The escalating freakout over Facebook’s 1984-esque relaunch is so entertaining that it distracts from the larger news going on here: Mark Zuckerberg may have lost several hundred million dollars in the last 24 hours.
Howzat? In March, BusinessWeek reported in a much-noted piece that the Harvard drop-out had turned down a $750 million offer (from Viacom, it later came out), and was holding out for up to $2 billion. We heard — put however much stake in that as you want — that Zuckerberg turned down an offer later this summer for $1.5 billion. The guy was a true believer, the reasoning went; he really thinks the project he started in his dorm room could be worth much more than that, change society much more than that. And you know what? Better offers probably were coming along the pike.
Here’s the problem: social networking sites are only as valuable as the base of users that support them. Remember Friendster? The site your older siblings and friends absolutely swore by? Today Friendster is hanging out with Natalee Holloway and JonBenet’s real killer — it’s gone. And so’s its market value. By changing his site so fundamentally, Zuckerberg has alienated a huge chunk of his users. If he were to cash out now, no corporation or investor would offer anything close to $750 million.
Mark’s a smart guy. We’ve no doubt he’s doing some hard, hard thinking right now — deciding between sticking to his vision and listening to his users. He could make some compromises and keep the bulk of the audience. But his idea really only works as a monopoly, if everyone’s connected. For now, the longer Facebook v.1984 stays public, the more zeroes Mark Zuckerberg’s bank account is gonna lose.