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What’s Facebook worth?

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by Peter Switzer

What is Facebook worth? To me this is the ultimate measure of this company’s potential and underlines why businesses have to get into social media and networking.

Of course, if you didn’t have inside information, you could come up with the inane answer: 'How long is a piece of string?' But I can do better than that, courtesy of Goldman Sachs, and this company’s involvement with Facebook is another reason for me believing that this F-word is here forever, just like Google.

Big deal

My Goldman-Facebook preoccupation came from a The New York Times article penned by Andrew Ross Sorkin, the author of Too Big To Fail. He explained how Goldman Sachs recruited some of its most influential and well-heeled clients to sling a minimum investment of $2 million into a capital raising for Facebook.

“In a private memorandum to clients when it made the offering, it said it planned to raise as much as $1.5 billion,” Sorkin wrote. “The overall deal pegged Facebook’s value at $50 billion.”

Unhappily for Goldman, it has run into an issue with the Securities and Exchange Commission. Apparently federal and state regulations prohibit what is known as “general solicitation and advertising” in private offerings.

“Firms like Goldman seeking to raise money cannot take action that resembles public promotion of the offering, like buying ads or communicating with news outlets,” Sorkin explains.

Can’t ignore it

While Sorkin cares about the ramifications for Goldman, me personally, I am interested in the implications of anyone in business who is ignoring Facebook.

I know our women’s magazine, RUSSH, has 30,000 members on Facebook, close to 8500 followers on Twitter and 9500 on MySpace. This social networking is the future and you can’t afford to ignore it.

As Eleanor Glass, one of my journalists here at Switzer wrote in an article recently:

Deborah Harry might have sung ‘Call me anytime’, but these days you have the options to make that offer even more enticing – it’s not just call, but tweet, message and more, all thanks to web 2.0.

Kristy Sheppard, Mortgage Choice’s senior corporate affairs manager, says it’s no longer enough to simply have an email address and phone number to engage with customers.

“Today, people want to interact with businesses, sometimes as much as businesses want to engage them,” says Sheppard. “Facebook, LinkedIn, Twitter, YouTube and blogs can be terrific avenues for generating new business and gaining the trust and loyalty of customers (and other stakeholders). According to each of their websites, Facebook has reached 400 million active users, there are more then 50 million tweets sent on Twitter per day and LinkedIn has over 65 million registered users. There is a new blog created at least once every second and YouTube is easily one of the most visited websites worldwide.

“As a business owner, you are operating at a disadvantage if you are not making use of social media,” she argues. “People will hold discussions and share content via these mediums as often as they like and, although you can’t control it, you can be a part of it.” All business owners, need to ask themselves: isn’t it better to be a part of the conversation than watching it from afar, or not being aware of it at all?”

Sheppard says social media platforms offer you opportunities to listen, interact, test and engage with your prospective and existing followers, friends and fans. “They allow you to socialise, humanise and add value to your brand,” she says. “Ultimately, if utilised well, social media attracts new customers and keeps existing customers interested.”

The bottom line message is that you just can’t afford to be left at the bus stop on the social networking super-highway!

Important information:This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

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Published on: Wednesday, January 19, 2011