So it looks like Facebook’s hit the $10b mark earlier than many people’s predictions.  There was much talk of a $10b+ IPO in 2008 or 2009, but the rumored MSFT move makes that look like an impossibly modest target.

Let me go on the record:  At $10b, Facebook is still a good deal for Microsoft.

Take a look at these numbers from Inside Facebook:

• Facebook now has more than 42 million active users (double the
  number one year ago when it opened up registration and growing at more
  than 200,000 per day since January)
• More than half of Facebook users are outside of college (85 percent of US college students still use Facebook)
• More than half of active users return daily (users spend an average of 20 minutes on the site per day)
  
• Facebook is the top photo sharing application on the Web
• There are more than 6 million active user groups on the site
• More than 80% of Facebook members have used at least one application built on the Facebook Platform

The price is $250 per active user.  This is an audience belonging to the weathiest segment in the world, wiy 100% YoY growth. At 20 minutes a day, you have unprecedented attention.  Plus you know who they know and talk to.  At least $20m of those users, share with you more than you they share with Google.  So, you also have intention information.

If the buyer will not know how to generate cash from this trove of potential revenues, it will be due to their own incompetence.

I presume MSFT will try to get some options for enlarging their stake in their deal.  Facebook has been a tough negotiator, but if they do, I’ll bet that those options will get exercised.

Finally, Barış is talking about the largest venture deals ever:

1  Chorum Technologies Richardson, TX Communications & Networks: Fiberoptic Equipment & Photonics Out of Business
2  CoSine Communications Redwood City, CA Communications & Networks: Connectivity Products Publicly-held
3  Internet Brands El Segundo, CA Media/Content/Info.: Media, Content & Information  In IPO Registration
4  Tellium Oceanport, NJ Communications & Networks: Fiberoptic Equipment & Photonics Publicly-held
5  TradeOut.com Valhalla, NY Cons/Bus Services: Business Services (Not Financial) Out of Business
6  Zhone Technologies Oakland, CA Communications & Networks: Connectivity Products Acquired/Merged

If we count this prospective Facebook deal a venture deal (I am not sure I would – I think there’s much less growth capital needs, and much more strategic direction involved), it easily tops this list. Interestingly, 4 of the 6 deals above are infrastructure deals.  I have always seen Facebook as a true technology company – one that is installing a social infrastructure over the pipes of the internet.

This is really interesting to watch.

There’s a new acquisiton in the Turkish internet industry – IMSG has acquired Zap Medya for approximately $13m (probably after an earnout).  The announcement also discloses that Zap had 2006 revenues of $12m and pre-tax earnings of $2m.

Zap is an interesting company that it has somewhat cornered the dysfunctional online advertising industry.  I presume that the bulk of the $12m revenues is actually media billings of its customers and, if true, it points to the enormous cuts the middlemen have in the Turkish online advertising market, given the very high net margin indicated by the earnings figure.  One has to wonder how sustainable the current model is, given that the media buying agencies, which previously have outsourced their online work to Zap, have started launching their own online companies and departments.

The acquisition is good news for Turkish internet sector, as more and more international players are taking notice of the opportunities here.  Congratulations to the Zap team.

PS. I am going through a much slower blogging period, largely due to a new baby. 🙂

UPDATE: Bulent Boytorun, Zap’s CEO sent me a message with some corrections, as well as some clarifications on the transaction and Zap’s business.  Here are the hightlights:

…the figures that were disclosed were not properly announced. The 2 m is
a figure forecast for 2007 at an expected turnover of around 20 m USD,
and Zap’s sole income is not the media billings [but also from our creative and content management services].
…
Not a majority of our profits are generated from our creative & content management services, but it is still quite sizable.
…
It is the usual practice to have about 10 % media commission on online
media billings throughout the world, since the budgets are much smaller
than those on TV or newspapers and the work involved is quite
extensive. However, especially big networks add to this commission
their adserving costs -which may be between 5 to 50 cents per CPM- as
well as additional creative and analysis charges or even extra charges
for strategic planning.

Here at Zap, we provide all these services free of charge
(including at many cases the whole creative work if it is in connection
with a sizable campaign) and all is included in the commission we
charge.

Congratulations to Anne, Blue and the rest of the team at SelectMinds.  They have just announced a Series A round by Bessemer Venture Partners.

SelectMinds has been clear the leader in parts of the enterprise social networking market.  The challenge will now be to expand the product offering to own what is still a fairly open area.

My bet would be that they will.

I have been contending that there is no Web 2.0 bubble, until I heard the news:

Classmates filed for a $125m IPO

Now I am scared.  Classmates is as far from Facebook as it can get on the internet, and yet is looking to cash in on the buzz around the entire social networking market.  This is how a bubble gets created – by public market fund-raising that resembles pump-n-dump operations.  Om agrees.
 

There’s quite a bit of buzz in the blogosphere that the NY Times is freeing up the content locked within its Times Select service.  This is great news and one more example of how content wants to be free.

And I think he’s wrong.  I will go further to say these are the signs that magazines like PC Magazine are losing their relevancy.

Dvorak asserts:

The current bubble, already called Bubble 2.0 to mock the Web 2.0
moniker, is harder to pin down insofar as a primary destructive theme
is concerned. A number of unique initiatives, however, are in play
here. Let’s look at a few of the top ideas floating the new bubble.

Neo-social networking. Today everything from YouTube to the
local church has a social-networking angle. And this doesn’t even
consider the actual social-networking sites, from MySpace to LinkedIn
to Facebook to even Second Life. This scene is totally out of control
and will contribute to the collapse for sure.

Video mania. With dozens and dozens of YouTube clones
cropping up to get on the "throw money away" bandwagon, you must sense
that the eventual shakeout in this space will have a negative impact.

User-generated content. This idea has been around since
Usenet and just keeps improving. It will make no contribution to the
overall collapse except for users reporting the collapse.

Mobile everything. Here is another concept that has been in
play since the mid-1990s. It cannot trigger a collapse since it will
never fully get off the ground, although the iPhone mania may be a bad
sign of something.

Ad-leveraged search. Most search engines will fail as a
matter of course. This segment of the industry is mundane. It would be
affected by a crash but not trigger one.

Widgets and toolbars. I cannot see the widget scene going
crazy, and the jury is still out on toolbars. But there is the
potential for nuttiness, I think. The problem here is that these things
tend to be dependent on the stability of operating systems and
browsers. One bad operating-system patch and suddenly nothing works.

He’s right that the above concepts have turned into buzzwords, and many businesses, led by service providers motivated by fees from new work, are spending money on these, and many will see negative returns on their investments.

But, bad business decisions does not make a bubble.  At worst, the above list will come and go as silly fads. 

What does make a bubble is equities trading at prices that can not be justified by traditional financial analysis.  That’s what happened in the dot-com bubble and the telecom bubble.

In the current internet scene, the stage where a new business needs large amounts of capital has shifted.  It’s much cheaper to start a company, so capital is required to really accelerate growth.  Which means that the sources of capital have better filters and liquidity requirements for investors are not as urgent.  As a result, you see much fewer companies raising public money.  Fred Wilson had a couple of good pieces on this a while back.

When the capital comes from private sources, it’s really difficult to call a bubble.

Again, in the worst case scenario, this so-called bubble’s worst effect will be a few low-return funds.

UPDATE: Fred chimes in on this article, as well.