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Facebook vs Google: The first 8 years
Facebook vs Google: The first 8 years
Facebook vs Google: The first 8 years
Facebook vs Google: The first 8 years
Facebook vs Google: The first 8 years
Facebook vs Google: The first 8 years
Facebook vs Google: The first 8 years
Facebook vs Google: The first 8 years
Facebook vs Google: The first 8 years
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Facebook vs Google: The first 8 years

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Summary of Google's and Facebook's financial performance during their first 8 years (2006 for Google, 2011 for Facebook). Google's revenues were 3x of Facebook's, while it was valued at 50% of …

Summary of Google's and Facebook's financial performance during their first 8 years (2006 for Google, 2011 for Facebook). Google's revenues were 3x of Facebook's, while it was valued at 50% of Facebook.

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  • 1. Google, circa 1998 Facebook, circa 2004 Google versus Facebook The first 8 years Ted Sapountzis, May 2012 @sapountzis Blog
  • 2. “By the time Google was 8 years old, it was3x the size of Facebook, and as of the day of Facebook’s IPO, Facebook’s valuation was >2x that of GoogleThis slide deck is a summary of the key performance metrics of Google and Facebook during their first 8 years, 2002-06 for Google and 2007-11 for Facebook. Please visit this blog post for more details
  • 3. From ‘humble’ beginnings... Organize the Make the worldMission world’s more open and information connectedFounded on Sep 1998 Feb 2004Founded atFounder(s)age at (25) (20)founding
  • 4. …to $1B in revenues…Years to 1st $Bin revenues 5 6.5…to an IPO…Funds raisedpre-IPO $25M $2.3BIPO Aug 2004 May 2012Age of companyat IPO (years) 5.9 8.3
  • 5. …to similar positions by the end of year 8…Compound growthrate years 4-8 122% 122%Non-US shareof revenues 43% 44%Share of adrevenues 99% 85%Net margin 29% 27%
  • 6. …but, are they really that similar? Or are they?Revenues (yr 8) $10.6B $3.7BFull-timeemployees (yr 8) 10,674 3,200Market Cap (yr 8.3) $142B $104B1P/E Ratio (yr 8.3) 41x 88x11 As of May 18, 2012, Facebook’s first trading day as a public company
  • 7. Google’s and Facebook’s marginsconverged by year 8 Although Facebook started from a very different place in their year 4 (2007), they were able to increase their efficiency significantly in the following 2 years
  • 8. Google was 3x the size of Facebook by thetime it was 8 years old While both Google and Facebook grew as the same annual compound growth rate (CAGR) of 122% between their respective years 4-8… …Google was almost 3x the size of Facebook by the end of year 8 ($10.6B vs. $3.7B) Google grew much faster than Facebook in their earlier years (e.g., Google hit $1B in revenues in 5 years, while it took Facebook 6.5 years)
  • 9. Their operating cost structure variessignificantly Google’s cost of revenues is significantly higher than that of Facebook, accounting for 40% of their revenues (as opposed to Facebook’s 23%). At the same time, Facebook spent 10% of their revenues on Marketing & Sales, as opposed to Google’s 7%. Lastly, Google outspent Facebook on R&D by more than 3.4x, accounting for 9% of their revenues as opposed to Facebook’s 7%.

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