Why I’d Buy Facebook
People have been asking me if I’d buy a chunk of Facebook at $50 billion. My answer is yes. Here is my thinking:
For whatever reason, Goldman has a knack for being on the right side of bubbles. They have an eye for finding things that escape economic valuation, propping them up, and letting a wave of animal spirits take over. They’re on to something with facebook. The best performing channels for a company are repeat and referral business– cost of acquisition is lower and lifetime value is higher. What facebook has created is a platform upon which people can easily refer and influence their friends directly to content and secondarily to services.
In the spirit of Seth Godin, we’ve already granted our friends permission to speak. I already trust their opinion. If enough friends– or just the right one– endorse a product, I’m more likely to take an interest in it. Can anyone put a dollar sign on that?