The Great Communicator

Mark Zuckerberg created a virtual town square for Generation Y. Is his business really worth $2 billion?

Two years ago, as a junior at Harvard, Zuckerberg developed software to help fellow students trade photos and jokes, rant on any topic they pleased, or just say ‘hi’ -- creating a searchable database of personal profiles exclusively for the college set.

It caught on. Facebook, the company he co-founded and ultimately left school to run full time, is now the seventh-most trafficked U.S. website, according to comScore Media Metrix. The site connects seven million (and counting) registered users at colleges and high schools across the globe -- a full 80% of the student social-networking market.

Beyond campuses, the company recently unveiled a workplace network, hoping to retain the bulk of its five million or so users expected to enter the so-called real world this year. Already, some 40% of graduates continue to log on -- joining the two-thirds of all Facebook users who visit at least once a day, Zuckerberg says.

Still, moving out of the college market puts his company into the same arena as MySpace, a broader networking site that was acquired by News Corp. last year for $580 million. While MySpace has far more traffic, Facebook sees its more focused communities as an advantage over the Wild-West style of competing sites.

Facebook's own reach has attracted big media players -- including a rumored offer from Viacom for $750 million in April, and speculation the site was holding out for $2 billion.

"The numbers people were throwing around back then were big, and we're flattered by that," Zuckerberg now says, adding that the company, which runs strictly on advertising revenue, was never looking for a buyer. "Our attention at this point is on continuing to expand." Just weeks after those rumors, Facebook received some $25 million in venture capital from Grwylock Partners, Meredith Capital Partners, and Peter Thiel, the founder of PayPal.

Where will future expansion come? Military bases, for one. Facebook has already tested the viability of running social networks for the armed forces, Zuckerberg said. "We don't think of ourselves as a college network." Today, he sees the company as a vanguard of a growing communications revolution in the way everyone -- not just college kids -- will eventually interact. "It's a utility to increase information flows, where you can express yourself and meet the people around you."

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