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May 18, 2012

A $100B Question for Mark Zuckerburg and FaceBook's Investors

Folks,

I've a simple $100B question for Mark and FB's investors, but before I can pop the question, perhaps I should setup the context.


Mark Zuckerburg. CEO, FaceBook

Today's IPO will value FaceBook at a little over a $100B.

There's only one reason for that valuation - about 1 billlion people on the planet supposedly use FaceBook, so FaceBook has the opportunity to display and monetize advertisements.

NOW, here's something to think about ...

In order to click on an ad and buy the advertised product a FaceBook user needs money. For most people, money comes from employment, so as long you or your provider's employed, all's well.

However, should you or your provider lose their job, or your employer be unable to employ you, you have no money to spend, and with no money to spend, you're not about to be spending either that amount of time on FB, or whatever little money you do have saved up, on products pitched by those ads.

So my simple $100B question, in layman's terms, to Mark and FB's investors is -

What will be the impact on FaceBook's business, should people have no money to spend on the ads you show them, and with no one clicking these ads, how many organizations will continue to pay FB to display these ads, irrespective of how FB ultimately gets compensated for these ads?


NOW, what could possibly disrupt the world's employers from employing these billion or so people, who (somehow find and) spend time on FaceBook? ...

...an IT security breach that has the potential to threaten the very business of employers worldwide.

It turns out there is at least one credible unmitigated threat to the IT security of most employers worldwide, that could substantially impact their business, and their ability to employ people.

Should this unlikely scenario come to life, FaceBook's valuation, could lose a 0 or two.

Of course, in all fairness, should this scenario come to life, many an organization's valuation could lose a 0 or two, and the world could proverbially stop turning.

The point very simply is that brasstacks, from a valuation perspective, FaceBook is just about advertising, and while advertising is important for businesses, it is not more important than security. Never has been; never will be, because while advertising is about growing the business, security is about staying in business.

Just something to think about.

Best wishes,
Sanjay

PS: There is at least one such threat to organizations worldwide (but I'm not about to publicly comment on it. I'll give you this much though - the IT infrastructures of over 85% of all employers worldwide are powered by Microsoft's Windows Server platform.)