Who Owns Facebook?

Who Owns Facebook?

Facebook, looking at planning a $US100 billion IPO next year, is it all froth. The valuations have jumped every other month thanks to bits and pieces being transacted in pre-IPO shares market. To invest in Facebook on sites like SecondMarket or SharesPost you needed to be "qualified as a sophisticated or professional investor" with about $US2.5 million in net tangible assets or $250,000 annual income over the last three years "for a start".


Would I be buying pre-IPO Facebook shares at US$65 billion valuation. My gut feel is YES. There is one Google, and there is one Facebook. I am not saying Facebook will end up with the same valuations as Google, but I think the momentum is there and the shares could go to US$150 billion valuation post IPO. Then I would sell if I had the shares - euphoria is predictable, riding the trend is risky but OK if you can stomach it, but always have in mind the exit strategy.
- in the light of current situation, i prefer to hold on to 'real assets' rather than bloated tech stock!

On its most recent valuation, Facebook has grown by $US15 billion in January to be worth about $US65 billion. Just last June Facebook was worth $US23 billion. The $US65 billion valuation was determined after one of Facebook's early investors, Interpublic, recently sold half of its 0.4 per cent share in the social networking site for $US133 million. But given that Facebook, which now has 750 million users, is a private company, it is difficult for smaller investors to get in. Facebook is widely expected to be preparing for a $US100 billion initial public offering (IPO) next year.

Bono's investment firm Elevation Partners - named after one of U2's famous songs - bought a $US210 million stake in Facebook in November 2009. That stake is now worth $US975 million - a more than fourfold increase. U2 frontman Bono's investment firm has made a profit of almost $US800 million on shares in Facebook in just a few years, but average punters looking to get in before the social network goes public should keep dreaming.

Mark Zuckerberg Status: Founder, CEO Age: 26 Residence: Palo Alto, CA Education: Two years at Harvard University Facebook stake: 24% Value: $20.4 billion
Selected TIME Magazine's "Person of the Year" in 2010, Mark Zuckerberg has been credited for connecting the world via Facebook. Is Zuckerberg the next Global Kingmaker? After Egyptian dictator Hasni Mubarek resigned, a Google executive based in Egypt credited Facebook as the catalyst for the revolution. Last Summer, British Prime Minister David Cameron promoted his video chats with Zuckerberg as evidence that he's a "wired" leader-- go figure. And President Obama's strategists credited Facebook as the foundation for the campaigns' massive youth-vote effort. Raised in Dobbs Ferry, NY, Zuckerberg began writing software while in middle school and by the end of high school, he had co-written a music recommendation program called Synapse Media Player, which Microsoft and AOL reportedly offered Zuckerberg a million dollars to further develop. "Zuck" however turned them down and ran off to attend Harvard. While in his ivy covered Cambridge dorm, Zuckerberg created Facemash, a website that compared students' photos side-by-side in a fashion similar to HOT or NOT.com. After disciplinary action from the school's administration, Zuckerberg shut down Facemash and began "thefacebook," initially only available to Harvard students. Zuckerberg has since defended the site in intellectual property disputes and spurned buyout offers from Viacom, Yahoo! and other suitors. The 26 year old remains CEO of Facebook, and (according to Forbes magazine rankings) is now tied with New York City Mayor, Mike Bloomberg, as the 10th richest person in the U.S.

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Accel Partners Status: Venture Capital Investor Founded: 1983 Location: Palo Alto, CA Facebook stake: 15% Value: $12.75 billion
Though too young to drink alcohol, it must have been the $400 bottle of wine Jim Breyer offered Mark Zuckerberg at a posh Silicon Valley restaurant that helped seal the deal forAccel Partners' $12.7 million investment in Facebook. Breyer, a managing partner at Accel, was hot for a big deal to impress Accel's less than enthusiastic limited partners. Then Associate, now Accel Partner, Kevin Efrusy, got the inside lead on an early stage financing of Facebook by walking up to the firm's Palo Alto offices, uninvited, on April Fool's Day, 2005. Efrusy's due diligence uncovered Stanford users of Facebook who not only used the website, but literally obsessed over it, even missing their classes to "poke" friends. After a week of back and forth that saw another Facebook suitor, the Washington Post, get the cold shoulder, Accel finally nailed a deal that valued Facebook at $98 million. The $12.7 million investment gave the firm a 15% stake, and also included million dollar bonuses for Zuckerberg, Parker and Moskovitz (unusual in a VC round).

