Facebook Valued At $15b After Microsoft Nabs A Slice

Sydney Morning Herald

Friday October 26, 2007

Asher Moses

FOUR years ago Mark Zuckerberg was just another geeky psychology student at Harvard - now he's a paper billionaire who's often compared to Bill Gates and Steve Jobs.

With his brainchild, Facebook, valued at $US15 billion ($16.8 billion) after Microsoft purchased a 1.6 per cent stake in the social networking site for $US240 million, the 23-year-old has turned his dorm room hobby into a star of the second web boom.

With a 20 per cent stake in the company, Mr Zuckerberg could theoretically sell now and walk away with $US3 billion.

The valuation makes News Corp's $US580 million buyout of MySpace in 2005 look like chickenfeed. Mr Zuckerberg is no doubt glad he turned down Yahoo's paltry $US1 billion takeover offer last year.

He started Facebook in 2004 as a networking tool for Harvard students before opening it up to the world.

With 49 million active users worldwide, Facebook is outgrowing MySpace, which has over 200 million members. If Facebook's executives and investors are to be believed, the site is growing at between 3 and 3.5 per cent a week and could overtake MySpace in as little as nine months.

Traffic monitor Hitwise says MySpace's Australian market share is shrinking while Facebook increased its share threefold in the 10 weeks to October 13.

Mr Zuckerberg owes much of his success to Mr Gates, and it's not only because the Microsoft founder just tipped hundreds of millions into Facebook's coffers. In an interview with Forbes magazine last year, Mr Zuckerberg said Mr Gates, also a Harvard dropout, inspired him to skip school to work on outside projects during a talk he gave to one of his computer science classes in 2004.

"He really encouraged all of us to take time off school to work on a project. That's a policy at Harvard - you can take as much time off as you want," Mr Zuckerberg said.

After enrolling at Harvard in 2002, Mr Zuckerberg took a punt on other web plays before launching Facebook with Harvard peer Dustin Moskovitz in February 2004. He was reportedly nearly expelled in 2003 for creating a Harvard clone of the Hot or Not? website, which allowed fellow students to rate each other's attractiveness.

As chief executive, Mr Zuckerberg commands an workforce of 300 and presides over annual revenues of more than $US100 million. Over the next year he plans to double his troupe of programmers to around 700.

"I didn't care about being a CEO ... I just wanted to build cool things," he told Forbes.