Six Months Ago: 10 people who don't matter
In entrepreneurship, timing is everything. So we'll give Zuckerberg
credit for launching his online social directory for college students
just as the social-networking craze was getting underway. He also built
it right, quickly making Facebook one of the most popular
social-networking sites on the Net. But there's also something to be
said for knowing when to take the money and run. Last spring, Facebook
reportedly turned down a $750 million buyout offer, holding out instead
for as much as $2 billion. Bad move. After selling itself to Rupert
Murdoch's Fox for $580 million last year, MySpace is now the Web's
second most popular website. Facebook is growing too - but given that
MySpace has quickly grown into the industry's 80-million-user gorilla,
it's hard to imagine who would pay billions for an also-ran.
Today: Yahoo’s “Project Fraternity” Docs Leaked
At Yahoo, the long running courtship has lasted at least as long as
this year, and is internally referred to as “Project Fraternity.”
Leaked documents in our possession state that an early offer was $37.5
million for 5% of the company (a $750 million valuation) back in Q1
2006. This was rejected by Facebook.
Things really heated up mid year. Yahoo proposed a $1 billion flat
out acquisition price based on a model they created where they
projected $608 million in Facebook revenue by 2009, growing to $969
million in 2010. By 2015 Yahoo projects that Facebook would generate
nearly $1 billion in annual profit. The actual 2006 number appears to
be around $50 million in revenue, or nearly $1 million per week.
These revenue projections are based on robust user growth. By 2010,
Yahoo assumes Facebook would hit 48 million users, out of a total
combined highschool and young adult population of 83 million.
Our sources say that Facebook flatly rejected the $1 billion offer,
looking for far more. Yahoo was prepared to pay up to $1.62 billion,
but negotiations broke off before the offer could be made.