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Dustin Moskovitz Status: Former Employee Age: 26 Residence: San Francisco, CA Education: Two years at Harvard University Facebook stake: 6% Value: $5.1 billion
Man, was this guy lucky to be Mark Zuckerberg's roommate? Currently the youngest U.S. billionaire, Dustin Moskovitz was one of the original founding Facebook cadre. Born in Washington D.C., Moskovitz met his fellow co-founders at Harvard University in 2004 where they developed the social networking site from their dorm room. Moskovitz was an economics major before dropping out of college to relocate to Palo Alto, CA to work on Facebook full-time. Credited as both Vice President of Engineering and Chief Technology Officer, Moskovitz led the technical staff, oversaw the major architecture of the site, and was responsible for the company's mobile strategy and development. He left Facebook in 2008 to start Asana, a company that builds project management software to help companies collaborate. Moskovitz was able to garner the title of "United States Youngest Billionaire" over Mark Zuckerberg because he is eight days younger than his fellow co-founder.

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Digital Sky Technologies Status: Corporate InvestorFounded: 2005 Location: Moscow, London Facebook stake: 5% Value: $4.25 billion
Russian Internet holding company, Digital Sky, grabbed 1.96% of Facebook stock in May of 2009 when it spent $200 million at a $10 billion valuation. Digital Sky, which is largely backed by a wealthy Russian oligarch, is the owner of Facebook clone VKontakte, the largest social network in Russia. Under the direction of Managing Partner, Yuri Milner (pictured), Digital Sky has also amassed sizeable positions in Zynga and Groupon, and is reportedly in talks to buy a substantial stake in Twitter. DST followed its initial stake in Facebook with large block purchases of stock from existing Facebook shareholders and employees. Digitial Sky also joined Goldman Sachs in 2010 for the investment bank's multi-hundred million investment round, with DST ponying up $50 million for yet another .1% of the firm (at a $50 billion valuation). DST's total stake position is approximately 5%.

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Eduardo Saverin Status: Former Employee Age: 28 Residence: Miami, FL Education: BA/BS, Harvard University Facebook stake: 5% Value: $4.25 billion
One of the three original founders of Facebook, Eduardo Saverin was a Harvard classmate of Mark Zuckerberg. Acting as the business partner of "The Facebook," in 2004, Saverin concentrated on developing advertiser relationships while Zuckerberg focused on product development. When Facebook moved its operations to Palo Alto and Sean Parker gained more influence, Saverin ended up on the losing side of a power struggle. Initially granted a 30% stake in Facebook, Saverin's position was whittled down as institutional investment rounds diluted his shares. Saverin was born in São Paulo, Brazil to a wealthy Brazilian Jewish family and was raised in Miami, Florida, the state where he initially incorporated Facebook. In 2006, Saverin graduated magna cum laude from Harvard University with a B.A. in Economics, and is currently living in Singapore. Saverin has been spreading his bucks around and is a major investor in a new social network called Qwiki, as well as Jumio, an online and mobile payment product.

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Sean Parker Status: Former Employee Age: 31 Residence: San Francisco, CA Education: High School Graduate, Oakton High School,VA Facebook stake: 4% Value: $3.4 billion
Part tech genius, part bad-boy, Sean Parker has displayed uncanny foresight and comprehension of Internet business strategy. However, his fondness for hard partying and run-ins with the law have also left him as the odd-man out in business ventures. At the age of 16, Parker's Virginia home was raided by the FBI when he was caught hacking systems of Fortune 500 companies. In 1999, at the age of 19, he co-founded the file sharing (and wrong-side-of -copyright-law) music service, Napster. At a trendy Chinese restaurant in New York in 2004, Parker met Facebook co-founder Mark Zuckerberg and became a mentor and advisor to the rising entrepreneur. Much like Napster, Parker was able to foresee Facebook's success and societal contributions only months into its inception. Acting as the company's first President, Parker negotiated a deal with Facebook's first investors Peter Thiel and Accel Partners, giving Zuckerberg absolute control of the board of directors. Ousted from Facebook in 2005 for a drug-related arrest, Parker went on to become Managing Partner of Founders Fund, a San Francisco-based venture capital shop. Parker still acts as an informal advisor to Zuckerberg.

