About Facebook

Today's Wall Street Journal featured an article on the back page of section C, which has been outsourced to breakingviews.com, concerning Facebook.

It seems that Facebook, having shunned offers to buy it for a reported $1B last year, now believes it is worth in the neighborhood of $8B. According to the Journal piece, it has doubled its current 30 million members in the last year.

The general thrust of the article is to compare Facebook to eBay and Google, in that it should spurn offers to buy it now, self-fund, and reward current owners and, potentially, public shareholders down the road. Yahoo and Google are reported to have considered buying it, thus, the $1B estimate of last fall's value.

Among the upside revenue potentials noted in the article are: Facebook's current lack of charging third-party applications developers for placing their work on Facebook; its failure to collect and sell user information on its college-aged members, and; its growing popularity among 25+ year-olds, as a sort of quasi-business-oriented networking site.

As I noted in this post last March, Facebook's success is yet another indictment of Terry Semel's failure to find a mission for Yahoo. If any company should have built the Facebook concept, it was Yahoo. Google is really in the information business, more than the networking business.

Yahoo, on the other hand, is all about providing themes, games, data, around which to hopefully group people who want to connect to similar people.

What is Facebook, if not this? And, yet, Yahoo was reportedly willing to spend a billion dollars to attempt to buy what it failed to foresee and build on its own.

It's yet another testament to innovation, good management, and Schumpterian dynamics, that amidst various online titans like Google, AOL and Yahoo, plus wannabees like Microsoft, there was, and is, still room for a guy from Harvard with an idea and some chutzpah. He did something which, in retrospect, is so completely obvious that you wonder why at least three senior executives, at AOL, Yahoo and MSN, weren't fired for missing it- converting paper-based people contact information into an online networking system.

Not only did Mark Zuckerberg do it, but he's managed to hang on and be associated with the firm's survival and continued growth in a hotly-competitive sector.

Maybe you don't have to look very far to find the next Google, per Monday's post, because it's going to be a different type of online company, like Facebook. Per Schumpeter, it's not necessary for Google to be competed into mediocrity or older age, merely for it to dominate its sector so thoroughly that innovative people just do something else for their creative, profitable outlet.

Like create really attractive, easy-to-use social networking sites. Like Facebook.