Business

Face the truth

Meet the new Mad Man.

Facebook’s chief pitchman, Mark Zuckerberg, is this century’s Don Draper.

When you strip away the tech veneer, Facebook truly is an advertising company, similar to Google in that it uses its technology to deliver advertising and usage data to its customers.

Currently, 900 million people have Facebook accounts; half access their accounts at least once a month. Like Google, Facebook doesn’t charge its users and has said it intends to keep it that way.

Companies like Ford and Procter & Gamble are Facebook’s real clients; they pay Facebook to advertise on its rapidly evolving photo-centric social network.

Last week Team Facebook kicked off its IPO road show. It was not without theater, of course — nothing involving Zuckerberg ever really is.

Before the kickoff, word broke that Zuckerberg was not going to make the road show because of “security concerns,” a rather ridiculous excuse that almost everyone could see right through as an obvious attempt to drum up hype around the meetings: “Will he show or won’t he?” Being the true new Mad Man that he is, he created the “buzz.” It went downhill from there.

Like the dapperly styled Draper, Zuckerberg is very good at what he does, and equally like him, he couldn’t care less what others think of his methods. So Zuckerberg, the 20-something wonder kid, and his entourage miraculously made it to the Midtown Sheraton.

Showing that he really wasn’t ready for Madison Avenue, the kid jumped out of his security SUV in a hoodie and went into his first IPO road show dressed like he just came from a skateboard park. A golden rule was broken. Respect isn’t something merely granted or bought, it is something you earn: a trust, an admiration. In the markets there is nothing more important.

But like Draper, Zuckerman is ultimately good at making money.

WPP, one of the most prestigious advertising firms in the business today — the type of place Draper would work — has said it plans to spend close to $400 million on Facebook advertising this year on behalf of its clients, an amount that’s up about 25 percent from last year, though still substantially less than the $2 billion-plus the firm will spend on Google.

Google is the closest comparison to Facebook in that it generates the bulk of its revenues from online advertising. Google had $38 billion in revenues last year and commands a very respectable $200 billion market cap, more than 5 times its revenues.

Meanwhile, among the non-advertising-focused tech companies, Microsoft trades at 3.7 times its revenues of $70 billion, and the ingenious Apple had $108 billion in revenue and trades at 4.9 times that.

The question isn’t whether Facebook is a great company. It clearly is.

The question is: What is it worth? Is it worth $100 billion? That’s half the value of Google, which is 10 times its size, and one-fifth the value of Apple, which is 30 times Facebook’s size and every bit as creative.

As a younger and smaller company, Facebook can justify a higher multiple because it is easier to grow off a smaller base, but at $75 billion-$100 billion you would be prepaying for many years of future earnings growth that may or may not materialize.

So, like Don Draper, Zuckerberg is very successful, very creative, very cocky and clearly very anti-authority.

The question is, Does he get made a partner in the Silicon Valley legends club of Jobs, Gates, Brin, Page? Or will that next Silicon Valley kid looking to raise some seed money step up and bump him off the Street’s Friends list? Only time will tell.