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Jake Munday’s internet business is based on a simple idea: people love dogs.

Jack-Munday-and-DJ-image www.socialselect.net

But that idea has garnered his Facebook page, Dog Lovers, more than three million followers, which Munday says is earning him about $40,000 a month.

These are impressive figures by any measure but even more so, considering that Munday is 24 years old and Dog Lovers is only a part-time exercise for him. His full-time job is selling phone plans in a Telstra business dealership.

Having decided he wanted to start a business based on people’s love of dogs, Munday thought he’d start a Facebook page and decided that rather than start from scratch he’d acquire one. So he acquired the Dog Lovers page when it had an already impressive 430,000 fans.

“We saw an opportunity there to set up a little business and sell dog collars and dog products to the audience,” says Munday, who lives in Geelong in Victoria. But he quickly discovered the business model was not workable. A lot of the Facebook page’s fans were overseas and it was impossible to make a profit by selling a dog collar that cost $8 wholesale for $12 and paying foreign postage.

In the meantime, he set about securing more fans for the Facebook page and, the way that Munday tells it, getting the next 2.5 million “likes” in the 12 months since was pretty simple.

Indeed, his strategy for attracting viewers is much like his original business idea. “Animals are very emotional to people; they’re like family, they’re like their kids,” he says. “We can make it sound like a special formula but at the end of the day some [posts] work and some don’t.”

They posted a picture of a cute little girl holding up a handwritten sign saying, “my daddy said I can get a puppy only if I can get 1 million likes”. The post went viral and within 72 hours had picked up 1.3 million clicks.

The picture had already been posted on Facebook. Munday simply picked it up and put it on his own page. He has no idea who the girl is or whether she ultimately got her puppy.

The site continues to pick up more traffic with its mix of cute and funny dog pictures and videos. Munday has employed a friend part time to produce content for the site but most of it is posted by fans, free of charge.

With the original idea of selling dog products not working out, Munday looked for other sources of revenue. He turned the Facebook page into an advertising vehicle.

The page earns its revenue through advertising – pet businesses pay to place ads on the site – and through affiliate marketing – where companies pay Munday when people click on their site from the Facebook page.

For instance, he promotes products for the pet-related group buying site coupaw.com and, when people click on the ads, they’re taken to the site where they have to fill out their email details and Munday earns $1 per email address. Others pay a commission on the sales Dog Lovers generates.

Promoted products include doggles (goggles for dogs), booties to keep puppies’ paws warm and dry, and dog-themed jewellery for owners.

The site initially earned $4000 a month in revenue, and has grown each month, to about $40,000 now, Munday says.

For several months, Munday ran his own non-Facebook website, with his videos and pictures, which earned revenue from the Google advertising service AdSense, where the search giant places ads on sites.

That site proved popular and profitable, bringing in revenue of several thousand dollars a week. But he was blocked by Google for not complying with its guidelines about how and where ads could be placed, such as places that created accidental clicks.

Munday plans to relaunch the site on a more professional basis. His next task is to work out how to derive revenue from his database of three million followers and the Dog Lovers brand.

“It is hard when you have a worldwide audience. It’s hard to create my own products,” he says. He could continue to sell ads on the new site but might also license the brand.

Munday expects the site to keep attracting likes but wants to sell out in the longer term.

“Ideally someone comes in and pays me out for the right price,” says Munday. “This is fantastic but it can’t last forever. The reality is that it’s always changing.”

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Henry Sapiecha
black diamonds on white line

TWITTER ENGINEER GETS A $10M A YEAR WAGE PACKAGE

A talented engineer's pay packet is the second biggest at Twitter, after that of CEO Dick Costolo, pictured.
A talented engineer’s pay packet is the second biggest at Twitter, after that of CEO Dick Costolo, pictured. Photo: Stephen Lam

Among Twitter’s highest-paid executives, Christopher Fry’s name stands out.

The senior vice president of engineering raked in $US10.3 million ($10.8 million) last year, just behind Twitter chief executive Dick Costolo’s $US11.5 million, according to Twitter’s IPO documents. That is more than the paycheques of executives such as chief technology officer Adam Messinger, chief financial officer Mike Gupta and chief operating officer Ali Rowghani.

