of 500 million people is worth 50 billion dollars - or 100 dollars an individual.
The resultant question is simple - is the personal information of you, or any other person worth more or less than 100 dollars? In fact, if someone would offer you 101 dollars, would you give them more information than what you have willingly published in Facebook for free?
50 billion dollars? I think Facebook is undervalued ...
In terms of classical economics, that is true, or at least based on given information. Afterall, Facebook is a private company, and thus its financial results are not public information.
However, valuations can also be based on the net worth of Facebook's assets. And its biggest assets have currently no real means of being objectively evaluated - personal information. Facebook has over 500 million active members; which in turn translates to personal information including likes, dislikes, freinds, connections, activities, photos, and a whole lot more of 500 million people on the planet.
If one ignores Facebooks' traditional assets (servers, datacentres, offices etc) and liabilities, it means that the personal information of 500 million people is worth 50 billion dollars - or 100 dollars an individual.
The resultant question is simple - is the personal information of you, or any other person worth more or less than 100 dollars? In fact, if someone would offer you 101 dollars, would you give them more information than what you have willingly published in Facebook for free?
50 billion dollars? I think Facebook is undervalued ...
2 comments:
Placing a financial value on personal information... hmm... very interesting read indeed.
Basically I think that it's not the value of your personal information in isolation, because that, as we all know, is free. It is the fact that this information is being overlaid with various other information (connection-related or not) that gives it value.
Data alone is meaningless, but FB has found a way to attach an artificial value to it by manipulating the strength of the bonds that exist between and around human beings. So my answer is, I'd give the same information out to you or anyone that I put on FB for mahala. What value they place on it or market it for is their business. Until they charge me.
Also have you used facebook, btw? You should at least go through the sign-on process and look around, not necessarily have an active account. Cause it kinda sounds like you haven't. Have you? I'm curious.
Post a Comment