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Peter Thiel Status: Angel Investor, Member of Board of Directors Age: 43 Residence: San Francisco, CA Education: JD, Stanford University Facebook stake: 3% Value: $2.55 billion
"Just don't f**k it up," is what Peter Thiel told Mark Zuckerberg when the two finalized Thiel's investment in the cash-strapped startup, according to Facebook chronicler David Kirkpatrick. In late 2004, Thiel became Facebook's first significant outside investor when he put up $500,000. Initially structured as a loan, the financing later converted to a 10.2% equity stake in the company. Born in Frankfurt am Main, West Germany, and raised in Foster City, California, Peter Thiel has been credited for launching and/or funding some of the most innovative startups of the last decade including Paypal, YouTube, and LinkedIn. Thiel maintains a seat on Facebook's board of directors and, in addition, serves as president of Clarium Capital, a hedge fund, and is a Managing Partner of VC firm, The Founders Fund. Thiel is known for being a package of contradictions due to the fact that he is a gay, Christian, entrepreneur, venture capitalist, libertarian, lawyer who, in 2010, launched theThiel Fellowship, offering $100,000 in cash to aspiring entrepreneurs under the age of 20 to drop out of school and pursue their business endeavors. Due to selloffs and dilutions, Thiel's original stake in Facebook has been reduced to 3%.

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Microsoft Status: Corporate Investor Founded: 1975 Location: Seattle, WA Facebook stake: 1.6% Value: $1.36 billion
Beaten in search by Google, and wary of Google's acquisitions in web video (YouTube) and banner advertising (Doubleclick) , Microsoft CEO Steve Ballmer (pictured) was willing to do whatever necessary to get in bed with Facebook, and seal the Seattle software goliath's foray into Web 2.0. Though interested in acquiring Facebook outright, an idea Zuckerberg nixed, Microsoft (NASDAQ: MSFT) opted for a complicated arrangement that included an advertising partnership and a small stake in the social network. Microsoft invested $240 million in the Fall of 2007 at what appeared to be a nosebleed $15 billion valuation, which garnered Ballmer a 1.6% position. Eager that the investment not appear inflated, Microsoft welcomed the participation of Hong Kong billionaire Li Ka-Shing in the Series D round. Terms also precluded Google from making an investment in Facebook. The deal looked pitiful when DST bought a larger stake at a $10 billion valuation less than a year later. However, Facebook's current $75 billion valuation means Microsoft's stake in privately-held Facebook has outperformed its own publicly-traded stock 5x.

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Greylock Partners Status: Venture Capital Investor Founded: 1965 Location: Menlo Park, CA; Cambridge, MA Facebook stake: 1.5% Value: $1.275 billion
One of the oldest VC firms in the country, Greylock got its piece of the world's hottest tech company by getting in on Facebook's $27.5 million Series C round. Meritech Capital Partners also participated in the financing along with existing investors Peter Thiel and Accel, who chipped in additional funds. With this financing Facebook was valued at over $500 million, five times the amount when Accel first invested. Greylock, founded in 1965, traces its roots to founders Bill Elfers and Dan Gregory, who both worked at the country's first institutional venture capital firm, American Research & Development, in Boston.

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Meritech Partners Status: Venture Capital Investor Founded: 1999 Location: Palo Alto, CA Facebook stake: 1.5% Value: $1.275 billion
Meritech Capital Partners gained its Facebook shares by participating in the company's $27.5 million Series C round. Joining Meritech in the transaction were Greylock, Accel and Angel investor Peter Thiel, with the round valuing Facebook at over $500 million. Meritech Capital Partners was founded in 1999 in partnership with Accel Partners, Oak Investment Partners, Redpoint Ventures and Worldview Technology Partners, and currently manages more than $2.2 billion in capital.

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Elevation Partners Status: Venture Capital Investor Founded: 2004 Location: Menlo Park, CA Facebook stake: 1.5% Value: $1.275 billion

Once pilloried with the moniker "world's dumbest VC investor," Elevation Partners mayshut up some of its critics with its stealthy purchases of Facebook stock. Using markets designed to provide liquidity for privately-held shares, Elevation has reportedly cobbled together a 7.5 million share position. Its $210 million investment aggregated shares when the valuation of Facebook was $14 billion. Not too shabby for the firm whose high-profile investments in Palm and Forbes Magazine deflated rather than elevated. Elevation, which sports U2 rocker Bono as an investment partner, manages $1.9 billion.

Wan Ahmad's EcoNexus Capital

-none -

Valuation standards 'essential' to rebuild trust in real estate - Emirates Business 24|7

Valuation standards 'essential' to rebuild trust in real estate - Emirates Business 24|7

Dubai Real estate market likely to bottom out in Q2

by Parag Deulgaonkar on Sunday, January 24, 2010 Emirates Business Online

The floor in the real estate market of the UAE is likely to come in the second quarter of this year. However, the entry of distressed assets and vulture funds is yet to materialise, according to a new report.