Welcome to Silicon Valley, where a shortage of top engineering talent amid an explosion of venture capital-backed start-ups is inflating paycheques.

“The number of A-players in Silicon Valley hasn’t grown,” said Iain Grant, a recruiter at Riviera Partners, which specialises in placing engineers at venture-capital backed start-ups. “But the demand for them has gone through the roof.”

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Stories abound about the lengths to which employers will go to attract engineering talent – in addition to the free cafeterias, laundry services and shuttle buses that the Googles and Facebooks of the world are already famous for.

One start-up offered a coveted engineer a year’s lease on a Tesla sedan, which costs in the neighbourhood of $US1000 a month, said venture capitalist Venky Ganesan. He declined to identify the company, which his firm has invested in.

At Hotel Tonight, which offers a mobile app for last-minute hotel bookings, CEO Sam Shank described staging the office to appear extra lively for a prospective hire. He roped in two employees for a game of ping-pong and positioned another group right by the bar.

It worked: the recruit signed on and built a key piece of the company’s software.

In Fry’s case, his compensation came mostly in the form of stock awards, valued last year at $US10.1 million, according to Twitter’s IPO documents registered with securities regulators. He drew a salary of $US145,513 ($153,689) and a bonus of $100,000 ($105,618).

Some might call that underpaid. Facebook’s vice president of engineering, Mike Schroepfer, took in $US24.4 million in stock awards the year before the social network’s 2012 initial public offering. He also drew a salary of $US270,833 and a bonus of $US140,344. But Facebook that year posted revenue of $US3.71 billion, 10 times more than Twitter’s $US317 million.

Grant said more than three-quarters of candidates who took VP of engineering roles at his client companies over the last two years drew total cash compensation in excess of $US250,000. Many also received equity grants totaling 1 to 2 per cent of the company, the recruiter added.

Lore of 10x

The hot demand for engineers is driven in part by a growing number of start-ups, venture capitalists say. Some 242 Bay Area companies received early-stage funding – known as a seed round – in the first half of this year, according to consultancy CB Insights. That is more than the number for all of 2010.

Another factor is the increasing complexity of technology. Many in Silicon Valley like to discuss the lore of the “10x” engineer, who is a person so talented that he or she does the work of 10 merely competent engineers.

“Having 10x engineers at the top is the only way to recruit other 10x engineers,” said Aileen Lee, founder of Cowboy Ventures, an early-stage venture fund.

Former colleagues said Fry, who joined Twitter earlier this year, fits the bill. The messaging service poached him from software giant Salesforce.com, where Fry had worked in various positions since 2005, rising from engineering manager in the web services team to senior VP of development.

Perhaps most attractive to Twitter is the fact that Fry joined Salesforce when it was also a six-year-old company with big ambitions of taking on the software establishment. At that time, Salesforce’s product development needed help, Fry has said in previous interviews. He whipped them into shape, helping build the company into one of the hottest enterprise-software providers in the industry today.

Twitter has had its share of technical problems, such as the notorious “fail whale” that regularly appeared on screens during outages. That made Fry’s experience all the more valuable.

“All it takes is a couple of bad incidents where Twitter is down, or there’s a security breach. That could be the end of the company,” said Chuck Ganapathi, an entrepreneur who previously worked with Fry at Salesforce, where he was senior vice president for products.

“You need somebody of this calibre to run it.”

Neither Twitter nor Fry responded to requests for comment.

Personal drum studio

Today, even entry-level engineers can draw lucrative salaries in the Valley. Google offered $US150,000 in annual wages plus $US250,000 in restricted stock options to snag a recent PhD graduate who had been considering a job at Apple, according to a person familiar with the situation.

The average software engineer commands a salary of $US100,049 in Silicon Valley, according to Dice, a technology-recruitment service. That is down from $US113,488 last year, due to an increase in hiring of less experienced engineers, said a Dice spokeswoman.

