One of my New Year’s resolutions was to start blogging again and the recent news that Facebook is valued at $50bn seems an opportune moment.
I remember very clearly the day back in March 2000 when Lastminute.com announced that they were raising their floatation price from a range of 190-230p to 320-380p . I was the CTO of a dot-com startup at the time, and I stood in the middle of our office in West London and opined to my colleagues that Lastminute.com was not worth that much. My CEO wasn’t particularly pleased with this, as he was hoping that we could surf the same wave of investor interest to raise £8m.
Unfortunately, history proved me right. Lastminute.com’s floatation proved to be the peak of the bubble and we never did raise that £8m (although, ironically, we later signed a letter of intent with Lastminute.com to manage their website content). In June 2000, in the face of zero interest from investors, we made the decision to mothball the company and return what remained of our £800,000 seed funding to our investors.
According to Wikipedia, Lastminute.com floated at 380p. On the first day of trading, it’s shares peaked at 511p but within a fortnight, they had dropped to 270p. Five years later, it was acquired for 165p per share. During those five years, Lastminute.com never made a net profit.
Fast-forward to today and the hype is back. Last week, it emerged that Facebook’s most recent funding round valued the company at $50bn. I don’t believe that Facebook’s worth that much and I’m a big believer in putting one’s money where one’s mouth is, so I’m prepared to bet $10,000 that I’m right.
Facebook reminds me of Compuserve. If you’re wondering “What the hell is Compuserve?”, then you’re (a) a youngster and (b) proving my point. Open standards for electronic mail helped spell the deathknell for Compuserve and its ilk. Facebook is susceptible to a similar fate and if initiatives like Diaspora give rise to open standards and protocols for social networking, I don’t think that Facebook will be able to hang on to that $50bn valuation.
Photo: A waterfall in Zion National Park.