It's coming! Hide yo kids hide yo wife!
Seriously though. What. the. fuck.
[url]http://www.tweaktown.com/news/19221/color_commentary_41_million_angry_reviews/[/url]
For those of you who don't feel like reading that article, someone created video of a less than alpha version of their "social media 2.0" app and viralraped it into the blogosphere. Somehow no one saw through their marketing shitstorm and a couple of fucknuggets threw them $41 million in funding and tossed them [url]www.color.com[/url] before we all realized what it really was....a shitty camera app coupled with a picture sharing stalker mode.
I might be coming off a bit too harsh. But seriously, $41 million for a FREE iPhone app. Angry Birds, the most popular iPhone App to date, has sold a mere 15 million copies at $0.99 apiece. What do these investors seek to get from $41 million? This was first round funding too!!! To put this into perspective, Facebook garnered a mere $12.7 million in their first round of funding a full 15 months after it had been launched.
My point in starting this thread wasn't to bash on Color specifically, but more to call to attention how overvalued certain social applications and websites are. The long term viability just isn't there. Chat Roulette is a better and more financially promising idea, yet it's only valued at $2 million. Why is it that Color is so overvalued?
I think the main reason behind this is sneaky investment tactics that are used to inflate the value. I'm sure there are people on here who know more about financial investments than me, but I've been reading up on it quite a bit recently and I think I've got a grasp on what's going on in certain areas. Facebook, for example, shot up from a $15 billion valuation to a $60 billion valuation in less than 2 months.
The reason behind this sudden jump lies with Goldman Sachs. Goldman Sachs is one of the largest investment banking companies in the world. They realized that Facebook is a very valuable company, partly because of the mass amount of data they have on people (fuck what they say about privacy in the future. Facebook can do whatever they want with the data and very few people will ever know). Goldman Sachs also realized that if Facebook wants to keep growing, they can't stay a privately held company forever. Facebook is going to take over more than just people's friend networks in the near future, but to expand into these other markets and take their competitors out they need lots and lots of money. Because of this, Goldman Sachs would love to be the banking firm that handles their IPO (initial public offering on the stock market) as there is loads of brokerage money and commissions in it for them.; not to mention they can cut off stock for themselves right away. Because Facebook is privately held, the SEC does not allow more than 500 shareholders in the company. Right now, Facebook through its several rounds of funding has used up almost all of its 500 shares limit. So what Goldman Sachs did is buy up the remaining 0.8% share for $500 million. In doing so, they gave Facebook a current valuation of $60 billion, making their cut when it hits IPO next year super juicy.
While I do agree that Facebook is worth a LOT of money. I don't think their business model alone is quite worth $60 billion. Facebook is currently bringing in around $1 billion a year in revenue. That's a lot of money and I think that given 3 years, a $60 billion valuation will be more appropriate if Facebook continues to grow into other markets. However, I will say that it's a safe bet as Facebook isn't going to "crash" anytime soon.
[b]Note:[/b] Some might contest this by pointing out how Google is valued at $160 billion. Well, Google has $60 billion in assets, $40 billion in equity and $30 billion in yearly revenue. As far as long term investments go, the general rule of thumb is that if the assets+equity+revenue is within 20% of the valuation and the company has positive cashflow, it is a safe investment.
The biggest problem I have with Facebook's current valuation is how Twitter decided to hop the fuck on board and prop themselves up for a $12 billion valuation. There's no way. That's valuing the average Twitter user at $120 a pop..or about equal to Facebook members. Twitter is in a very small niche market compared to Facebook which has the internet's best targeted ads, social gaming platform, and social network. And what's more, [b]the top 0.5% of Twitter users make up 70% of tweets, traffic, and follower count[/b]. I honestly can't see how twitter is worth more than $2 billion seeing as how they are currently only bringing in $100 million a year. Personally, I find Tumblr a much better website that is basically a one-up version of Twitter and it's only valued at around $150 million despite having 1/5 as much global traffic as Twitter.
