{"id":472,"date":"2008-05-19T22:35:42","date_gmt":"2008-05-20T03:35:42","guid":{"rendered":"http:\/\/devinreams.com\/blog\/2008\/05\/19\/why-people-are-always-wrong-about-facebook\/"},"modified":"2008-05-19T22:35:42","modified_gmt":"2008-05-20T03:35:42","slug":"why-people-are-always-wrong-about-facebook","status":"publish","type":"post","link":"https:\/\/wordpress.reams.me\/?p=472","title":{"rendered":"Why people are always wrong about Facebook"},"content":{"rendered":"

<\/a><\/p>\n

People like Scoble still think Microsoft is going to drop something like $20 billion<\/a> on Facebook. A site with maybe $0.2 billion in revenue? Yeah, okay. Aside from what I like to call the decimal-place-mismatch let me explain why Facebook is not worth that much and why Zuckerberg is not a billionaire.<\/p>\n

We aren’t in a vacuum<\/strong><\/p>\n

There are many more variables to how Microsoft decides to drop $240 million<\/a> on a “stake.” Sorry but you can’t just say “oh, that’s a percentage, let’s multiply it.”<\/p>\n

I liken the situation to that of my friend who recently started a company and moved into 200 square feet of a 10,000 foot floor (for those of you playing at home, that’s 2%). A generous businessman owns 10,000 of empty space and is renting 200 square feet for, let’s say, $2,000\/month. So can we say that each square foot is worth $10 and call it good? Sure. Wait, no–no we can’t!<\/p>\n

Just like we can’t say each percentage of Facebook ownership is worth $150 million. Just like we can’t say Zuckerberg’s 30% puts him at $5 billion.<\/p>\n

We can’t cross-multiply-and-divide because we should consider the fact that<\/p>\n