A little over a month ago TechCrunch made an argument that Facebook could be the next Microsoft. I thought it was an overly bold headline and I countered with an article of my own - Why Facebook is NOT the next Microsoft: Lending Club example. Peer to peer lending through Lending Club is only available to Facebook users.Wired has just published a glowing article about Facebook that makes the same Microsoft comparison - How Mark Zuckerberg Turned Facebook Into the Web's Hottest Platform.
"And by turning itself into a platform for new applications, Facebook has launched a whole new branch of the software development industry, just like Bill Gates did with MS-DOS in the 1980s. By allowing developers to charge for their wares or collect the advertising revenue they generate, Zuckerberg set up a system for every programmer to get paid for their efforts. Now venture capitalists like Bay Partners are scrambling to fund almost anyone who has an idea for a Facebook application."
According to the article, Facebook turned down a $1 billion dollar from Yahoo. I've heard the claim before but not the details:
"...Zuckerberg disagreed, but when Yahoo came calling with a bid of $1 billion in cash, the pressure became too much. He relented in July, verbally agreeing to sell Facebook to Yahoo. Strategically, it seemed like a good match. Yahoo had hundreds of millions of users, but its foray into social networking was struggling. Facebook had cool tools and was looking for a mass audience.
The timing, however, couldn't have been worse. In the days after Zuckerberg agreed to sell, Yahoo announced it was projecting slower sales and earnings growth, and that the launch of its new advertising platform would be delayed. Its stock price plunged 22 percent overnight. Terry Semel, Yahoo's CEO at the time, reacted by cutting his offer from $1 billion to $800 million. Zuckerberg, who had been warned about Semel's reputation for last-minute renegotiations, walked away. Two months later, Semel reissued the original $1 billion bid, but by then Zuckerberg had convinced his board and executive team that Yahoo wasn't a serious partner and that Facebook would be worth more on its own. He rejected the offer and became famous as the cocky youngster who turned down $1 billion.
Today, Zuckerberg, 23, is famous for other reasons. For one thing, analysts think he could be the nation's richest man under 25, with a net worth estimated at $1.5 billion. But more important, he has transformed his company from second-tier social network to full-fledged platform that organizes the entire Internet. As a result, Facebook is the now most buzzed-about company in Silicon Valley, and Zuckerberg is constantly compared to visionaries like Steve Jobs and Bill Gates."
The comparison between Zuckerberg and Gates is probably a better one to make that Facebook and Microsoft. Both dropped out of school to build a technology company. Gates built an empire and became the richest man in the world. Zuckerberg is estimated to be the richest man under 25. It's a wonderful story and I'm a big fan of Facebook. Lending Club was very wise to start on the Facebook platform. But Facebook is still not the next Microsoft.
If Facebook is the next Microsoft what does that make Lending Club?
