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HR Zone » General Awareness » Facebook revenue to be "billions" in 5 years: Survey Report

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Facebook revenue to be "billions" in 5 years: Survey Report
Praveen
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Posted 09-07-2009Reply

Facebook will likely be posting billions of dollars in revenue in five years, up from about $500 million this year, according to Silicon Valley entrepreneur Mark Andreessen who sits on Facebook's board.



Andreessen told Reuters that the world's most popular online social network could pile up $1 billion in revenue this year if it pushed harder on selling advertising.



But he added that it was more important at this stage for social sites like Facebook and Twitter to retain and grow their user base and capture market share, rather than worry too much about making lots of money right away.



"This calendar year they'll do over $500 million," Andreessen said in an interview, noting that Facebook has more than 225 million users, so revenue per user is still small.



"If they pushed the throttle forward on monetization they would be doing more than a billion this year," said Andreessen, who made the cover of Time Magazine as founder of the world's first Web browser company, Netscape.



Privately held Facebook -- which counts venture capitalist Peter Thiel, Accel Partners, Microsoft Corp (MSFT.O) and Russian Internet investment firm Digital Sky Technologies among its investors -- has never disclosed its revenue except to say it expects 70 percent growth this year.



"There's every reason to expect in my view that the thing can be doing billions in revenue five years from now," Andreessen said.



Andreessen, who is starting his own venture capital fund with Netscape executive Ben Horowitz, regrets not investing in Facebook. "I probably could have if I had tried hard but I didn't," he said, recalling that he has known the founders of Facebook from the beginning.



Andreessen has invested in Twitter, the fast-growing micro-blogging site that lets users share 140-character messages known as tweets.



Twitter famously makes no money, and Horowitz and Andreessen think that that is OK for now because the site needs to focus on increasing its number of users and improve the features it offers so that no rival can swoop in.



"They have to take the market," said Horowitz. "There is no investor in Twitter who will tell you: 'Boy, those guys are screwing up, there's no revenue yet.'"



Horowitz and Andreessen point to the once-leading social network MySpace, which has fallen behind since it was acquired by Rupert Murdoch's News Corp (NWSA.O).



MySpace focused too much on selling advertisements -- to contribute to News Corp's bottom line -- and not enough on developing the platform, leaving room for Facebook to come in and take market share, they said.



"If the revenue degraded the user experience then that was a very dangerous thing to do," Horowitz said.



Andreessen said it will be difficult, but not impossible, for MySpace to rebound now that Facebook has such a big following. Both he and Horowitz say they do not expect Twitter to make the same kinds of mistakes that MySpace did.



Twitter was a high profile Web start-up even before it shot into the headlines during the Iran election crisis, when the U.S. State Department called on it to reschedule planned maintenance because it considered Twitter a vital communications channel for protesters.



As for Facebook, Chief Executive Mark Zuckerberg told Reuters in May that an initial public offering was not in the cards for at least a few years. Instead, the company is allowing some shareholders to sell their shares to Digital Sky.



"Generally speaking, people who are selling their stock in Facebook now are making a mistake," Andreessen said.



Source: Reuters
 
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