Lee Lorenzen Strikes Back

Two days ago I deconstructed Lee Lorenzen’s argument that Facebook is worth $100 billion without much thought. Yesteray, Lee posted his response on my blog. I don’t want to get into a mud slinging fight but I thought I would take the opportunity to post a rebuttal. Feel free to comment Lee!

Lee went through and expressed how Facebook is going to reach 200+ million users. This is one area where I totally agree with Lee. Not only do I think they will surpass 200 million users but I think they will hit 500 million users. That is not a typo. Not only will they surpass 500 million but I think they could go even higher. I won’t speculate about that though.

Next, Lee went on to justify his value of $500 per user on Facebook. Here are the five sources Lee came up with:

  1. targetted brand advertising — their Yahoo play
  2. keyword driven search advertising — their Google play
  3. P2P e-commerce transactions — their eBay play
  4. B2C e-commerce transactions — their Amazon play
  5. Industry Alliance transactions — their Microsoft vs. Google play

Apparently Facebook is going to take Yahoo, Google, eBay, Amazon and Microsoft head on, with one hand tied behind their back. While I am one of the primary Facebook evangelists, it is hard to imagine Facebook generating $500 per user. Conversely, I know that Google has successfully done it. Lee states that, “Facebook’s multiple sources of revenue … are mostly tied to people staying within Facebook’s environment.” All the ads that I click on Facebook seem to direct me to other sites except for those ads being placed by the more than 7 other ad networks that have been launched on Facebook’s platform. Conversely, I can see this shifting in the coming months.

Honestly, I’m playing devil’s advocate here and I see a lot of what Lee is talking about. One thing I don’t agree with Lee on though is how Facebook has dramatically improved email. They need to improve their messaging system dramatically. I can’t browse through my unread messages currently. Also, the notion that they have “effectively killed SPAM” is a false one. I can guarantee that the volume of SPAM will increase on Facebook over the coming months and this will be one of Facebook’s primary challenges.

You know what? After trying to disprove Lee’s arguments, I have suddenly come to believe that Facebook may indeed be worth $100 billion soon enough. I said it! Facebook will be worth $100 billion. Facebook definitely has some serious issues that they are going to have to resolve though including the overload of application invites I’m receiving as well as their highly inefficient messaging system. Once they make those changes (and launch their killer feature) Facebook may just become the next $100 billion web company. I guess this wasn’t really a strong rebuttal was it?