[b]The best part is that Silicon Valley investments over the last 10 years have had some of the worst returns of any industry with an average of 2%. Aka...lower than inflation[/b]
A short aside...Apple is also a bit of a victim to this current "shiny company" investment syndrome as well. Their current share price places the company value at $375 million or almost double the value of Microsoft, a company that had slightly more in revenue and net income last year.
[i][b]Here is where I'm going to talk about the 2000 dotcom bubble burst and compare the warning signs to today, but it's late and I have to get up early so I'll write it later. Consider everything up to this point an introduction to my mainpoint[/b][/i]
Sources can be dug up if requested. Some numbers will vary slightly from actual amounts depending on the source reviewed.
[quote]It's coming! I don't feel so good! Hide yo kids hide yo wife! I like turtles![/quote]
This is not a good way to start off a serious thread about economics.
[QUOTE=TheBrokenHobo;28886787]This is not a good way to start off a serious thread about economics.[/QUOTE]
As if Facepunch is a place to start a serious discussion on economics....
Consider it an "ironic" (in b4 hipsterfag) metaphor for the current state of web investments if it really bothers you that much.
[QUOTE=adamjon858;28886821]As if Facepunch is a place to start a serious discussion on economics....
Consider it an "ironic" (in b4 hipsterfag) metaphor for the current state of web investments if it really bothers you that much.[/QUOTE]
Just a friendly bit of advice so you don't walk into a business meeting one day and just say "lol farts." and start your presentation.
I stopped reading at the first line. You need a way to pull the reader in, not make the reader get turned off from as line that a 5 year old would write.
[QUOTE=TheBrokenHobo;28886863]Just a friendly bit of advice so you don't walk into a business meeting one day and just say "lol farts." and start your presentation.[/QUOTE]
Why not? It might get me $41 million in funding!
[QUOTE=adamjon858;28886883]Why not? It might get me $41 million in funding![/QUOTE]
Actually, the way shit works these days, it probably would.
Disregard my previous advice.
They didn't get color.com tossed to them - they bought it for $300,000. :v:
Are there any legal avenues for short selling in the US?
[QUOTE=Contag;28887206]Are there any legal avenues for short selling in the US?[/QUOTE]
As far as I know yeah...however almost all I know about the stock market I read from a book written in the early 90s so laws might have changed a bit.
It'd either be in iPhone apps or social media (and there are only a few social media websites that have a monopoly on the net).
might be in iPhone apps
Shame they spelt colour wrong. You'd think they'd spell check if they're spending that much money.
[QUOTE=3com111;28888158]Shame they spelt colour wrong. You'd think they'd spell check if they're spending that much money.[/QUOTE]
color colour
same shit different country
[QUOTE=3com111;28888158]Shame they spelt colour wrong. You'd think they'd spell check if they're spending that much money.[/QUOTE]
Both color.com and colour.com link to the same place.
Color: See the genitals in your area!
remember when we had a massive walled garden that everyone used
then one day no one used it anymore
it was called aol
sound familiar
Woah it takes pictures holy shit how has nobody thought of this!?!?!?!?!??
I'm actually looking forward to the next part of the OP.
[QUOTE=KigJow;28886865]I stopped reading at the first line. You need a way to pull the reader in, not make the reader get turned off from as line that a 5 year old would write.[/QUOTE]
for those of us that don't have the attention spans of a thirteen year old, excellent thread. well thought out and well articulated. I'm looking forward to the next part of the post because I don't know about the conditions leading up to the dot com burst and this sounds very interesting
however I [B]did[/B] watch inside job last night so I have a [I]very[/I] loose grasp on some of the things you're talking about :smug:
[QUOTE=KigJow;28886865]I stopped reading at the first line. You need a way to pull the reader in, not make the reader get turned off from as line that a 5 year old would write.[/QUOTE]
I read it. In related news, I'm not 12.
