Why Facebook May Really Be Worth $100Bn

I wrote my last post about how Facebook was a bubble, so now I am going to eat my words and explain why I think Facebook might be worth its price after all.  

I have long been a FB-apostate when it came to seeing the platform’s monetization potential: big, yes, but $100Bn big?  Now however I’m starting to see the light.  And it's not because of advertising.

I believe that Facebook has won the online identity war, and the spoils will be enormous.

Companies like MSFT and GOOG have forever been trying to create a single identity for users to use across the web, from MSN Passport cum Windows Live, to the simply titled Google Account (or is it Google Profile?) cum Google+.  Other, parallel efforts have focused on being a one-stop destination for all things online, from the Yahoo! Portal to iGoogle. But FB has actually done it, and not as a bolt-on afterthought but as their core competency (granted the portal was Yahoo's core competency, they just weren't very competent at it).  Because identity is a natural monopoly, this makes FB’s dominance of this space difficult to challenge.  

We've Already Created an Israeli Nokia

A couple of years ago Daniel Cohen at Gemini wrote a great piece in VentureBeat called "The quest to create an Israeli Nokia" in which he argued that the black-eye to Israel's high tech scene was that "there are no examples of great Israeli break out companies – no Israeli equivalent of Google, Microsoft or Nokia."  He went on to give a very insightful commentary into the reasons behind this, all of which are based on what I would call "micro" factors - impatience of investors, impatience of entrepreneurs, a think-small mentality, and lack of $1bn experience - which could be overcome by the right people.


In doing some research for a piece that I am planning on writing about what I believe are the structural reasons that Israel has not created a Nokia or a Microsoft, I discovered something very interesting: we have already created a Nokia.  Teva Pharceuticals, despite having sales of around 20% of Nokia, actually has a slightly higher  market cap as of the time of this writing.  Nokia has a slightly higher EV, but even being close is an accomplishment.


Sure, you could say that Teva is not high-tech in the sense of IT, but life sciences/biotech is a pretty big VC sector, and pretty high-tech in its own way.  You could also say that Teva is "Old" (as Danny puts it in his piece), tracing its history all the way back to 1901, but let's not forget that Nokia was founded in 1865!


I am still planning on writing my post about the structural challenges to Israeli entrepreneurs, but first I've got to brush up on my Michael Porter ...