By comparison, the average salary for all professions in San Francisco’s Bay Area is $US66,070, according to the Bureau of Labour Statistics. Other jobs in the area can command higher wages – physicians make $US133,530, a lawyer about $US174,440 and a civil engineer makes $US107,440 – but the tech industry often offers restricted stock or options on top of salaries.

Even for plain-vanilla engineers, competition is intense, said Dice CEO Mike Durney, leading companies to go to great lengths to attract and hold onto the right people.

Accommodation-search service ApartmentList rents a drum studio on an on-going basis to help retain a key engineer, said CEO John Kobs.

In one of the better-known examples, Google famously allowed engineers to devote 20 per cent of their time on personal projects. It is worth it, many recruiters and industry executives say.

Many of the most talented engineers bring more than programming chops, promoting the sort of career diversity prized in Silicon Valley.

Take Fry, who earned a PhD in cognitive science from the University of California at San Diego in 1998. He is a surfer, a sailor and a snowboarder, according to his personal website.

In a fitting twist for Twitter, known for its blue bird mascot, Fry also has avian expertise. His post-doctoral fellowship at the University of California, Berkeley, focused on the auditory cortex of zebra finches.

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Henry Sapiecha

black diamonds on white line

HEARSAY SOCIAL TO EXPAND WORLDWIDE AFTER RAISING $30M CAPITAL

money community

(Reuters) – Internet company Hearsay Social has raised $30 million in funding which it said would help accelerate product development and international expansion.

San Francisco-based Hearsay said on Thursday that its latest round of funding came from venture capital firms Sequoia Capital and NEA, which have both previously invested in the company.

Hearsay, whose tools help businesses use social networks such as Facebook Inc, LinkedIn Corp and Twitter to generate sales, said it has more than doubled its number of customers during the last twelve months, adding financial services firms such as Raymond James, Bank of the West and Nationwide Insurance among others.

With roughly 100 employees, Hearsay expects to increase its work force and its product capabilities to better target customers in various industries and geographic regions, Chief Executive Clara Shih told Reuters. Shih said that Hearsay would also be more aggressive in acquiring other companies.

Founded in 2009, Hearsay has raised $51 million to date.

(Reporting by Alexei Oreskovic; Editing by Bernard Orr)

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Henry Sapiecha

black diamonds on white line

NEW TECH SUMMLY & THE YAHOO BUYOUT TO A 17YEAR OLD

Cloud 9 for the young Nick D’Aloisio techie

At just 17, former Perth and Melbourne resident Nick D’Aloisio is now one of the world’s youngest self-made multimillionaires, after tech giant Yahoo acquired his firm for a reported $28.7 million.

His technology Summly aims to change the way we read emails, news articles or any other text on our computers and smartphones by using algorithms to summarise text in under 400 characters.


I-Tech - Computer Hardware and Software Australia

I like shoes, I will buy a new pair of Nike trainers and I’ll probably get a new computer but at the moment I just want to save and bank it. I don’t have many living expenses.

Summly founder Nick D’Aloisio.

Yahoo did not disclose the terms of the deal, but The Wall Street Journal‘s AllThingsD blog said Yahoo would pay $US30 million ($28.7 million), mostly in cash, with 10 per cent in stock.

Nick D'Aloisio.
Summly founder Nick D’Aloisio, 17.

Before the Yahoo deal, D’Aloisio received a collective $US1.5 million in investment funds from people including celebrities Ashton Kutcher and Stephen Fry and billionaire Li Ka-shing.

Speaking from his family home in London, where he has lived since leaving Australia when he was seven, D’Aloisio said he was excited about the deal with Yahoo, believing it would help assist in developing the Summly technology further and integrating it with Yahoo’s offerings.

His technology summarises text using algorithmic technologies, allowing for simplified dot point summaries of anything on the web such as search results. It has many uses and could even be used to summarise emails, social networking posts and product descriptions.

The Summly app.
The Summly app.

The deal with Yahoo will see his company’s iPhone app Summly shut down. D’Aloisio said the app had been downloaded almost 1 million times in the past five months and generated about 90 million summaries.