"The floor in the direct real estate market may come in the second quarter; but recovery does not come until 2011. However, the hype surrounding the emergence of distressed asset funds has yet to materialise. Equity capital remains sidelined and property is a business that makes money when there is leverage attached – otherwise there is not enough return for 'vulture funds' – unless of course prices are sufficiently discounted," Chet Riley, Equity Research, Middle East, Nomura International, said in a report on the UAE real estate market.

"The emergence of vulture investing in 2010 may mark the low point in the current pricing cycle, but it is probably not enough to absorb oncoming supply, so any recovery may be muted," he said.

On the sector outlook, Nomura believes that pricing of real estate will remain "depressed" and may see another dip into rental deflation due to increasing supply of vacant property.

"Capital values are driven more by capital flows than rental values, but we are not seeing new capital yet," Riley said. Although 2009 was a difficult year, Nomura expects 2010 to be just as hard. "The UAE services a regional population of more than 1.5 billion and arguably is the trade hub capital of the world, so we believe it is difficult to dismiss Dubai [and the wider UAE] on long-term fundamentals," the report said.

The UAE is positioned well ahead of competing interests in the Gulf Co-operation Council in terms of timing and delivery. The valuable infrastructural framework is in place and the lead time to develop what has been installed locally is probably around five years, and this assumes that such large-scale developments could ever be financed again to the same degree.

This gives Dubai some breathing space to absorb the current excess and normalise the real estate market, but it will take some time. We are seeing signs of stabilisation, but the residual risk has not fully unwound yet, Nomura said.

"When the risk does unwind, the financially weak developments are sidelined for good and the looming oversupply situation is resolved, we will become more positive on the macro real estate fundamentals," the global investment bank said.

According to Nomura, the sector is currently in the mid-cycle with real estate secondary prices stabilising, but project financing for new or stalled developments is still virtually impossible. Until the financing of these developments can be bridged, there will be a sector stalemate – with real estate trying to transfer the purchasing risk and the banking sector not willing to accept it. The fourth quarter 2009 results and corporate commentary from real estate companies may not be as interesting as those from the banking sector, where Nomura house view remains that loan-loss provisions will expand rapidly as real estate risk is more fully recognised.

Dubai at least does capture some underlying market data points (the Land Department), and there is an increasing number of house price indices emerging. Land sales are not representative of the secondary "built" market, and there is significant variation between the value of land based on location and "in place" infrastructure and so forth.

Land sales (by transactions and value) peaked in May 2008, and the residential market peaked in August 2008 (Colliers monthly HPI). With house price indices starting to become more prevalent, Nomura said it will start to measure the causal relationships to see if land sales are an early (albeit not significant) indicator for house prices.

At the peak, Real Estate Regulatory Agency estimated that there were 800 developers in Dubai alone. The last official count suggested 473 and, intuitively, the investment bank thinks this number will shrink to fewer than 100 as "boom" cycle developments get delivered into "trough" conditions.

Nomura also believes that the fractional ownership model of commercial property in Dubai is flawed. Strata titled buildings represent around 85 per cent of the total office supply (existing and forecast) versus approximately 15 per cent in Abu Dhabi. Typically these buildings command lower rents, higher service charges, sinking maintenance funds and, therefore, lower values. "We think funded property investors will increasingly try to consolidate the ownership of commercial real estate to maximise a building's value with management-light buildings more valuable than management-intensive ones," Riley said.

The report points to property companies increasingly selling equity stakes in ongoing developments in order to "round trip" equity and de-risk balance sheets.

"We like the strategy if it diversifies the funding base and the development risk, without necessarily affecting returns. Assuming there is no shareholder dilution, third-party arrangements can be mutually beneficial; 2010 could be the year of partnering and joint ventures. We expect to see sales of development stakes and completed assets. We expect routes into new markets to take the form of joint ventures with local partners," Nomura said.

According to Nomura, development is relatively finite and capital consumptive, whereas investment properties (occupied) are cash-flow positive almost immediately. "Union Properties may buck this trend and sell mature assets to fund its current development programme. We think corporate disclosure needs to improve to re-establish investor confidence. With the evolution from developer to investment property owner, we expect to see corporate disclosure improve.

"If we have one generic criticism of UAE real estate companies, it pertains to the disclosure on property portfolios. We think occupancy, lease structures and covenants, net operating income yields, equivalent and reversionary yields should be disclosed along with relevant independent valuation summaries," Riley added.

