Monday, June 13th, 2011

Which IPO Do You Want to Lose And/Or Double All Your Money In?

Rumors on the Internets put the Facebook IPO as coming early next year, which, BOOM, BANG, EVERYTHING BLOWS UP, CONFETTI, DEATH, BOTTLE SERVICE, THE FOUR HORSEMEN, INVISIBLE RICHES, CHINA BUYS BRAZIL, CATS AND DOGS HAVING SEX, THE END OF TIME, ALL THE LIGHTS GO OUT EVERYWHERE, THUNDERDOME, STERILITY, A NAKED OLYMPICS AGAIN, WE ALL TRY TO MOVE TO THE MOON, A SELECT FEW LIVE FOREVER BUT MOSTLY EVERYONE DIES. But first in IPO-landia comes Zynga (who? The makers of FarmVille) and Pandora. And Avaya ("a global leader in business communications")! For one billlllion dollars! One billion dollars. One billion dollars. (One billion dollars.)

18 Comments / Post A Comment

BUBBLE. Bubble. Bubblez?

@armagnacforbreakfast BUBBLE!

GiovanniGF (#224)

Serious investors should first buy a copy of John Cassidy's Dot.Con (from 2002), or the junior-high reading level version, F'd Companies by Philip Kaplan (also 2002). Bonus: 90s nostalgia!

keisertroll (#1,117)

@giovanni Remember when Qualcomm traded at like seriously 400? Tell me this actually happened.

GiovanniGF (#224)

Here's a handy list of some of the funnest flame-outs:

TheRtHonPM (#10,481)

@keisertroll Forget Qualcomm, remember when Nortel was a real company that people took seriously?

Avaya actually makes real physical things though? And I'd actually known about them before, unlike Zynga.

@Butterscotch Stalin Yeah, they are kind of a real Actual Business. (Well hell: all of these are Real Actual Businesses.) The ripple effect on Markets is going to be FUNKY TOWN though!

@Choire Sicha Haha! I just noticed from that article that they put Avaya's value at $3.3 billion less than what they were bought for (in 2007). But they have a good "pedigree," so.

@Butterscotch Stalin Was going to say the same. They make phone-type things.

Leon (#6,596)

As a Giant Nerd, I feel like the value of Facebook is kind of hard to peg – like, all of those clicks, all of that data on how we behave, mined properly, could potentially be worth even more than 1 or 2 billion if someone who also has access to that data and is controlled by Facebook comes up with the right algorithm.

The really scary part to me is the competitive advantage one internet company faces over startups by amassing a massive amount of data at a certain critical mass. Look at Google, for instance. A huge amount of what Google is able to do, in terms of keeping PageRank so high quality, is that it has so much fucking data on how people respond to actual rankings. If just "having the data" becomes a barrier to entry for competitors, how to we prevent monopolies? But on the other hand, the first time a government forces a database public as part of a theoretical anti-trust suit, what is the incentive to create your own shit and 'have the data'?

It just worries me that we're constantly trying to fit new stuff into the framework of existing commerce law, when it seems really clear to me that "the internet" in general has rendered old-law irrelevant, and we need to be deciding how we want to approach business in the first era of human history when physical stuff is no longer required rather than try to make the laws from "the age of stuff" fit into "the age of data".

Lockheed Ventura (#5,536)

@Leon Saint-Jean An evaluation of 1 or 2 billion would be reasonable, but the problem was last year, Goldman was pushing a 50 billion dollar evaluation. The issue is whether Facebook can continue its exponential growth. Over the last year growth rates have dropped precipitously in the US, as everyone is already on Facebook. What then? China is not opening up to Facebook anytime soon. Can Facebook transition to other products or is it a company that has already saturated its primary market and thus the not worthy of an evaluation based on rapid growth.

TheRtHonPM (#10,481)

@Leon Saint-Jean There's a weird dissonance in your post when you write "what is the incentive to create your own shit and 'have the data'?" followed by "it seems really clear to me that 'the internet' in general has rendered old-law irrelevant". Because the answer to your first question is the very old law concept of intellectual property, which most internet age dudes deride as outmoded.

deepomega (#1,720)

Zynga is basically in the business of making people wait in line to pay them money. You know how everyone talks about how videogames are a bigger business than the film industry? Every game company looks to Zynga as a financial inspiration. The only risk there is whether the government will figure out some way to regulate "getting people addicted to clicking on your shitty game".

riotnrrd (#840)

@deepomega I have friends On The Inside at Zynga, and their lunch is slowly but surely being eaten by other game devs. Their money maker, simple and addictive Facebook games, has a very low barrier to entry and they are minting money right now because they were first in that space. The internal word is that they are rushing to IPO before the market completely shatters and they are forced to compete with a hundred smaller and more creative companies.

Matt (#26)

Dude did you just respek the farm? I think you did!

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