While active it received Apple’s Best Apps of 2012 award for Intuitive Touch and had a contract to display content from News Corp publications.
I-Tech - Computer Hardware and Software Australia

The purchase has led some in the media to question why Yahoo would want to acquire the technology. Technology news website Wired suggested it was so that Yahoo could be cool again.

The Summly app summarised news in under 400 words.
The Summly app summarised online news articles in under 400 characters.

“There’s no logical explanation for Yahoo’s reported $US30 million acquisition of Summly,” wrote Wired‘s Ryan Tate. “The team and technology are unexceptional and the app itself will be shut down. What Yahoo really gets for its big cheque is momentum and buzz. In other words, Yahoo bought Summly to appear cool again.”

D’Aloisio said it was “technically true” that he was now a millionaire after sealing the Yahoo deal, but added that he had no immediate plans to do anything with the money.

“Obviously the money is going to be in a fund and I’ll work with my parents to save it,’ he said. “I’m just focused now on working for Yahoo and kind of taking everything to the next level.

“I like shoes, I will buy a new pair of Nike trainers and I’ll probably get a new computer but at the moment I just want to save and bank it. I don’t have many living expenses,” he told the London Evening Standard.

D’Aloisio told Fairfax Media last year that he began his journey with computers when he was eight, using Apple’s movie making software iMovie before progressing to the more professional video software Final Cut Pro.

“I basically begged my parents for six months to get [an Apple] computer,” he said of his father, an investment banker, and his mother, a lawyer. “And when I finally got it, instead of using it for just watching videos or browsing the web, I kind of had an interest to create things.”

A lot of D’Aloisio’s coverage in the media has been positive, with some describing him as “telegenic” and a “wunderkind“. But the coverage wasn’t always so glowing.



In 2011 an app writer for technology website Gizmodo, Casey Chan, published D’Aloisio’s Trimit app (now Summly) as “worst app of the week” after D’Aloisio bombarded his office with emails.

“Over the course of a few days, D’Aloisio … barraged me with over a hundred emails about Trimit,” Chan said in a post entitled “How I made a 15-year-old app developer cry“.

“I saw him go from calm to excited to a nervous wreck …” (In comparison, Fairfax was sent six emails chasing up when last year’s article would be published.)

Asked for a response last year to the Gizmodo post, D’Aloisio said his actions occurred at a “very early stage of development”. “Obviously I’m still learning and really excited about everything that’s happened with Summly,” he said. “Dealing with the current media attention is something I’m unexpectedly going to have to get used to.”

In a statement, Yahoo said it was excited to share that it was acquiring Summly and that D’Aloisio and a team would join the technology giant “in the coming weeks”.

I-Tech - Computer Hardware and Software Australia

D’Aloisio will be based at Yahoo’s central London office.

“At the age of 15, Nick D’Aloisio created the Summly app at his home in London,” Yahoo said in its statement. “It started with an insight — that we live in a world of constant information and need new ways to simplify how we find the stories that are important to us, at a glance.”

Yahoo said most articles and web pages were formatted for browsing with mouse clicks and that “the ability to skim them on a phone or a tablet can be a real challenge — we want easier ways to identify what’s important to us”.

Former Google executive Marissa Mayer took over at Yahoo in July 2012 as part of efforts by the struggling internet search pioneer to reinvent itself.

D’Aloisio said he was excited to be working with Mayer.

“The thing that’s really exciting me about Yahoo is the fact that Marissa Mayer is now their CEO, who is a product person,” he said.

With AFP
CardioTech

Sourced & published by Henry Sapiecha

FACEBOOK TO CHARGE $100 ACCESS FEE TO SOME USERS

Facebook is dabbling with charging members as much as $100 to get messages to the inboxes of strangers such as social network co-founder and chief Mark Zuckerberg.

“We are testing some extreme price points to see what works to filter spam,” Facebook said on Friday in response to an inquiry regarding the costly delivery fees.

In December, Facebook began testing the feasibility of charging to guarantee that messages from strangers make it into inboxes of intended recipients.

