Disclaimer: I work for Google.

People like to compare Facebook to Google as the next "company of the decade" or the like but let points out some differences:

- Google received $25 million in funding [1] in basically one large round in 1999 [2]. Facebook has received a total of $2.34 billion [3]

- Google was started as a project in 1996 [4], became a company in 1998 [3], funded in 1999 [2], was profitable in 2001 [4] and filed for IPO in 2004 [4]. In the quarter before IPO Google earned a profit of $79 million on revenue of $700 million [5] and had a project IPO valuation of between $20 and $30 billion;

- Facebook was founded in 2004 [6] and is still a private company. Financial statements purportedly leaked as part of the Goldman investment report $1.2 billion in revenue and $355 million in profit for the first nine months of 2010 [7], equivalent to $400/$120 million (although the last quarter would be higher due to the growth factor) with a private valuation of $50 billion or more.

Facebook's growth must come from increasing the number of users (getting difficult with most of the developed world already on it), increase revenue per user or diversifying their business. Diversification is hard. Most of Microsoft's money still comes from Windows and Office. Most of Google's is from advertising. Increasing revenue per user seems the most likely path.

Facebook's value is in their data and the audience. They are a silo and, like pretty much all silos, that won't last, which isn't to say it won't make some people a bucketload of money in the interim.

My personal view is that the value of "social search" is overstated. After all, this is what we used to have. Before search engines and the Internet your source of what to buy, watch or do came from your friends and the media. The huge leap forward with search engines--particularly Google--was suddenly you could canvas the opinions of the entire connected world.

If I want to buy a camera, my friends aren't likely to know what to buy. This kind of question relies on a certain scale to get meaningful information. After all, how many of your friends bother to be almost exhibitionist in their opinions on what they bought ("Like"ing something really doesn't tell you all that much).

The data can only be held captive for so long. Facebook has already sued to protect what is publicly visible and accessible data [8]. Facebook already makes it as difficult as they can to export or even delete your own data. They realize the value in that data and (IMHO) that sort of business model is only sustainable in the short to medium term.

So at $70 billion I see upside but at most 2x--maybe 3x--and an awfully large downside potential. The early investors have made--and will make--out like bandits. But invest now? I don't really see the point.

[1]: http://www.crunchbase.com/company/google

[2]: http://web.archive.org/web/20000309205910/http://google.com/...

[3]: http://www.crunchbase.com/company/facebook

[4]: http://money.cnn.com/2004/04/29/technology/google/

[5]: http://www.businessweek.com/technology/content/jul2004/tc200...

[6]: http://en.wikipedia.org/wiki/Facebook

[7]: http://www.huffingtonpost.com/2011/01/06/facebooks-financial...

[8]: http://petewarden.typepad.com/searchbrowser/2010/04/how-i-go...