Facebook and the Groucho problem

This morning’s Observer column

Pssst … have I got a deal for you! Send me a cheque for £10 and I will sell you a 0.000001 per cent interest in NetworkerColumns Ltd, a privately held company which produces copious quantities of mildly irritating prose. I will then release a press statement announcing that we are both partners in a £1bn company!

Daft, isn’t it? Well, it’s exactly the same logic that has led the mainstream media to hail Facebook as a $15bn company – that is to say, the fifth-most valuable internet company after Google, eBay, Yahoo and Amazon. What happened is that Microsoft, after months of secret negotiations, announced it was paying $240m for a 1.6 per cent stake in Facebook. Multiply 240 million by 100, divide by 1.6 and out pops the ‘valuation’…