"What Does Goldman Investment Mean For Facebook?"

MICHELE NORRIS, host:

From NPR News, this is ALL THINGS CONSIDERED. I'm Michele Norris.

MELISSA BLOCK, host:

And I'm Melissa Block.

What does Mark Zuckerberg want? The founder of Facebook, the world's youngest billionaire at age 26, Time magazine's Person of the Year for 2010, Zuckerberg now has a whopping new investment in Facebook, half a billion dollars from Goldman Sachs and a Russian investment firm.

So, what does that new money mean for the social networking giant? What's the future of Facebook? We're going to get some ideas now from David Kirkpatrick, who interviewed Mark Zuckerberg at length for his book, "The Facebook Effect." Welcome to the program.

Mr. DAVID KIRKPATRICK (Author, "The Facebook Effect"): Thanks. Good to be here, Melissa. Thank you.

BLOCK: And, David, this is not just half a billion dollars we're talking about, right? This also leverages a lot of money from other investors.

Mr. KIRKPATRICK: Right. It actually is a total of $2 billion that'll be coming almost all to Facebook as a result of what Goldman Sachs has just arranged. So it's a huge infusion of cash to what is still a relatively small company.

BLOCK: Now, you say relatively small, let's put that in context because Goldman Sachs has figured that Facebook is worth about $50 billion at this point. Where does that number come from and do you think it's real?

Mr. KIRKPATRICK: Well, it's based on projecting into the future all the businesses that Facebook is already successfully operating, and that includes selling ads to major advertisers. It includes its self-service ads, which small businesses buy, which is actually its single biggest revenue stream, and it includes its credits product. So just those businesses alone are projected to grow enough that Goldman's, you know, financial experts believed it will be very soon that a $50 billion valuation will be justified. And I'm sure they anticipate that Facebook will eventually be worth a lot more than that.

BLOCK: And you think that's realistic?

Mr. KIRKPATRICK: I don't see any reason why it should not be.

BLOCK: What does this new capital help Facebook do? Are there innovations, products, acquisitions, things that you think Facebook is hungering after?

Mr. KIRKPATRICK: Well, in fact, I think there's innovations, products and acquisitions.

BLOCK: All of the above.

Mr. KIRKPATRICK: All of the above. And people. That would be the fourth category. You know, there certainly will be necessary acquisitions. And, you know, basically Facebook is going more and more head to head with Google on many matters. Even Apple is a company that Facebook has a complex love-hate relationship with and might require it to spend money in order to stay abreast.

So, Facebook, which currently has no cash on hand just to do things, means it has to do battle competitively with the biggest players in technology and the Internet.

BLOCK: And, David, based on your conversations with Mark Zuckerberg, what's his vision of the future, the company that he wants Facebook to become? Because he told you it's not building just a company for him, he wants to build something that makes a really big change in the world. Those are his words.

Mr. KIRKPATRICK: Well, I think he's already doing that. But, you know, to answer the basic question you asked at the outset of this report, what he wants is for more people to use Facebook. He believes he is giving them a new way to, as he puts it, share and be more open and connected, which he thinks is a transformative social process that will make the world a better place.

BLOCK: What would some specifics be about things that Facebook might be doing in the future, a bigger, bolder Facebook, that it's not doing now?

Mr. KIRKPATRICK: Well, I could think of two really big ones. One is to deploy its currency which it calls credits in a more broad-ranging way. At the moment, Facebook credits are something that you buy with a credit card or Paypal, and then you spend inside the network that Facebook operates. Predominantly you're doing that on games today. So, Zynga, which is the biggest Facebook game company, lets you buy a new cow for Farmville or whatever, and in order to do that, you have to use Facebook credits.

Another big opportunity is search. Something they could directly compete with Google on and, you know, by bringing all the social data that they have and the information about what people like and don't like, there's a lot of things they can get you information about more effectively today than Google has. And, in fact, Facebook may end up making a lot more money than Google as a result.

BLOCK: I've been talking with David Kirkpatrick. His book is "The Facebook Effect: The Inside Story of the Company that is Connecting the World." David, thanks so much.

Mr. KIRKPATRICK: Thank you.