At its launch, the Facebook Messages test, limited to the United States, let a sender pay a dollar to make sure an electronic missive is routed to someone’s “inbox” even when the person is not in their circle of friends.

In a spin revealed by Mashable and other technology news websites, the test includes evaluating whether ratcheting up delivery prices for high-profile members such as Zuckerberg helps ensure that only messages truly of interest get to inboxes.

The Facebook messaging system was billed as being designed to deflect seemingly unwanted correspondence into an “other” folder that can be ignored.

Facebook said it wanted to determine whether adding a “financial signal” improves its formula for delivering “relevant and useful” messages to members’ inboxes.

Facebook already uses social cues, such as connections between friends, and algorithms that identify spam messages.

Dabbling with getting people to pay to connect with Facebook members comes as the social network strives to tap the potential to make money from its membership base of more than a billion people.

Sourced & published by Henry Sapiecha

Good or bad, this will go down as the year that Facebook really put a dollar sign before its users to maintain its services & ensure survival.

The technology company has been under immense pressure from investors to come up with ways to make money from its product, which has led to a fundamental shift in how it operates. When the company first filed to go public in February, CEO Mark Zuckerberg stated very clearly that profit is not his or the company’s first priority. “Simply put: we don’t build services to make money; we make money to build better services,” he wrote in the public filing. Eight months and plenty of bad stock trading days later, Zuckerberg revealed in an earnings call that every team at Facebook is now responsible for coming up with a revenue strategy for their product.

In the past year, we’ve seen Facebook try out a range of tactics to make money from its users, whether it’s inserting more advertising into the News Feed or the recently announced option that lets people you don’t know message your inbox for $US1. Some of these efforts, like the messaging option, have been met with heavy criticism from users while others have largely been accepted as par for the course.

What matters now to Facebook from an investor standpoint is how much it can increase the money it makes from each user. Facebook generated about $US1.25 per user on average in the third quarter, up from about $US1.19 in the same quarter last year.

To put that another way, right now you’re worth about $US5 a year to Facebook and the company would really like to see that number go up.

For that reason, don’t hold your breath for Facebook to stop trying out new ways to make money off you in the new year. Brian Wieser, senior research analyst at Pivotal Research Group, says that some features introduced this year like Sponsored Stories for mobile will likely stick around, while the company continues to test out others to see what works and what doesn’t.

“I think you should expect just an ongoing testing and learning from an ad sales perspective about what balances near-term revenue growth with durability,” Wieser said. With that in mind, here’s a look back at all the ways Facebook tried to make money from you this year, as well as a glimpse at what they might do next year.
SocialNetAdd

Putting sponsored stories in your News Feed

Image courtesy of Facebook

Facebook launched Sponsored Stories in the beginning of 2011, in an early effort to monetise activity on the desktop website by turning users into quasi-brand promoters. This year, Facebook took that effort a step farther by placing these promotions in the user’s News Feed, where they are more visible and presumably generate a higher click-through rate. This has been a big money maker for the site, bringing in more than $US1 million a day, but it has also proven to be a bit of a headache. Users filed a class-action lawsuit against the company earlier this year, objecting to the having their names and pictures used in the ads.

SocialNetAdd

Mobile ads in Facebook’s app

Image courtesy of Facebook

From the perspective of investors, nothing was more important for Facebook than proving it could monetise on mobile. It did just that starting in the middle of this year by introducing Sponsored Stories, app install ads and Offers into the mobile feeds of its users. In the third quarter – just a few months after Facebook launched these mobile ads – it generated $US139 million from mobile ads, or 14 per cent of its total ad revenue.

Facebook now makes $US3 million a day inserting promotional content into your mobile News Feed and, as Zuckerberg noted during a conference call with analysts, “We’re just getting started.

