There has been a tremendous amount of interest in one financial event that opened the first Monday of the new year. Goldman Sachs and a Russian investor, Digital Sky, invested $500 million in Facebook. This is interesting on so many levels that it’s hard to pick the most important implication.
- There is the question that the market led with – is this $50 billion valuation justified?
- There is the question of “secondary markets” and whether the $1.5 billion that Goldman states that it is going to raise next is anything other than the thing that the SEC says is the focus of its “inquiry.”
- There is Goldman’s reasoning in taking on this particular issue at this time.
All of this is interesting. But the comment to which I keep returning was the one from Erin Burnett on CNBC’s Morning Joe. Erin pointed out that if Facebook is valued at $50 billion then its being valued at more than Boeing.
This comment led to a discussion with Joe Scarborough about companies that “make things” and companies, like Facebook, that make “nothing.”
The part of this that I find so interesting is the question of valuation in the digital age. I can imagine a number of reasons that Goldman might have granted Facebook a valuation of astonishing magnitude. At least half of the reasons would make you nervous that the regulators or the culture could keep up with the new “bubble.” But putting these issues aside, the even more interesting question to me is to imagine the value of Web 2.0. Where is Facebook going and what will be possible for companies like this? Sitting in front of a computer screen as we all do every day, the possibilities for the future of an institution that can make connections among people who have not (literally) seen one another for 40 years is astonishing.
The future is more about watching the “crowd” find its voice.