Online marketplace SecondMarket recently revealed that Facebook is worth around $41 billion. While the number is based largely on guesswork and speculation, many of us feel this number is pretty darn accurate. Facebook has proven again and again that they are capable of raising the bar in terms of social networking.
When the true numbers come out, we may see that Facebook’s real value is indeed lower than $41 billion, and a lot of critics will be saying ‘I told you so’. However, I think Facebook, no matter its monetary evaluation, is worth more than 41 billion dollars.
"Valuing the company is all good and fun, evaluating the value the company creates is what truly matters."
Each Facebook user is a brand, an asset to the Facebook company. We work together like employees of Facebook to ensure that the site is worth visiting. We post content, videos, photos, links, status messages, at an alarming rate (over 30 billion pieces of content are shared each month). Facebook, as a company, has only created a platform. We are the ones who make the entire website tick.
Everytime we share content on Facebook, we are creating value for ourselves, or for another ‘brand’. At the end of the day, every Facebook user is their own personal brand, and we can start to evaluate the value we create using Facebook. Check this out:
-There are over 500 million active users on Facebook.
-The average user creates 90 pieces of content each month.
If only 10% of this shared content creates value for a brand, that leaves 9 valuable pieces of content shared each month.
Let’s place a value of $0.10 on each valuable piece of content shared by a Facebook user.
-The average Facebook user has 130 friends.
When a Facebook user generates content, it is shared with 130 friends, who are given the opportunity to share the content, or click thru to the content, ultimately giving value to the content.
500 million users
X 9 pieces of valuable content
X $0.10 value per content
X 130 connections
$58.5 BILLION worth of value generated by Facebook users… per MONTH.
While Facebook as a company may not be worth the $41 billion evaluation, the value created on Facebook is much higher than $41 billion. According to these assumptions, the value created on Facebook is around $702 billion per year.
Valuing the company is all good and fun, evaluating the value the company creates is what truly matters.