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One of the things that goes unmentioned and I think that this is an important thing, even for facebooks valuation that we have all been talking about: With the
by jayzee 16y ago
One of the things that goes unmentioned and I think that this is an important thing, even for facebooks valuation that we have all been talking about:
With the right feedback loops companies can ramp up quickly like never before is true. But those same loops are in place for the site to down down very quickly too.
In the valuation for such companies analysts often use a multiple times revenue (or users etc). This multiple is based on the old school model that it took time for companies to die, for competitors to emerge etc. Doubt that is true anymore. One bad move that pisses off the community and people will leave in droves too. Digg anyone?
- destraynor 16y agoIt went unmentioned cause it wasn't really relevant in the article. The danger all of these type of applications face is that it's very very hard to tell if you're delivering anything of value, when you're not charging money. Some people just delete their account. Some people stop logging in. Some people log in but far less often. Some still log in as often, but are bored when doing so. Some do it, but are really just waiting for the next big thing. The risk of the high valuations is that all of these guys look like potential users, people who will click adverts. Bebo had a shit load of active users when AOL shelled out $850,000,000 for it. The danger is that no one ever checked if any of the users actually gave a shit about Bebo.