Grand Slam Valuation

Just catching up on my news reading after a busy and disconnected (from the 'net!) day – this article on the NY Times web site gives their take on the investment by Microsoft in Facebook.

This is surely a record valuation (Bubble 1.0 valuations NOT withstanding) for an investment in a private company – a staggering valuation given any conventional metrics.

Don't even try and think about this valuation in the context of an investment - Microsoft plays the classic role of a strategic investor in Facebook:

• It's not about a return on the capital
• It's all about access and strategic value to Microsoft
• Warning to startups reading this at home: Resist the temptation to think about this as a comp - #1 you aren't FB, #2 see above.
• Like the credit card commercial, the value to FB - $240M (very nice!), the value to Microsoft? Priceless!!!!

This is a bold, swing for the fences move for Microsoft to establish themselves as a player in the engagement world – don't think just advertising, this is about capturing the ATTENTION and ENGAGEMENT of the audience.

In a world with so much information, so many things competing for our attention, we're all becoming ADD – engagement is the interesting metric. Forget reach, CPM, CPC, CPA – it's about engagement – minutes (or hours looking at Meebo numbers) of focused attention.

The world just got even more interesting! Stealing a tag line from my friend (and fellow VC) Rick Segal…

I love my gig…