Liveblogging the Lee Lorenzen keynote: why Facebook is worth $100 billion

“I hope to convince people that I’m not drunk, on crack, or anything like that” - why is facebook worth $100 billion?

At the launch of F8, Facebook wasn’t really on Lee’s radar at all.

iLike added 600,000 users in 8 hours. “OK,” Lee thought, “there is something new on the planet here.”

Most of his career he’s been a software engineer and hasn’t had much of a public persona - not really a thought leader.

So he thought this was a great chance to experiment: he created an Altura Ventures group and recruited a bunch of top FB developers to join the group, then made them officers. This is to show off how many cool people he “knows.”

Your Facebook page is much like your digital resume.

On his FB page, he used his top friends app to show off all the people he is “friends” with who are important. It’s basically name dropping on facebook. Someone goes to FB and says “look at all these people he knows, this is someone I ought to be friends with.”

At graphing social, Lorenzen said FB is worth $100 billion, and was roundly criticized for the statement. “Are you drunk??” Calacanis asked.

(LOL Lee missed Zuckerberg’s “Steve Jobs impersonation” at F8)

They thought: “What’s a Facebook feature that FB did kind of half-way, and how can we make it a full feature?”

Web 1.0 web sites are about a full set of features because you have to collect all your user’s data as if you were the only web site on the planet that this user is interacting with.

When you develop (2.0) on Facebook, you have all that information, you now focus on what is the initial way in which your app is going to spend, and how do you add incremental value to keep your app in people’s sidebars.

Birthday Calendar went to 1 million users in 15 days.

Solves the “white page problem.” When you finish your invites and open the app canvas page, it is already populated, and you are instantly learning about your friends.

…and that was his introduction!

Why FB can’t be worth $100 billion:

They have limited revenue & profits: $100mil revenue (goog 2001: $86 million)

(aside, Lee says: why is FB ultimately worth MORE than google? because goog’s business is based around people leaving the site, and fb is about keeping users there)

Lee launches into an interesting analogy of a Texas ranch sitting on an oil field. The rancher can’t pull out the oil, but third parties can…more later?

MySpace is bigger is a moment in time type thing. IBM was bigger than MSFT. What does that mean?

Google will crush it? What has google crushed other than search? Failed with YouTube, Failed with Skype…the goog brand MEANS search, does not mean something else

OpenSocial will crush it? Lee says the lowest common denominator doesn’t work. It’s like fifteen other companies building their own iphone and calling it “the standard” (note: I disagree - isn’t that why the PC has so much of the market share? Open/standardized with many companies vs. closed/one comapny? - JP)

Apps are toys for toddlers? Lee thinks many people provide useful functions but people just don’t think about them in the right way. What are sitcoms but entertainment? Facebook shares that function…

The Social Graph is a silly term? Lee: “so what?” Everyone needs a buzz word.

Lee says: “there is still a dose of humility in Facebook”

Lee wants an app that backs up his Facebook profile. Don’t we all. Too bad it’s got to be black-hat if it exists.

“The only software war that MSFT never won was with Intuit over Quicken, and that was because of user data, which Facebook has in spades.”

Throws up some FB statistics: essentially some guesses at expenses and whatnot: he guesses 2008 they will have $210 million in profit.

Now a chart comparing MSFT’s rise to FB’s rise - interesting comparison (with funny coincidences that, I’m sure, have not escaped people: two Harvard drop-outs with their former roommates).

Lee: Zuckerberg decided that they can’t own FB as a platform and the application space, so they decided to focus on owning the platform, not the basic space.

He’s waiting for killer apps to drive people to FB more than anything else. There will be an “office suite” of Facebook.

Why is a FB user more valuable than a web user?

Sourcing new users in easier (just use invites), app install in easier, you get more value (people don’t opt-out as much), no need to remember 50 passwords…FB app space is like a dashboard.

“Facebook is as addictive as porn, in the social network space”

The genius of Facebook is that they found a way to use all these passive actions to cause the word to spread.

Beacon “fiasco” - tactic? Lee says, “he asked for a mile, and stepped back to .9 miles. If he’d gone half a mile, he would have been pushed back to .4. Over time, people will just remember that they fixed it.”

Lee: Facebook has inserted a wedge into the world of search. You want to search for a product? Google. Web site? Google? People? Facebook.

What was Alaska worth in 1867? If you use Warren Buffet’s “future earnings” definition, it’s worth more than $400 billion. It was bought for a couple million (in today’s dollars, $187 million, I think ti was).

Interesting equation to get to $100 billion for Facebook. Check out the posted word doc for the breakdown.

Good presentation, Lee!

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