What Is Facebook & LinkedIn Doing With Their High Valuations

Posted Jun 27, 2008

LinkedIn and Facebook together are now worth roughly $16 billion based on valuations given to them after funding.  Since Facebook and LinkedIn have not been acquired by public companies, I cannot help but wonder what they would say during an IPO of their own.  What would they say is their contributions to society or what are they doing to solve world problems?

The only joy I get out of Facebook personally is that I can mass upload photos that I take on my digital camera and tag my friends.  As a matter of fact, that is Facebook’s most popular feature because over 14 million photos are uploaded per day between their 80 million users.  YouTube solved a similar problem, but their emphasis was on videos only.

Is Facebook’s contribution to society “being a place to mass upload photos for your friends to see?”  Or is Facebook’s contribution to society “being a storage of personal information on your friends?” It seems like that they are all over the place.  Facebook self-describes themselves as a “social utility that connects you with the people around you.”  Their most popular feature makes me want to compare them to Shutterfly, but the way they describe themselves makes me want to compare them to Classmates.com or Match.com.

Facebook is one out of the top two sites in Alexa’s Top 10 sites that do not belong to a public company.  The other sites in the top 10 include Yahoo.com (Yahoo! property), Google.com (Google property), YouTube.com (Google property), Live.com (Microsoft property), MSN.com (Microsoft property), MySpace.com (News Corp. property), Wikipedia, Blogger.com (Google property), and Yahoo.co.jp (Yahoo! property).  Wikipedia is the other company that is not public, but the open source encyclopedia does not walk around sporting over a billion dollar valuation.

The aforementioned companies, Yahoo!, Google, Microsoft, and News Corp. all have a pretty clear purpose and are constantly innovating otherwise their shareholders would get pissed.  Their innovations all revolve around their core services.  Yahoo! and Google have an emphasis on finding information quicker, Microsoft makes software that computers need to run on, and News Corp. distributes media all over the world.

Ford and GM’s valuation combined is about the same as LinkedIn and Facebook combined.  What makes this disturbing is because we know that those two automotive companies have done more to advance our society today than a couple of social networks.  The Richter Scales music video points it out too.

Perhaps there’s something I’m not seeing about LinkedIn and Facebook that makes their valuations worth it, so I encourage you to help me understand in the comments.  This is not intended to bash social networks, it is only to provoke discussion.