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Summary:

Facebook, the college social networking site, and a phenom I wrote about for Business 2.0 is apparently on the block. Business Week reports that the company is looking to get close to $2 billion, and had passed on a $750 million offer. Well, I think they […]

Facebook, the college social networking site, and a phenom I wrote about for Business 2.0 is apparently on the block. Business Week reports that the company is looking to get close to $2 billion, and had passed on a $750 million offer. Well, I think they should have taken the $750 million. Why?

Just look at their Alexa stats for past three months. They are stagnating like my new year resolution to lose 50 pounds. Over past three months, the daily pageviews and the daily reach are range bound, and the daily traffic trends are not encouraging as well.

From what I have heard is that the company is considering opening up its network to the non-core audience, aka young people who are not in colleges etc. I think doing so would be disastrous for the company. It would become yet another social network, which would get spanked by MySpace, which is still defying the odds, staying firmly perched in the stratosphere.

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  1. Om – I agree with you that FB should have taken 750 Mil. I think the stats are even worse when you consider that this should be the peak time for Facebook (college students are all at college and the weather isn’t nice yet in most of the country) they haven’t hit their summer slow down yet, which is when the numbers look really bad.

    But I think that they need to expand beyond the college market to reach younger kids. If they don’t when kids hit college they won’t need / want Facebook.

  2. See Friendster.

    “Humility makes great men twice honorable”

    Ben Franklin

  3. Andrew Ferguson Tuesday, March 28, 2006

    “From what I have heard is that the company is considering opening up its network to the non-core audience, aka young people who are not in colleges etc. I think doing so would be disastrous for the company.”

    Facebook is already allowing high schoolers to sign up, but I don’t think it’s as disastrous as you think. Yes, Facebook competes on some levels with MySpace, but their end games are different. Facebook is a surrogate address book while MySpace is a surrogate blog…at least that’s the way I see it.

    What Facebook has that MySpace doesn’t is order. I look at MySpace and all I see is zany colors and chaos. I don’t care for it and thus I don’t use it (although will admit that I have a MySpace account). Facebook on the other hand is much more organized. I can go in, get the information I need, and get out.

    Also, how many people who talk about Facebook have actually used it?

  4. If the management at FB wanted to really keep people logged in longer (thus exposing us to more ads), they could create features such as the ability to upload resumes and interact with potential employers or roommates or a plethora of other entities. I’m dumbfounded that they haven’t and that no one else has. Plus, it is alot easier to regulate and keep unwanted visitors out of a .edu restricted domain network which creates in part a feeling of trust.

    Note: as a college student that enjoys using FB on a regular basis I have become frustrated with the gradual movement towards opening the network to the non-collegiate realm. If I wanted to hang out with highschool kids I would get my mom to pick me up in her minivan and drop me off at the mall…

  5. The fact cannot be denied, facebook owns the college market. But I do believe that facebook is rapidly losing ground to MySpace and the trend doesn’t show signs of reversing. Without getting into numbers or Alexa rankings, let’s just look at the basic concepts.

    Currently facebook is enjoying being the college social networking site. But despite the occasional tech trick here or there, they have no major competitive advantages over any other social networking website. MySpace has a lock on the high school market like facebook has a lock on the college market. So in 4 years when these high school kids go to college what do you think they’re going to do? Leave their MySpace contact list and years of collected information just to switch to what is essentially a more localized version of the same thing on facebook? They’re either going to maintain two profiles or just use MySpace.

    I know several people who are college age and facebook certainly isn’t as popular as it used to be. But maybe the novelty is just wearing off and people aren’t talking about it as much. Either way, I have my doubts about the initial $750M offer (much less $2B). The only reason I see for someone to make aquisition like that is so that Viacom can keep up with News Corp (aka “The Joneses”) and have a player in the Mega Online Advertising arena.

    All in all, I think the sales of facebook for anything over $500M would be bad news for the whole social networking sector. Then you’re going to get 10x the number of players and 20x the number of crappy sites that give the whole thing a bad name. There’s a new socnet site launching every other day as it is…if facebook sells for a bil we’ll be drowning in the things (like tribbles, but with ajax and tags instead of fur). Not to mention that all this hype that socnet sites have been getting recently isn’t doing a lot of good for the market. I’ve seen this before…lots of hype, lots of press coverage, massively inflated valuations and then POP. I agree with you Om, facebook would be wise to get out while the getting is good.

    (and isn’t their CEO like, 22? If I were this kid I would take my millions and retire to a 60 year spring break in mexico somewhere)

  6. It may be stagnant in the middle of the school year, but you are going to get many, many, many more freshman in september. Everyone by this time has added their friends, but when new students (mainly freshman) hit the college life, the traffic will increase.

  7. Erik Schwartz Tuesday, March 28, 2006

    If you can’t monetize the traffic it’s worthless. In fact it’s worth than useless, it’s an expense.

    Has facebook shown it can monetize their traffic?

  8. If they stick to the core idea of limiting to college students and fresh alumni i think Facebook has better monetization potential (comparing CPM to CPM) than MySpace or any other social network!.

  9. Opening up FB to the non college sector would be horrible in the longevity of this site. It’s main attraction is that it IS collegiate only. Demographers know EXACTLY what they are getting with this site. Sure MSpace has a larger audience, but it is not as highly targeted. They don’t have to be the next MySpace, they can be who they already are, FACEBOOK. They have thier own clones (Xuqa.com, whoever else). 2 Billion? please… His bankers are too greedy and this will become a ‘not super great’ deal for the buyer (but not totally bad either). 750 is to high too, but he should have sold.
    What’s amazing is how under the radar the communityconnect sites have been even though they are have highly targeted niches (www.blackplanet.com, http://www.asianavenue.com & http://www.migente.com) MySpace is eating thier lunch and they have been around much longer.

  10. Facebook reported a while back in a interview they were doing over a million a month in revenue. At any rate with something like 80% market pentration the room for growth is limited. Myspace is taking over their market and myyearbook as well. facebook is about to level off soon and even if it does it will still be a monster site.

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