[timbowen]

This doesn't seem like an outlandish bet to me. It seems to me that Facebook has, up to this point, spent much more time and energy on their core product rather than improving advertisements. Six months ago the ads were totally worthless, now I notice they are beginning to tailor their ads to my interests and my group of friends. If they continue optimizing the ads those revenues should increase.

There is also a virtually untapped market on Facebook for virtual objects. The gift system does exist, but I feel needs improvement. Social networking sites in Asia make the bulk of their money off of this feature, not ads. If FB beefs up this aspect of their business I think 2 billion by 2014 is a reasonable goal.

All that being said, the sentiment that "he is selling something" seems reasonable. They could be ramping up for an IPO or, more likely, going for another round of private investments to fuel growth.

[jacquesm]

I'm not too scared. Google made 21 billion over the whole of 2008 on advertising, both on their own site and in the 'channel'.

To be taken with a grain of salt:

http://alexa.com/siteinfo/facebook.com+google.com

So, at a daily reach of 2/3rd of googles they have managed to score about 10% of googles income.

I don't see facebook getting several times the size of google and I don't see how they could possibly get close to the clickrates / cpms that google is getting for their traffic.

It doesn't get much more targeted than search traffic, facebooks citizens revolt whenever the company tries to pull in a direction where they can monetize the traffic better.

'Facebooks' come and go, geocities, myspace and so on...

To my feeling they're already over their top, but then again I could be mistaken, which will cost $100 :)

For FB to make that 2 billion (that's a lot of dough) on their users they'd have to become roughly 10 times their current size at the same conversion rates, so they'd have to have a reach of 200%, which is impossible.

I think they'll top out somewhere in the 600 to 800 million range and then they'll either stay there or they'll be upstaged by someone with a better idea.

[zimbabwe]

I wouldn't bet either way, but remember that profit isn't a linear progression. Right now, Facebook's not making much money per user. If they figure out a way to convince its average user to pay for something, suddenly they'll be in for a shitload of cash.

I dunno if they'll find something like that, but it's not something to be instantly ruled out.

[gojomo]

'Facebooks' come and go, geocities, myspace and so on...

True, but at one point that was true of search engines, too. Sometimes the music stops and a winner plants their seat in the most profitable position.

Many of the entrants so far have been happy to follow the strategy Mark Cuban recently outlined in his anti-freemium post. "More importantly, when you see your BlackSwan company appear and you know they will kick your ass, rather than ramping up to try to compete, get out. Sell." There's much to recommend that strategy, especially if you'd rather own an NBA franchise than a web company.

But Facebook has plenty of Nth generation advisors and investors who want to escape the flame-out/sell-out cycle and go for the Google-sized enduring win -- Andreesen among them. That changes the questions:

Is there a niche for a universal, well-tended social/identity network platform? (I think yes.)

Will one gorilla dominate that market? (I think yes, it has many of the same network-effects and natural-monopoly aspects as search or operating systems.)

Can the Facebook team avoid the nightclub-like fad boom-and-bust cycle? (I think probably; they're certainly wise to the problem and building defenses like crazy.)

Will being the de facto monopolist in this market involve massive new revenue streams (beyond advertising) that can now only be imagined? (I also think yes. Distrust and fraud are the biggest drains on internet value creation; a trust-network anchored in real-world relationships is the ultimate countermeasure.)