How Is Facebook Worth $15 Billion?

If you hadn’t noticed, there have been a number of people investing in Facebook since they were given a $15 billion valuation by Facebook. This could potentially include a significant investment by Nokia as was reported earlier this week. So why on earth are all these companies and wealthy individuals trying to invest in Facebook at such ridiculous valuations? Hooman Radfar, CEO of Clearspring, has shared his thoughts on this and a lot of it makes sense.

Part of Hooman’s master plan is for Facebook to purchase Powerset or Hakia, both early-stage search engines that are trying to master the natural language search market. For the most part, the plan appears to be how to build the next Google. Creating the “people search engine” would generate a lot of press but I’m not sure how much value there is for placing ads next to people’s names versus ads next to targeted keywords.

Regardless, of search, I think Facebook is going to really turn up the revenue dial with the launch of their upcoming payment platform. Rather than focusing simply on search, Facebook can put a lot of effort into building the social shopping platform that many have dreamed of. Facebook would get most of their value out of having the most accurate representation of the real-world social graph. I would argue that Facebook and LinkedIn are the current leaders in that space.

While it wouldn’t necessarily increase Facebook’s revenue, one thing I would like to see done in the near future is the addition of a search feature within the Facebook inbox. Right now I have absolutely no way to sort through my messages and it is becoming increasingly ridiculous to manage. In regards to valuation I think Hooman outlines one route that Facebook could take. For the time being, I don’t think acquiring search engine is anywhere on the horizon.

Do you think Facebook will eventually start to rake in billions of dollars?