Facebook Versus Google Circa 2004
Is Facebook worth $50 billion? As people ponder that question this week, we decided to look at Google, the Internet's previous wunderkind. — Google's market cap passed the $50 billion mark in October 2004. The company was exactly six years old …
Context & Ripple Effects
Facebook's valuation debate is not new territory for the company: the question of what it was worth was already being asked back in 2007, when it was an order of magnitude smaller, and by November 2010 coverage was framing it as an unstoppable juggernaut rather than a promising startup. What changed by early January 2011 is the number being pondered — roughly $50 billion in investor discussion, a figure still marked as unconfirmed.
The Wall Street Journal's Digits blog grounds that debate by reaching for a precedent: Google crossed the same $50 billion market-cap mark in October 2004, six years after founding, and analysts openly cast Facebook as the internet's previous wunderkind reborn. DealBook's syndicated take widens the lens further, drawing parallels to Microsoft rather than Google alone — the comparison has become the frame through which Facebook's private valuation is being judged.
First-order effects
- Facebook's shareholders and employees are holding paper wealth priced against a $50 billion figure that remains an investor rumor rather than a settled market price, making secondary-market sentiment the de facto ticker for a company that has never sold public stock.
- Google inherits a new role in the narrative: no longer the wunderkind but the yardstick, with every Facebook milestone now measured against the trajectory Google itself ran between 2004 and its own 2007 valuation peak questions.
Second-order effects
- Google faces a competitor whose private valuation conversation implies parity with Google's own scale just six years in, pressuring Google on the two fronts where they overlap — advertising budgets and engineering talent — while it is still defending its position.
- DealBook's invocation of Microsoft as a parallel suggests investors are building a template of prior tech giants' arcs and applying it to Facebook, which raises the stakes for any misstep: Facebook is now being priced against history, not just against peers.
Third-order effects
- If the pattern holds, the decisive pricing moments for consumer internet companies shift upstream into private and secondary markets, years before any IPO — meaning valuations like Facebook's debated $50 billion get set by a small circle of institutional buyers rather than public markets.
- The Google-then/Facebook-now comparison points toward a generational rotation in the industry's center of gravity, where each cycle's dominant platform becomes the benchmark for the next one's ambition — a dynamic that concentrates capital and attention on ever-fewer companies at the frontier.
The trend: Private-market valuations of consumer internet platforms are increasingly being benchmarked against the last generation's public-market milestones, moving price discovery ahead of any IPO.