SocialNetAdd

Mobile ads in third-party apps

Image courtesy of Flickr, Jason A. Howie

Even after you leave Facebook, the company can still find ways to make money off you. In September, Facebook began testing placing mobile ads in third-party applications. The ad exchange allowed certain websites and apps to use Facebook information to better target users with ads promoting a website or providing a link to download an app. Facebook recently put this ad product on hold, but that doesn’t mean it’s going away for good. As a Facebook rep told Mashable, “We have learned a lot from this test that will be useful in the future.”
SocialNetAdd

Promoted posts

Image courtesy of Facebook

As the social network gets more crowded with posts from users and advertisers, some of your updates may get lost in the clutter. So Facebook decided to give users a new option in October to ensure that their posts are seen by more people. For the low, low price of just $US7, Facebook allows users to “promote” their posts in their friends News Feeds. As Mashable‘s Matt Silverman wrote at the time, Facebook is now applying the “freemium” model for its service.
SocialNetAdd

Facebook gifts

Image courtesy of Facebook

After trying and failing to operate a gift shop two years ago, Facebook decided to give the gifts idea another shot. In September, the company launched Facebook Gifts, helped by its acquisition of the gift-giving app Karma earlier in the year, in an effort to create another revenue stream. As mentioned, Facebook currently makes just $US5 on average per user per year. If every user makes just one small purchase through Gifts, that amount will skyrocket in the coming year. That’s why you’ve likely seen more than a few prompts on the site to buy someone a gift for a particular occasion.

SocialNetAdd

Paid Messages

Image courtesy of Facebook

Facebook decided to squeeze in one more money-making attempt before the end of the year, announcing last week that it is testing a new option that lets users pay $US1 to ensure that a message is delivered to someone’s inbox, even if it’s not someone he or she is connected to on the network. Until now, messages are only delivered to your Facebook inbox if it is sent by someone you are friends with, or who you share mutual connections with. Otherwise, the message goes to a subsection of your inbox called Other, which essentially serves as a spam folder.

Facebook is billing the option as an effort to crack down on spam by seeing if imposing a financial cost on users stops them from messaging people they don’t know. But it seems just as likely that this could lead to an influx of spam from marketers and others who may be eager to get access to your Facebook inbox. While the plan is subject to change, a Facebook rep told Mashable that as of right now, a user could pay a one-time fee of $US1 to message your inbox an unlimited number of times until you decide to mark it as spam.
Get into the social sites here where everything is accessable to you. (ie) Click Here To Enter Merchant Website And View Products.

Video ads in the News Feed

The next big attempt from Facebook to make money may be placing video ads in News Feed. Advertising Age recently reported hearing from “several industry executives” that Facebook is planning to let advertisers place 15-second ads in users’ News Feeds on desktop and mobile by April, 2013. Worse still, the ads will reportedly be on autoplay, meaning they will start playing once you open up the page, whether you want them to or not.

Welcome to the new era of Facebook.

Mashable is the largest independent news source covering digital culture, social media and technology.
SocialNetAdd

Sourced & published by Henry Sapiecha

CO-FOUNDER OF FACEBOOK EDUARDO SAVERIN RENOUNCES US CITIZENSHIP

SocialNetAdd

EDUARDO SAVERIN, the billionaire co-founder of Facebook, renounced his US citizenship on the verge of a sharemarket float that values the social network at nearly $US96 billion.

Facebook plans to raise as much as $11.8 billion through the float, the biggest in history for an internet company.

Mr Saverin’s relinquishing of US citizenship could reduce his tax bill. His stake in Facebook is about 4 per cent, according to the website whoownsfacebook.com. After the float, that would be worth about $US3.8 billion.
Get your own social space here.

Mr Saverin joins a growing number of people giving up US citizenship before a possible increase in tax rates for top earners. The Brazilian-born resident of Singapore helped Mark Zuckerberg start Facebook in a Harvard dormitory.

”Eduardo recently found it more practical to become a resident of Singapore since he plans to live there for an indefinite period of time,” his spokesman, Tom Goodman, said.

The 2010 movie The Social Network portrayed him as a scorned friend who provided the company’s early financing and then was squeezed out. He sued Mr Zuckerberg and settled for an undisclosed amount.
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Sourced & published by Henry Sapiecha

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BRISBANE AUSTRALIA SPAWNS A NEW FACEBOOK LIKE CONCEPT USING LIVE VIDEOS AS THE COMMUNICATION MEDIUM

A first name isn’t the only thing Mark Cracknell has in common with Mark Zuckerberg.

