Why Facebook  Won’t Go Public

Jim Breyer, the investor with Accel Partners, emphatically ruled out a 2010 IPO for Facebook, where he sits on the board. He cited the usual reasons. Being private is good. The public boards he serves on spend a disproportionate amount of time on accounting, legal and Sarbanes-Oxley issues and too little on product strategy. Facebook’s goals, Breyer said, including attracting a billion users, forging relationships with any and all Web companies on the company’s Facebook Connect platform and crafting more relationships with media companies.

A major reason Facebook can afford to be patient is the hundreds of millions of dollars that Russia’s DST has invested. Its capital gives Facebook the latitude to invest in its business without tapping public markets. Interestingly, DST isn’t a venture-capital fun. Yuri Milner, its founder, also appeared at DLD and stressed this advantage. “We are patient capital,” he said. “We have no need to return capital to investors.

Milner and Breyer said Facebook had recently turned on its service in China, which seems like a major development given the problems Google (GOOG) has flagged there. Despite being asked, they didn’t elaborate.

What Hulu Doesn’t Have

I also got an update on Hulu, the joint venture of NBC, Fox and ABC run by ex-Amazon executive Jason Kilar. Kilar is sporting a buzz cut in Munich, the product, he says, of a promise he and three other Hulu honchos made to shave their heads if Hulu hit certain 2009 revenue targets. Kilar doesn’t disclose those revenue figures. He does have a compelling talking point, however, about revenue: Unlike Google’s YouTube, which can’t do much with videos of skateboarding cats, Hulu can sell an ad against virtually every video it streams.

Hulu’s growth is impressive. Kilar says Hulu contains 14,000 hours of content, twice the level of a year ago, and is approaching a billion streams per month, three times year-ago levels. Hulu runs content from 220 media partners today, up from 130 last year. Advertisers have jumped from 160 to 410. It has 44 million monthly users.

Despite its success, Hulu is best understood for what it lacks. It has failed to sign up CBS (CBS) as a partner. (Kilar says the most searched program that Hulu can’t deliver is CBS’s popular CSI franchise.) Hulu also does nothing to encourage users to  adopt devices that make it easy to  watch Internet programming on televisions. He says Hulu is purposely quiet on the device subject, citing a “careful” approach that is respectful of the “ecosystem” of content producers and distributors.

That’s a fairly direct acknowledgement that his investors are comfortable with a little Internet TV, but not too much. Asked how Kilar’s conversations have gone so far with Brian Roberts, whose Comcast (CMCS.A) is set to control Hulu investor NBC, Kilar says the Comcast relationship is “TBD.”

Another hole in Hulu’s offering is anything at all outside the U.S. Kilar says any international strategy involves case-by-case negotiations with non-U.S. rights holders. A German cable company, for example, that owns re-broadcast rights to ABC’s Lost expects to get paid if Hulu were to want to stream Lost in Germany. (Hulu blocks computers trying to use its service outside the U.S.)

While Kilar didn’t go so far as to rule out a near-term IPO, he implied one isn’t imminent. The company’s one financial investor, Providence Equity, is another patient investor, says Kilar.

What Google Didn’t Say

Nikesh Arora, the top business executive at Google beneath the ruling troika, also spoke at the conference and divulged next to nothing about Google’s business, its China policies, or anything else for that matter. He did announce plans to give away a free NexusOne phone to every conference attendee, setting off a feeding frenzy among the heavily Blackberried and iPhoned crowd. Everyone, it seems, loves to get something for nothing.