Investor exclusively targets developers of social-networking
technologies
By Therese Poletti, MarketWatch
Last Update: 6:19 PM ET Nov 13, 2007Print E-mail Subscribe to RSS Disable Live Quotes
SAN FRANCISCO (Marketwatch) -- Some people think that Lee Lorenzen, an entrepreneur-turned-venture-capitalist, is crazy
Lorenzen is a big fan of the social networking site Facebook. He's so convinced of its future potential that he created a venture capital fund devoted to funding only technology developers who are working on Facebook-related applications. This only a month-and-a-half after Facebook opened its site up to outside software developers.
'I view myself as this voice in the wilderness.'
— Lee Lorenzen, investor
At a conference last month, Lorenzen even floated the possibility that Facebook is worth $100 billion -- far in excess of the $15 billion valuation implied by Microsoft's recent investment in the site.
"Jason Calacanis asked me if I was drunk," Lorenzen said, referring to the chief executive and founder of Weblogs Inc., a network of blogs. Lorenzen said he has also been asked if he was on crack and he's been told he's an idiot. "I view myself as this voice in the wilderness."
In his own blog entry from the event, Calacanis, who probably learned some lessons as the founder of the Silicon Alley Reporter in New York during the dot-com boom, said those kind of estimates create the absurdities we saw back in the first tech bubble.
"As an industry, we should NOT make absurd claims about companies as it does a disservice to the entire industry and the company itself," Calacanis wrote last month in his blog. A valuation of $100 billion, he noted, would make Facebook worth about 1,000 times its revenues, currently estimated at a bit under $100 million.
Rumors had been floating at the time about Microsoft's interest, and Calacanis wrote that Facebook was worth probably about $2 billion to $5 billion, or maybe even $5 billion to $10 billion to someone like Microsoft Corp. (MSFT:Microsoft Corporation
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MSFT 34.46, +1.19, +3.6%) . Two weeks later, Microsoft bought a 1.6 percent stake in the Palo Alto company for $240 million. See full story.
Lorenzen, based in Monterey, Calif., has founded several companies, including Shop.com, and is unfazed by criticism. He truly believes Facebook will be huge and that it is the first mainstream social operating system, taking a page from the playbook of Guy Kawasaki, Apple's former self-proclaimed evangelist.
Lorenzen thinks Facebook will eventually become a massive Web-based mall, but with much more value because people are shopping based on their friends recommendations, with Facebook as their main portal.
The first step in that evolution was the company's introduction last week of its Social Ads. The idea is that a purchase made by a Facebook member on other Web sites can be listed on their page, allowing their friends see, for example, what book they bought on the other site.
Another new ad feature is for members to become "fans" for products, brands or celebrities, a tack taken by its larger rival, MySpace. (MySpace is owned by News Corp. (NWS:news corp cl b
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