[QUOTE=Croix;28890362]I read it. In related news, I'm not 12.[/QUOTE]
13 is not a huge difference from 12. Especially in your case. :smug:
Anyhow, big meeting today but I'll write the next "chapter" tonight.
where's the next part you stupiddipshitasshole
[QUOTE=Kalibos;28890214]for those of us that don't have the attention spans of a thirteen year old, excellent thread. well thought out and well articulated. I'm looking forward to the next part of the post because I don't know about the conditions leading up to the dot com burst and this sounds very interesting
however I [B]did[/B] watch inside job last night so I have a [I]very[/I] loose grasp on some of the things you're talking about :smug:[/QUOTE]
I stayed at a holiday inn last night. I'm a CFO now because of it.
I can't wait for this social bullshit to stop. It will stagnate sooner or later. Everyone wants in on the game, and as you know: Too many cooks spoil the broth.
Thats besides the fact that the appeal won't last forever either.
[QUOTE=KigJow;28886865]I stopped reading at the first line. You need a way to pull the reader in, not make the reader get turned off from as line that a 5 year old would write.[/QUOTE]
Do remember that not everyone on Facepunch is a journalist.
That's a great domain name, too bad shitty content's hosted on it.
I think there will definitely be another bubble that bursts before we realize how to handle the internet.
Think of all the new war technology in the last century and how we had to go through WWI, WWI, and a few smaller wars until we started to get some self control, and even now it's not very good.
I'm gonna try to Inb4 OP and make a small explanation of what the Dotcom bubble burst was (for those who can't remember it or don't get it):
From what I've read and investigated (I'm quite interested in economics and how does the market works) The Dot Com Bubble bursted (To put it in Layman terms) because after the success of internet start-up companies like amazon and ebay, investors were like "Holy shit internet! I'm gonna make shitloads of money with e-businesses" so they gave all their investment capital to any nutjob that had a business idea of selling [I]X[/I] shit on the internet, truth is these "entrepreneurs" had no idea of how they were going to make money off the internet. A lot of these new companies went IPO, others didn't make it there, but in the end they saturated the market, took a giant shit on the internet fucking up its original purpose (A worldwide community for sharing knowledge and getting people together) and made no profit out of this. So when the investors asked for profits, they soon realised they had fucked up big time by not using traditional investment safety measures under the promise of large profits by the Dot Com. Soon after, the dotcoms start-ups burned their investment capital and went bankruptcy right after, resulting in large amounts of investment capital lost, billions of dollars to waste and lots of butthurt, with the only prominent survivors beign Ebay, Amazon and Google (and other companies, but who cares..)
One of the results of the Dot Com Bubble:
[IMG]http://i160.photobucket.com/albums/t196/barttool/Dotcom8.jpg[/IMG]
[I]A dream denied...[/I]
The similarities between the Dot Com bubble and today's situation are rather small, but lately there have been tons of social networking start-ups and if investors are not wise (like Color's investors or -on an unrelated note- the investors that put 35 million dollars into -for fuck's sake- the Cheezburger Network ) when putting their money in these new businesses, we might face another debacle, perhaps smaller but equally devastating as we are not completely over the recession. It just takes regulation from competent government organisms, which is what the US market severely lacks.
But really it is an exageration to say this is a sign of a bubble, I found this article surfing my way through OP's and It explains quite well what does this 41$ million funding really means, and what could happen. [URL]http://www.businessinsider.com/color-deal-2011-3?partner=incmagazine[/URL]
Also, if you want to read more about the Dot Com bubble, you should totally check out ED's entry on it, freaking hilarious.
Great explanation. I'll add to it when I'm not ridiculously busy...
To anyone interested in this topic:
[url]http://www.amazon.com/Startup-Com-Kaleil-Isaza-Tuzman/dp/B00005N5QV[/url]
[url]http://www.amazon.com/Intelligent-Investor-Definitive-Investing-Practical/dp/0060555661[/url]
Sorry, you need to Log In to post a reply to this thread.