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I have two additional and unrelated thoughts on this. First, the astonishing price paid is a very tangible indictment on the management of Facebook, and Zucker
by bedhead 13y ago
I have two additional and unrelated thoughts on this.
First, the astonishing price paid is a very tangible indictment on the management of Facebook, and Zuckerberg especially. Combine this $19 billion with the Snapchat offer and Instagram, and it's clear that Facebook is looking frighteningly like Microsoft, which is to say a behemoth of a company that seems to flat-out miss every next big thing. I can't even imagine how many more things Facebook will end up buying because they failed to build a good product themselves. If I was a shareholder (and I'm not, anymore) I would sell today and never look back. In a world where actions speak louder than words, Facebook is telling us they simply don't have the ability to create value internally.
Second, this is an absolutely perfect microcosm to describe the ever-expanding wealth inequality. I'm not saying this as a lament, just as an observation. Technology has fundamentally changed the way that wealth is created, and I believe it's the single largest cause of the wealth gap. Think about it. Thirty years ago, what would it have taken to create $19 billion of value in a new company? How many thousands of employees would it take? How many years, if not decades of hiring people, paying them, paying suppliers, providing pensions, etc? By the time that company was worth $19 billion, so many people would have been involved...that wealth would've been very spread out. Today, thanks to technology, $19 billion was created in a couple years, concentrated in just a couple dozen people. Folks, there is no escape from this. The genie is out of the bottle.
- sentenza 13y agoSomething's fishy though. Compare these acquisition numbers to the numbers that float in more "money-prone" parts of the software business. For instance, I've never heared of that kind of money being thrown around regarding the suppliers of software that banks and traders use. It's not that a revolutionary social service shouldn't be worth billions, but What's App is messaging. And messaging in the long term could just as well boil down to a specified standard with half a billion apps out there that support the standard. There's no reason why messaging should be a market that can be dominated by a single player over more than the social network percolation timescale.
- adventured 13y agoI think that's a critical conclusion: messaging in the age of bytes is nearly worthless monetarily. You have to be able to hold your base hostage to really milk it financially (eg as Verizon and AT&T have done for years on SMS). It's why webmail and instant messaging have never produced much financial value. If you can't hold them hostage, I think you'll find your audience unwilling to pony up for what effectively costs nothing to transit.
- bedhead 13y agoThat's because bank infrastructure or CAD/CAM or ERP systems aren't particularly new or exciting, so there's no reason for a mania to take hold. The upside is generally known. But something like Snapchat or WhatsApp or hell even Tesla have these crazy "blue sky" opportunities, so people can extrapolate a kajillion dollars in profits one day and no one can definitively dispute otherwise.
- acdha 13y agoThe flip side is that the value is also very ephemeral: WhatsApp has no commitments or unique selling points other than their install base. If they try to charge for the service, have a prolonged outage, etc. or a competitor ups their game, it all disappears quickly enough to raise the question of whether what's changed is actually wealth or just valuations.