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.

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 was
3x the size of Facebook, and as of the day of
Facebook’s IPO, Facebook’s valuation was
>2x that of Google
This 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 world
Mission world’s more open and
information connected
Founded on Sep 1998 Feb 2004
Founded at
Founder(s)
age at (25) (20)
founding

4. …to $1B in revenues…
Years to 1st $B
in revenues 5 6.5
…to an IPO…
Funds raised
pre-IPO $25M $2.3B
IPO Aug 2004 May 2012
Age of company
at IPO (years) 5.9 8.3

5. …to similar positions by the end of year 8…
Compound growth
rate years 4-8 122% 122%
Non-US share
of revenues 43% 44%
Share of ad
revenues 99% 85%
Net margin
29% 27%

6. …but, are they really that similar?
Or are they?
Revenues (yr 8) $10.6B $3.7B
Full-time
employees (yr 8)
10,674 3,200
Market Cap (yr 8.3) $142B $104B1
P/E Ratio (yr 8.3) 41x 88x1
1 As of May 18, 2012, Facebook’s first trading day as a public company

7. Google’s and Facebook’s margins
converged 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 the
time 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 varies
significantly
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%.