You couldn't throw a dot com last year without hitting a rumor that Yahoo was in talks to buy social networking site Facebook.  In fact, it was widely reported that Yahoo threw more than a dot com at Facebook.  About $1 billion more.  And the red exclamation point wasn't the only company reportedly thinking of putting some bucks down on the table for Facebook.  But at the end of the year, Facebook remained a privately held company.

After having turned down so many offers, Robert Young is asking a simple question:  Was it a smart move… or a stupid one?

Writing at GigaOM, Young makes a good point.  Sure, Facebook has continued to see increases in traffic and subscribers.  And as Young points out, the decision to expand the service's initial offering, which was only for students, to the general public was a good idea.  By all appearances, Facebook users like the service and remain loyal to the brand… which is a good thing.  I've said numerous times that companies that focus on one service, instead of trying to be all things to all people, will succeed.  And Young even talks about Facebook's dedication to, and focus on, communication.

All of those things are what make Facebook a popular service.  But like other social networking sites, such as MySpace and YouTube, the time has come to monetize the whole thing.  You've got the audience.  Eyeballs are in place for advertising.  But according to Young, big-name advertisers have been disappointed in the performance of advertising on Facebook.  Once you've spent big bucks on ads that don't sell, you're going to be less likely to spend those big bucks again.

So the challenge Facebook faces (pardon the pun) is two-fold:  1)  How do we get advertisers to spend money with us again? and 2) When should we admit that we can't do it alone?

Rumors circulating last year said that Facebook didn't like the money they were being offered in buyout talks.  Even though the company was only valued at $500 million at the time, Yahoo offered $1 billion… Viacom offered $750 million.  And Facebook said no to them all.

It's time to find out if that decision was wise… or greedily foolish.