The genius of Facebook was getting students at elite universities to divulge lots of potentially profitable information for advertising. They did this because Facebook was an exclusive place just for elite college kids (and later just college kids). Now that its open to everyone it no longer has that value. I don't see how it can reasonably continue to increase in value (although they could certainly find a greater fool to sell it to).

I'm not sure of the experiences from other early facebook adopting schools -- but my old school (Bowdoin College) was among the first -- and it's still like crack to them. Not as ridiculous as a few years ago, but it's still wickedly popular. And from my perspective the alum retention rate, as the article mentions, is very strong.

I think the genius of Facebook is not just the eliteness, but instead a new word I'll makeup called 'localness'. Facebook cordons off the scary, wild web and presents you with people that you know or could at least see yourself knowing or bumping into. Combine that with early entry into the social networking world, very strong and appealing UI, and yes, eliteness, and a few years later, you've got 18 million users.

>Joi Ito, founder of Neoteny, a venture firm, and former chair of Infoseek Japan, has joined a group of technologists advising Dean ... I contact him to ask if he tihnks there's a difference between an emergent leader and an old-fashioned political opportunist. What does it take to lead a smart mob? Ito e-mails back an odd metaphor: "You're not a leader, you're a place. You're like a park or a garden. If it's comfortable and cool, people are attracted. Deanspace is not really about Dean. It's about us."

Facebook is a place. Think of it like Manhattan. What creates value isn't the population (the users). Nor is it the buildings (the technology). What creates value is the emergent social interactions and the culture that occur there. To put it in geek terms, it's not the instances of people, but rather what goes on in the interstices between them.

To quote Howard Rheingold, "The 'killer app' of tomorrow won't be software or hardware devices, but the social practices they make possible. The most far-reaching changes will come from the kinds of relationships, enterprises, communities, and markets that this future infrastructure will make possible."

That is interesting. So the question becomes; how do you put a value on a virtual place?

Well how do you put a value on a place like Wall Street? It's not the number of people or the number of computers. It's what people do there and the amount of money flowing through. As someone said below, when you have this ability to datamine 18 million kids (in aggregate) then you're pretty much sitting on a mint. Every time one kid posts on another kid's wall, it's more data to feed into the system. College-aged kids are probably the most valuable demographic to marketers in general (not because college kids have the most money, but because marketers like marketing to them because it makes them feel young), and college-age kids who actually go to college are even more valuable because they have more money on average.

Hmm, I see your point. Value/Users does seem to be meaningless by itself. You could reverse it around and say $440 is how much value they think they can derive from each facebook user. But that does not take into account any future growth and as long as facebook stays *the* college social network it's going to continue tapping into that valuable demographic.

erm, the technology cannot be copied for less than $100k.

Yep, I just threw out a figure and later realised it was way off. It is definitly a fraction of $8 bill though.