4 ms·

I think the valuations are a bit of a bubble, but social media is real. In the dotcom bubble of 2001 I heard the same thing except with "internet" replacing "s

by po 14y ago

I think the valuations are a bit of a bubble, but social media is real. In the dotcom bubble of 2001 I heard the same thing except with "internet" replacing "social media". In the last bubble there were no customers. Facebook makes $4 per user. The users are customers. They produce real revenue. Nobody's debating whether Facebook can make money. This may be true but how much of that $4 per user is driven by the bubble itself? How much advertising is coming from companies that are within the Silicon Valley gravity well? If the (so-called) tech bubble pops, people will still need cars, vacuum cleaners and food so how well does Facebook do with those kinds of advertisers? The reason a bubble is scary is because it distorts your normal metrics of what a healthy company is. It doesn't matter how much money you're making selling hotdogs at the boardwalk if one day people stop going to the beach.

forgottenpaswrd 14y ago
This. Of course social media is real, of course having 900M customers is worth something. But trowing infinite amounts of money means you spend more that what is worth, in other words, it is a bubble. In Spain we had this houses boom, and everybody said: but houses are real, you need them, they are necessary so they will never go down. It is not qualitative, but qualitative. They make $4, but they need $100 for the stock to be fair price. Fb founders are selling as much as they let them, Goldman S are going to sell at least 50%. This is the biggest scam I had seen for a while.
po 14y ago
Thinking about this some more the part that drives me crazy is this: Facebook makes $4 per user. The users are customers. That just doesn't follow. The advertisers are the customers. They happen to pay $4 for every person right now. If the advertisers dry up - because say, they go out of business or decide facebook isn't great value - then the facebook users are 'worth' a lot less.

by po 14y ago

forgottenpaswrd 14y ago

This. Of course social media is real, of course having 900M customers is worth something. But trowing infinite amounts of money means you spend more that what is worth, in other words, it is a bubble. In Spain we had this houses boom, and everybody said: but houses are real, you need them, they are necessary so they will never go down. It is not qualitative, but qualitative. They make $4, but they need $100 for the stock to be fair price. Fb founders are selling as much as they let them, Goldman S are going to sell at least 50%. This is the biggest scam I had seen for a while.

po 14y ago

Thinking about this some more the part that drives me crazy is this: Facebook makes $4 per user. The users are customers. That just doesn't follow. The advertisers are the customers. They happen to pay $4 for every person right now. If the advertisers dry up - because say, they go out of business or decide facebook isn't great value - then the facebook users are 'worth' a lot less.