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Golden Age of Silicon Valley Is Over With Facebook IPO
Hugh Pickens writes "Steve Blank, a professor at Berkeley and Stanford and serial entrepreneur from Silicon Valley, says that the the Facebook IPO is the beginning of the end for Silicon Valley as we know it. "Silicon Valley historically would invest in science, and technology, and, you know, actual silicon," says Blank. "If you were a good venture capitalist you could make $100 million." But there's a new pattern emerging created by two big ideas that will lead to the demise of Silicon Valley as we know it. The first is putting computer devices, mobile and tablet especially, in the hands of billions of people and the second is that we are moving all the social needs that we used to do face-to-face onto the computer and this trend has just begun. "If you think Facebook is the end, ask MySpace. Art, entertainment, everything you can imagine in life is moving to computers. Companies like Facebook for the first time can get total markets approaching the entire population." That's great for Facebook but it means Silicon Valley is screwed as a place for investing in advanced science. "If I have a choice of investing in a blockbuster cancer drug that will pay me nothing for ten years, at best, whereas social media will go big in two years, what do you think I'm going to pick?" concludes Blank. "The headline for me here is that Facebook's success has the unintended consequence of leading to the demise of Silicon Valley as a place where investors take big risks on advanced science and tech that helps the world. The golden age of Silicon valley is over and we're dancing on its grave.""
Morgan Stanley had to buy back all the stock to prevent it turning from Facebook into Faceplant. They'll have to sell it all over again.
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And this is the usual geek thinking. If it's not direct binary or code, it's useless. However, in real life there are tons of other factors to consider.
The conditions under which Facebook would be really worth $100 billion are that somebody with $100 billion in cash was prepared to offer that much for it, and it was accepted. The IPO is, in effect, designed to prevent us finding out the true market value of the company. All we know is that people who almost all already had shares were prepared to exchange them for Facebook shares. Those people might have thought that their shares were about to tank, or that they might make short term profits. We don't know.
The historical analogy, although the exact terms of the deal were very different, is the Time Warner/AOL merger. The merger valued the entire group at around $350 billion. It turned out that the analysts and the investors were comprehensively wrong.
Don't get me wrong; in the Wall Street casino, people may get rich dealing in Facebook shares. But, as set up at the moment, the actual value of the company cannot be inferred from the share price, and all the predictions of a change in world culture are as reliable as the same predictions that were made about the AOL merger.
From scarped cliff or quarried stone she cries "A thousand types are gone, I care for nothing, no not one."
From TFWU: "If I have a choice of investing in a blockbuster cancer drug that will pay me nothing for ten years, at best, whereas social media will go big in two years, what do you think I'm going to pick?"
How did the economy get so skewed that something that is a real product which can serve a social good is ignored for sheer speculation?
And don't give me: "Rapid communications makes the economy more efficient" The economy was OK, even better, before Facebook. The economy even was OK before the internet, it just took a little longer to get things done( which may not be a bad thing). Also, efficient for who? Efficiency depends on where you are standing and how you measure it, e.g. immediate expenditure vs long term expenditure and immediate gain versus long term gain.
Basically people are speculating on a toy.
putting the 'B' in LGBTQ+
I wish I could agree with, but I can't. You see, Facebook uses the single most readily available resource humanity has - mediocrity, an outlet of which it essentially is. The vast majority of people are simply statistics. Nobody knows or cares about them except maybe for their relatives and a handful of acquaintances. Every like they get, every stupid comment on a picture they post compensates for their lack of self esteem and fuels their exhibitionism. Facebook it's not something you grow out of, but rather something you grow old into, because the older you get, the better you realize you're not worth much.
Share price implausible. The tl;dr is that of $16 billion, nearly $12 billion had to be bought by the usual suspect banks: Morgan Stanley, JP Morgan and Goldman Sachs. Among all the hype, that is actually a huge failure.
From scarped cliff or quarried stone she cries "A thousand types are gone, I care for nothing, no not one."
The important thing is that we're close to likening posting on FaceBook to taking a shit, which -is- the reality of it.
How much thought and value do people place in FaceBook updates? Little to none. People just spontaneously update to it almost all day long.
Not that they necessarily take a shit while posting (some do) but that the two acts are pretty close in terms of how much social consciousness they actually require.
Oh, by the way, I just won three golden cookies on Tropical Bat Farmer. You know you want to play.
"Stratigraphically the origin of agriculture and thermonuclear destruction will appear essentially simultaneous" -- Lee
This is extremely obvious to anyone who is older than 15 years old and especially for those of us who live overseas and have friends, family and people all over the world and helps to keep in touch with people easily (and no, I'm not going to bother them all by emailing them on little things).
You make a valid point, but this quoted part is pure bullshit.
The actual good Facebook has done is by contributing to projects like Cassandra and a bunch of work it did on MapReduce and Hadoop, memcached and what not. Visit their github.com to check on that, though those aren't the only projects they worked on (more like, those are the projects they have started)
Dude, those are mere tools.
They exist to DO THINGS.
It's the THINGS that are important.
So kids, how does it feel to be your parents talking about how this e-mail thing is a waste of time and when you want to talk to someone you should pick up the phone or write a letter?
You can only drink 30 or 40 glasses of beer a day, no matter how rich you are.
-- Colonel Adolphus Busch
Would it kill you to do a quick check on wikipedia before expounding away?
> I don't put anything on Facebook that I wouldn't say in public, even though I have all my private data limited to friends I personally know
What you say in public is transient and taken in context. What you say on FB is permanent and can be largely devoid of context. I'm also pretty sure you change your content based on who might overhear you IRL, whereas you have really no clue who might be listening on FB.
> but I am aware of the cost of having a "free" way to keep in touch with friends and relatives all over the world, and I'm willing to pay that cost.
No, you clearly aren't aware of the cost. You have no idea, nor do I, how deep down the data mine we'll go or who will be doing that mining. Yes, your anti-fascist statement on FB might be applauded loudly today and put you in favourable standing, but what if the far right gains power in your country? Or what if that dude you friended not so long ago happened to have an affinity for explosives in his underthings?
We collectively don't understand all the implications, so don't be so naive to claim that you do. If you're doing anything more than updating your friends on your bowel movements then it's pretty much guaranteed that someone, at some point, will have material to use against you. The only questions are whether it will be relevant in your lifetime and whether they'll have significant power.
It's on America's tortured brow, That Mickey Mouse has grown up a cow
Facebook stock is going to tank.
They opened with a price/earnings ratio of 92. (Closed around 88, as the stock price dropped from 42 to 38). A normal P/E ratio for a successful large company is between 10 and 20. (Google is at 18, Microsoft at 10, IBM at 15, Apple 13, News Corp. 16).
What this means is that Facebook has to increase their revenue by a factor of 6. They can't increase their user base by that much; there aren't enough people on the planet.. Their Alexa traffic peaked in mid-2011, so they're no longer growing. Their revenue per ad is dropping. General Motors just dumped Facebook as an ad medium because it was ineffective. Facebook has lately been increasing the page space devoted to ads. Myspace tried that before they tanked.
We've probably seen the peak of ad-supported businesses. There's only so much ad spending in the world to compete for. That industry is not the future. It's the past. Like the "house prices can only go up" crowd.
It's important to look at key ratios, like P/E and median house price / median income. Those tend to stay in a narrow range over decades, and when they get too high, it's a bubble.
We warned you. You didn't listen. Now suffer. Downside