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Yes. It reminds me of DHH's loud proclamation that Facebook was not worth $33B. He'd have gotten a great return if he'd just bought some of their stock at that

by xiaoma 9y ago

Yes. It reminds me of DHH's loud proclamation that Facebook was not worth $33B. He'd have gotten a great return if he'd just bought some of their stock at that price instead of this: >"Oh, well, but maybe Facebook just needs to mature, you say. If we give them just a few more years, the profit fairy might drop by and sprinkle her billions all over Facebook and its shareholders. I call fat chance." https://signalvnoise.com/posts/2585-facebook-is-not-worth-33000000000 https://signalvnoise.com/posts/2585-facebook-is-not-worth-33...

thr0waway1239 9y ago
So this article was written in 2010. FB's trajectory after that point had a few step functions which had nothing to do with talent or execution (i.e. more predictable factors), but the remarkable mutual back scratching arrangement going on between governments and Facebook (and similar companies). For example, I don't know how anyone in their right mind would have allowed the FB - WhatsApp acquisition to happen after seeing the price tag. I really doubt if anyone who understands technology still thinks this wasn't a sweetheart deal between the govt and FB. The other step function is the US government's (and probably other governments) decision to simply look away on privacy issues as soon as they saw the huge benefits of having a tame populace unable to untether themselves from the top social networks (i.e. less stuff to monitor). This is all the more bizarre when you notice how the privacy intrusion has basically moved to a stage where just about anything goes, and not one person is actually able to function in the economy without accepting a drastic reduction in privacy. By which I mean, it is only a matter of time when this is going to turn against the politicos who helped usher in this era. In fact, we are already seeing this in some cases. It seems like the people who are reaching the top positions in politics seem to be disgustingly shameless. The more regular, normal politician is unable to withstand/ignore the scrutiny of all the skeletons in their closet. While that may be a good thing (the scrutiny), the outcome where the most shameless person becomes the leader by default is not. You are taking huge risks when trying to understand what manipulations governments around the world would resort to when trying to predict currency movements. You take a similar risk in predicting the trajectory of private companies which manage to acquire enormous quantities of data because you don't know what kind of mutual back scratching arrangements that is going to set up in the future.
bigbugbag 9y ago
It's still not worth $30B but investor story time works wonder for them. Almost all of the stock market is decoupled from actual value, the bubble is obvious and once again the cycle will repeat itself and it will burst.
- mikeyouse 9y ago
  This is a bad take. At least pretend to look at their financials if you're going to make this argument. I'll help: Facebook has $30 billion in cash and essentially no debt. The equity value of $30 billion in cash is.. $30 billion. So it's clear that they're worth at least $30 billion. On top of that they're generating ~$4 billion / quarter in net income. The equity value of net income is roughly Net income x (1 - Tax Rate), so call it $3 billion/quarter. Discount as you'd like for them to be worthless someday, but in the mean time they have a ton of cash and are printing a ton of cash. I bet if you run the numbers and assuming a decent growth rate, you'll come to a total market cap of ~$420 billion. Efficient markets and all that..

by xiaoma 9y ago

thr0waway1239 9y ago

So this article was written in 2010. FB's trajectory after that point had a few step functions which had nothing to do with talent or execution (i.e. more predictable factors), but the remarkable mutual back scratching arrangement going on between governments and Facebook (and similar companies). For example, I don't know how anyone in their right mind would have allowed the FB - WhatsApp acquisition to happen after seeing the price tag. I really doubt if anyone who understands technology still thinks this wasn't a sweetheart deal between the govt and FB. The other step function is the US government's (and probably other governments) decision to simply look away on privacy issues as soon as they saw the huge benefits of having a tame populace unable to untether themselves from the top social networks (i.e. less stuff to monitor). This is all the more bizarre when you notice how the privacy intrusion has basically moved to a stage where just about anything goes, and not one person is actually able to function in the economy without accepting a drastic reduction in privacy. By which I mean, it is only a matter of time when this is going to turn against the politicos who helped usher in this era. In fact, we are already seeing this in some cases. It seems like the people who are reaching the top positions in politics seem to be disgustingly shameless. The more regular, normal politician is unable to withstand/ignore the scrutiny of all the skeletons in their closet. While that may be a good thing (the scrutiny), the outcome where the most shameless person becomes the leader by default is not. You are taking huge risks when trying to understand what manipulations governments around the world would resort to when trying to predict currency movements. You take a similar risk in predicting the trajectory of private companies which manage to acquire enormous quantities of data because you don't know what kind of mutual back scratching arrangements that is going to set up in the future.

bigbugbag 9y ago

It's still not worth $30B but investor story time works wonder for them. Almost all of the stock market is decoupled from actual value, the bubble is obvious and once again the cycle will repeat itself and it will burst.

mikeyouse 9y ago
This is a bad take. At least pretend to look at their financials if you're going to make this argument. I'll help: Facebook has $30 billion in cash and essentially no debt. The equity value of $30 billion in cash is.. $30 billion. So it's clear that they're worth at least $30 billion. On top of that they're generating ~$4 billion / quarter in net income. The equity value of net income is roughly Net income x (1 - Tax Rate), so call it $3 billion/quarter. Discount as you'd like for them to be worthless someday, but in the mean time they have a ton of cash and are printing a ton of cash. I bet if you run the numbers and assuming a decent growth rate, you'll come to a total market cap of ~$420 billion. Efficient markets and all that..