DHH's Famous Bad Call: 'Facebook Is Not Worth $33 Billion'

In 2010, DHH published a blog post arguing that Facebook, despite 500 million users, was not worth $33 billion. VCs still pull it out regularly to dunk on him. Facebook is now worth over a trillion dollars. By any outcome-based measure, he was spectacularly wrong.

At the time, the reasoning seemed sound. Facebook had no real monetization strategy. They had massive traffic, but DHH pattern-matched it to sites like Blue Mountain, a hugely popular e-card site from the early 2000s that had tons of traffic and turned it into nothing. Facebook's traffic was people talking about random stuff with no purchase intent, the opposite of a Google search where someone is actively looking for something.

What went wrong was that DHH did not foresee the alchemy of surveillance capitalism. The paradigm was already under construction but not yet widely understood. The breakthrough was that intent did not matter if you knew everything about everyone at all times. Facebook could serve better-targeted ads to someone scrolling mindlessly than a golf magazine could serve to someone actively reading about golf, because Facebook knew where you were, what you were doing, and whether you could be nudged. That alchemy turned trash traffic into gold.

The lesson DHH draws is not "I should have bought Facebook stock." It is a deeper point about humility and intellectual honesty. Nobody else saw the alchemy either, or they would have bet the house at $33 billion. He revisits this wrong call at least yearly as a reminder that predictions deserve humility. Being publicly wrong and owning it is more valuable than the alternative of never making a call at all.