The Times Online is reporting that Facebook has offered $85 million for Zhanzuo.com. I had seen a rumor about this a few weeks back but now the Times Online appears to be semi-confirming it. Honestly, I’m not quite sure if there is some sort of cultural miscommunication or if I’m completely misunderstanding the article. As the article states:
A spokeswoman told The Times that Jack Zhang, Zhanzuo’s chief executive, and Mark Zuckerberg, the Facebook founder, were acquainted but this did not mean that they intended to reach a deal – for the moment.
Is that confirmation of the offer? Either way, Facebook has been rumored to be attempting a Chinese entry after their recent acquisition of the Facebook.cn domain. China is a difficult country for American companies though. Both Yahoo and Google have been forced to censor specific content at the request of the Chinese goverment. Additionally, there are already competing social networks in China that have gained a large base of users. Granted, China will soon have the largest web based population. The competitive landscape has only begun to reveal itself.
An acquisition by Facebook seems a bit prematured given that Zhanzuo.com only has 7 million active users whereas Facebook has over 50 million. Also, according to Alexa.com data (which is famously inaccurate), Zhanzuo.com suffered a significant drop in traffic just a few months back. I’m sure there may be another explanation but making such a large investment seems extremely risky. I seriously doubt that this deal ends up happening.
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I don't know… 7M users is 14% of Facebook's userbase – not exactly a drop in the bucket. More than the userbase, I think they'd be trying to acquire the team – i.e.: the on-the-ground, culturally plugged in expertise that makes entering the CN market a challenge for N/A firms.
Comment by rod / techwatching.c — November 18, 2007 @ 6:31 pm
I don't know… 7M users is 14% of Facebook's userbase – not exactly a drop in the bucket. More than the userbase, I think they'd be trying to acquire the team – i.e.: the on-the-ground, culturally plugged in expertise that makes entering the CN market a challenge for N/A firms.
Comment by rod / techwatching.c — November 18, 2007 @ 7:31 pm
That's a good point Rod. This is still a serious investment though for a company that has around $500 mil in cash. They do need to take some risks though. This would be a huge investment.
Comment by Nick O'Neill — November 18, 2007 @ 8:16 pm
That's a good point Rod. This is still a serious investment though for a company that has around $500 mil in cash. They do need to take some risks though. This would be a huge investment.
Comment by Nick O'Neill — November 18, 2007 @ 9:16 pm
I concur with rod, the team would be incredibly valuable. There's little point buying Facebook.cn, translating the interface into Mandarin and expecting the US concept to work in an entirely different culture.Even in Australia, where we use the Facebook.com site, the cultural differences from the US are noticeable. And annoying.The distinguishing feature of China, against Australia, is that China's big enough to warrant its own social networking site/s. It will also be interesting to see what the Chinese government asks of Facebook in return for letting it operate? Or perhaps Zhanzuo is a way for Facebook to profit from Chinese social networking population, without having to deal directly with the government, and without irritating the nationalist government. There are at least some synergies in terms of back-end software and management, without turning Zhanzuo into "Facebook China".
Comment by Pat — November 18, 2007 @ 11:32 pm
This valuation thing always the game of the VC's.. at the end of the day, it's how much ROI the VC's want, for whichever website they so invested..Number of users a matter of lesser relevancy.. eg., 51.com claims to have 80M registered users, for example.. how much are they worth?..
Comment by ac / 113.com — November 19, 2007 @ 12:32 am
I concur with rod, the team would be incredibly valuable. There's little point buying Facebook.cn, translating the interface into Mandarin and expecting the US concept to work in an entirely different culture.
Even in Australia, where we use the Facebook.com site, the cultural differences from the US are noticeable. And annoying.
The distinguishing feature of China, against Australia, is that China's big enough to warrant its own social networking site/s.
It will also be interesting to see what the Chinese government asks of Facebook in return for letting it operate? Or perhaps Zhanzuo is a way for Facebook to profit from Chinese social networking population, without having to deal directly with the government, and without irritating the nationalist government.
There are at least some synergies in terms of back-end software and management, without turning Zhanzuo into "Facebook China".
Comment by Pat — November 19, 2007 @ 12:32 am
This valuation thing always the game of the VC's.. at the end of the day, it's how much ROI the VC's want, for whichever website they so invested..
Number of users a matter of lesser relevancy.. eg., 51.com claims to have 80M registered users, for example.. how much are they worth?..
Comment by ac / 113.com — November 19, 2007 @ 1:32 am
Is ~ $10/user a good deal? I think so. That should be easy to make back. Plus, as Rod said they would be acquiring a socially connected, thriving team and platform. I've heard it's not always easy to start a business in China. I've heard it compared to the early days of the industrial revolution here. I've had a few friends from countries in Asia observe that, it's not only about how skilled you are, but how connected you are and what those connections allow you to do. Only 14% of China is online – a number that is already larger than the number of connected Americans and growing rapidly. It is essential that Internet companies tap into this massive market.I give kudos Zhanzuo for doing so amazingly well. And think it would be a smart move for Facebook.
Comment by Zach Katkin — November 19, 2007 @ 4:27 am
Is ~ $10/user a good deal? I think so. That should be easy to make back.
Plus, as Rod said they would be acquiring a socially connected, thriving team and platform.
I've heard it's not always easy to start a business in China. I've heard it compared to the early days of the industrial revolution here. I've had a few friends from countries in Asia observe that, it's not only about how skilled you are, but how connected you are and what those connections allow you to do.
Only 14% of China is online – a number that is already larger than the number of connected Americans and growing rapidly. It is essential that Internet companies tap into this massive market.
I give kudos Zhanzuo for doing so amazingly well. And think it would be a smart move for Facebook.
Comment by Zach Katkin — November 19, 2007 @ 5:27 am
[...] to Facebook PR. I had seen rumors over the past week and they appeared to be unsubstantiated. As I wrote yesterday, the article didn’t appear to be confirming the acquisition offer. Otherwise the title of the [...]
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