As Mike Arrington points out with a tiny bit of understatement, the numbers that Yahoo used to justify its valuation — at one point it offered a deal valuing Facebook at a YouTube-ilicious $1.6-billion — look to be based on “robust” user growth. How robust? By 2010, the company projected that the social-networking site could be attracting almost 50 million users, or more than 50 per cent of the combined high school and young-adult population of about 83 million.
And that’s not the only thing that is “robust” about Yahoo’s numbers, as Fred Stutzman notes on his blog. He points out that the projections for Facebook’s revenue — from which the purchase price is derived, as in “6 times revenue at a discount rate of X” — assume that more than 90 per cent of the site’s users are “active users.” That’s not just an aggressive target, it’s right up there in wishful-thinking land.
Was it those kinds of nose-bleed projections that made Yahoo pause in its all-out pursuit of Facebook? Or was it the fact that the Internet giant was being held at arm’s length by Mark Zuckerberg, a guy who won’t get up at 8 a.m. even for a conference call with Microsoft, and who wears sandals to venture capital conferences? Or did weird old Uncle Terry finally put the kibosh on the deal?