Rental Portfolios

UAE developers have been forced to evolve rapidly and build up rental portfolios in the current market situation with Emaar and Aldar being the most advanced with revenues doubling year on year.

"Rental streams can be capitalised to provide alternate sources of funding [the securitised market remains shut, however] generally at a lower cost and increase the longevity of the business," the report said.

In November 2009, the then Union Properties Vice-Chairman Khalid bin Kalban said the company expects recurring revenues from its leasing portfolio to more than double to Dh500 million from 2010 onwards from the current Dh160m.

"About 2,000 units not sold or defaulted will be transferred to our rental portfolio. And so we expect our rental income to increase to Dh500m from next year onwards," he had said.

The United States Of Ponzi

Nouriel Roubini, 03.19.09, 12:01 AM ET

A reporter contacted me recently with the following question:"I am a reporter, and I am doing a story on Bernard Madoff's life after pleading guilty. As part of this, I was wondering if you could comment on what significance he will have in the history of this period. Will he represent more than a scamster who stole a lot of money from a lot of people? As Bernie Ebbers and Ken Lay came to embody corporate greed and deceit, what will Madoff symbolize?"

Here is my answer fleshed out in full:Americans lived in a "Made-off" and Ponzi bubble economy for a decade or even longer. Madoff is the mirror of the American economy and of its over-leveraged agents: a house of cards of leverage over leverage by households, financial firms and corporations that has now collapsed in a heap.When you put zero down on your home, and you thus have no equity in your home, your leverage is literally infinite and you are playing a Ponzi game.And the bank that lent you, with zero down, a NINJA (no income, no jobs and assets) liar loan that was interest-only for a while, with negative amortization and an initial teaser rate, was also playing a Ponzi game.And private equity firms that did over a $1 trillion of leveraged buyouts (LBOs) in the last few years with a debt-to-earnings ratio of 10 or above were also Ponzi firms playing a Ponzi game.A government that will issue trillions of dollars of new debt to pay for this severe recession and socialize private losses may risk becoming a Ponzi government if--in the medium term--it does not return to fiscal discipline and debt sustainability.A country that has--for over 25 years--spent more than income and thus run an endless string of current account deficit--and has thus become the largest net foreign debtor in the world (with net foreign liabilities that are likely to be over $3 trillion by the end of this year)--is also a Ponzi country that may eventually default on its foreign debt if it does not, over time, tighten its belt and start running smaller current account deficits and actual trade surpluses.Whenever you persistently consume more than your income year after year (a household with negative savings, a government with budget deficit, a firm or financial institution with persistent losses, a country with a current account deficit) you are playing a Ponzi game.

In the jargon of formal economics, you are not satisfying your long-run inter-temporal budget constraint as you borrow to finance the interest rate on your previous debt, and are thus following an unsustainable debt dynamics that eventually leads to outright insolvency.According to Hyman Minsky and economic theory, Ponzi agents (households, firms, banks) are those who need to borrow more to repay both principal and interest on their previous debt; i.e., Minsky's "Ponzi borrowers" cannot service either interest or principal payments on their debts. They are called "Ponzi borrowers" as they need persistently increasing prices of the assets they invested in to keep on refinancing their debt obligations.By this standard, U.S. households whose debt relative to income went from 65% 15 years ago, to 100% in 2000, to 135% today were playing a Ponzi game.And an economy where the total debt to GDP ratio (of households, financial firms and corporations) is now 350% is a Made-Off Ponzi economy. And now that home values have fallen 20% (and they will fall another 20% before they bottom out) and equity prices have fallen over 50% (and may fall further), using homes as an ATM to finance Ponzi consumption is not feasible any more.

The party is over for households, banks and non-bank highly leveraged corporations.The bursting of the housing bubble, the equity bubble, the hedge funds bubble and the private equity bubble showed that most of the "wealth" that supported the massive leverage and overspending of agents in the economy was a fake bubble-driven wealth. Now that these bubble have burst, it is clear that the emperor had no clothes, and that we are the naked emperor. A rising bubble tide was hiding the fact that most Americans and their banks were swimming naked; and the bursting of the bubble is the low tide that shows who was naked.Madoff may now spend the rest of his life in prison. U.S. households, financial and non-financial firms, and government may spend the next generation in debtor's prison having to tighten their belts to pay for the losses inflicted by a decade or more of reckless leverage, over-consumption and risk-takin.

Americans, let us look at ourselves in the mirror: Madoff is us and Mr. Ponzi is us

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Nouriel Roubini, a professor at the Stern Business School at New York University and chairman of Roubini Global Economics, is a weekly columnist for Forbes.com.!