I love Quora. I don’t know what it is about the service, but something makes interesting people give very interesting answers to a huge range of questions. Take Paul Buchheit, for example.
Buchheit is an angel investor and co-founder of FriendFeed, the social aggregation and conversation service that Facebook acquired last year (he now works at Facebook doing well, something). But he’s perhaps best known as the key person behind the creation of Gmail for Google. He also had a hand in the creation of AdSense/AdWords as well — you know, the way Google makes all their money. Point is, when he compares Facebook to Google, it’s worth listening to. And that’s exactly what he did a couple days ago on Quora.
“I believe many people were (and still are) significantly undervaluing Facebook equity. It has the potential to be worth more than Google,” Buchheit wrote.
That’s a big statement. But depending on who you talk to, it’s either crazy or a certainty. Buchheit obviously has a vested interest in saying that — quite literally. With the Facebook deal, he and his fellow FriendFeeders were undoubtedly given a nice basket of stock options. At the time, it was believed that the total deal was worth about $50 million, with around $30 million of that in Facebook stock. In other words, if Facebook is one day worth more than Google, Buchheit will be very, very rich.
All of this came up because someone on Quora posed the question: “Is Paul Buchheit considered a successful entrepreneur?” — and Buchheit himself responded. “I don’t know, but I’m happy with how things worked out :),” he led off before making his prediction.
At the time of the FriendFeed deal, Facebook was valued around $6.5 billion — “silly-low“, as Buchheit puts it. Today, on SecondMarket, Facebook’s valuation is over $30 billion. This means that the roughly $30 million in Facebook stock (we’ll just say that’s accurate for now, but who knows) is worth something north of $125 million. That all of a sudden makes the FriendFeed acquisition worth something like $150 million (again, hypothetically)!
“I think re-doing the math on this deal in a couple of years should be very interesting,” Buchheit concludes with.
Google’s current market cap value is about $165 billion. If Facebook is to get that high, they’ll have to grow in value six times over (and they’ll undoubtedly have to be public in order for that to happen). That would make FriendFeed’s (again, hypothetical) shares worth over $750 million, with the total deal value approaching $800 million.
If Facebook gets anywhere near that in value, Buchheit is right. He’ll be seen as a very successful entrepreneur.