Like the Facebook founder, Cracknell is a young man with big dreams and a background in computing. He also has a website, Kondoot, which, like Zuckerberg’s famous social network, enables users to share their lives online.

Mark C may not have emulated Mark Z’s stratospheric success just yet, but the comparison is already being drawn – by no less than the Wall Street Journal – after the 21-year-old Brisbane-based entrepreneur and partner Nathan Hoad returned from the US with $3.2 million in funding for their site.

Sourced & published by Henry Sapiecha

Facebook investors heading

for the exits as value hits $70bn

April 28, 2011 – 10:19AM

A group of Facebook shareholders is seeking to offload $US1 billion worth of shares on the secondary market, a sale that would value the company at more than $US70 billion, according to five sources with direct knowledge of the situation.

It would represent one of the largest transactions of Facebook shares to date and points to a growing wariness among early-stage investors and employees who fear Facebook’s growth cannot keep pace with its market valuation.

The sellers have lowered their price after previously trying to offload shares at a price that valued the company at $US90 billion, which would make Facebook more valuable than Time Warner and News Corp combined. But buyers balked.

“At the current valuation where it is, it is really hard to justify the investment,” said Sumeet Jain, partner at venture capital firm CMEA Capital, who has examined Facebook deals recently and has taken a pass. “It’s hard to imagine it will turn into a $US270 billion company in the next few years.”

The current deal, which includes stock held by Facebook employees, is awaiting approval from top Facebook executives including Chief Executive Mark Zuckerberg and Chief Financial Officer David Ebersman, according to two sources.

Facebook declined to comment.

Investors, ranging from venture capital firms to rich individuals to investment banks, have scrambled to get a piece of the privately held company before its expected IPO next year.

Facebook raised $US500 million from Goldman Sachs Group, and Russia’s Digital Sky Technologies, for instance, giving it a market value of $US50 billion. Weeks later, private equity firm General Atlantic piled into the company, valuing it at $US65 billion, according to CNBC.

Tim Draper, the well known venture capital partner who founded Draper Fisher Jurvetson, told Reuters this month he recently looked at buying shares of Facebook deals, but passed because of an unattractive valuation.

One wealthy person, who has fielded calls for the past month involving Facebook pitches in the range of $US200 million to $US1 billion, is also sitting on the sidelines.

“It’s priced to perfection in the private marketplace,” said the person, who did not want to be named. The person said the pitches implied a valuation of $US90 billion. “I don’t like to own anything I can’t sell right now.”

Created in a Harvard University dorm room in 2004, Facebook rocketed from an online directory created for college students to the world’s No. 1 social network with more than 500 million members worldwide.

The company’s astounding growth and popularity have put some of the internet’s biggest guns on notice – including Google – and have made it the darling of investors seeking to stake out claims in private companies before they go public.

Facebook, the world’s No. 1 internet social network, earned $US355 million in net income in the first nine months of 2010 on revenue of $US1.2 billion.

It is one of a handful of internet companies including Twitter, Groupon and Zynga whose soaring valuations recall the heady days of the late 1990s.

It is questionable whether new investors would realize the exponential growth that early-stage investors got in Facebook, said Oppenheimer & Co managing director Stephen Todd Walker.

That’s particularly true, he said, as the company faces more competition abroad from social networking sites like China’s Renren Inc, which is expected to go public next week.

“For Facebook, the larger you get, the harder it is to have that explosive growth,” said Walker.

Nonetheless, an array of investors has piled into Facebook. Mutual fund giant T. Rowe Price recently disclosed that several of its funds owned stakes in Facebook, valuing the company at $US25 per share, which implies a valuation of $US50 billion.

Yet one hedge fund manager who passed on smaller Facebook deals recently said that, for him, the opportunity to get in on the action had passed.

“By the time T. Rowe Price is investing,” he said, “you know it’s too late.”

Reuters

Sourced & [published by Henry Sapiecha

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