Facebook at Face Value: How High Will the Bids Go?

Oct. 17, 2006 — -- Don't even think of telling Mark Zuckerberg what to do.

The 22-year-old founder of Facebook has been tempted by offers to buy him out or take the social networking Web site public since 2004, soon after he launched it out of his dorm room at Harvard.

He's always refused to sell out.

Even when Yahoo! dangled $1 billion in his face in recent weeks, Zuckerberg wouldn't budge, holding out for more money.

In fact, the entrepreneur is so insistent on maintaining control of Facebook that he once fired an underling who dared to suggest that the company issue an IPO, according to Noah Kagan, a product development consultant who left the firm a few months ago.

"Mark is going to wait until the right offer comes along," Kagan said. "It's his baby, and he's adamant about not selling out right away."

After Google's recent $1.6 billion purchase of online video site YouTube, Zuckerberg is even more determined to hold out for at least $1 billion, according to sources close to him.

But is it too late to wait for a better offer?

Facebook's traffic is dwarfed by competitor MySpace (14.7 million versus 55.7 million unique visitors in August) and the site has lost some of its exclusive cachet by allowing more users to join.

"If you allow everyone to use it, it is pretty much the same as MySpace," said West Virginia University student Heather Bonecutter in a column she recently wrote for The Daily Athenaeum. "The thing that made Facebook so cool was the exclusivity."

And some industry observers point to the example of Friendster, one of the first social networking sites that rapidly lost ground in the increasingly competitive arena.

When Google offered Friendster founder Jonathan Abrams $30 million a few years ago, he turned them down, holding out for more money, and ended up watching his venture fizzle.

"Take the money. That's my advice," one industry observer said. "The Internet audience is very fickle and keeps changing every few years. There's already buzz that MySpace won't be around in a couple of years. Ask a 12-year-old -- they don't think MySpace is cool anymore."