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Business Consulting For The 21st Century Via A Holistic & Intelligent Approach

The truth about Facebook and Goldman Sachs

Consumed => “I was wrong about Facebook’s valuation. Way wrong. Lee Lorenzen was right. Way right” by Robert Scoble on Scobleizer.

http://scobleizer.com/2011/01/03/i-was-wrong-about-facebooks-valuation-way-wrong-lee-lorenzen-was-right-way-right/

Left a comment…

Allow me to play the contrarian card…Personally, I have to discount the Goldman Sachs bit. Could anything be more self-serving? As if they’d go negative on it and then buy in. My point being, GS is into for the money. Now before you say, “Duh?!?,” my point is, it’s not an investment to them (in the way the rest of us probably think it is).

Let’s not be naive, they’re not looking at is holistically. They have a single very simple criteria: Is there opportunity here? Can we get in and out and make a buck? GS is in because they see opportunity. That has very little to do with Facebook itself. The “valuation” of Facebook doesn’t mean boo to GS. So in placing a value on it, they are merely trying to fulfill their own prophesy. GS’ play is that everyone else believe there’s value and so and so on. I say this because it’s still not clear to me what FB’s biz model really is. Sure, they’re racking up users but where’s the profit?

Finally, Facebook might be the biggest to date but it’s hard to ignore it’s genetics (i.e., MySpace, AOL, etc.).

Note: I’m not saying I believe everything I just said. I simply wanted to table a slightly different perspective on the matter. Fair enough?

The point is, this isn’t about GS investing in FB. This is about risk, hype and GS making their wealthy clients even more so. FB is a means, not an ends. If you doubt this fact then I also suggest:

http://dealbook.nytimes.com/2011/01/02/goldman-invests-in-facebook-at-50-billion-valuation/

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