Comments on: Web 2.0 Valuations: Not a hard and fast science

By: emilecambry

emilecambry — Mon, 12 May 2008 04:25:31 +0000

Thanks Will for stopping by. The thing people have forgotten is that Social Networks have existed since the beginning of time informally and especially since the beginning of the Internet. Imagine if GeoCities was able to evolve and take advantage of new trends, or even AOL at its peak. What Facebook and LinkedIN has is the platform approach the enables a petri dish of innovation to occur within their site, increasing those switching costs. Everyone, including myself predicted MySpace would have been finished by now, but with annual revenues approaching a billion dollars, it’s hard to argue that they wont be here for awhile.

By: Will Stokes

Will Stokes — Mon, 12 May 2008 04:20:49 +0000

I also found your article interesting. I’m not convined these social networking type sites are here to stay though. So your Mom got a Facebook account. Ok, but let us know if she’s still using it a month or year down the road. It’s not clear if these types of sites are just a temporary fad, or if people ultimately find them hard to live without.

Some services/products will fit in the latter category. The obvious example from the first bubble is Google, which isn’t going anywhere. It will always be hard to know which companies/market strategies will pay off in the long run.

I share your hopes that Chicago VC’s will start providing seed money for more tech startups in the local area. It’s kinda silly how the valley has remained the hub that it is for so long. That, and as a software developer who wants to end up in Chicago, I guess I have a vested interest.

By: Emile Cambry

Emile Cambry — Thu, 08 May 2008 23:20:17 +0000

I definitely agree. Remember how much of a steal Myspace was/is? When it was sold for $580 million, everyone was crying bubble this, bubble that. FOX has the horsepower to make Myspace a billion dollar a year entity. It may not be powering the FOX empire, but it was a great ROI acquisition.

By: Marcus Ogawa

Marcus Ogawa — Thu, 08 May 2008 15:54:35 +0000

I agree with Harry. Its kind of like the Kentucky Derby in that sense. One company publicly wins with a huge valuation during acquisition, one publicly loses with a loud bang, and more then half of the other contenders are carried away in the background either injured and limping or barely able to continue racing.

By: Harry

Harry — Thu, 08 May 2008 09:04:08 +0000

Valuation of Web 2.0 companies may be focusing on asset acquisition by larger firms.

These acquirors may have big plans for revenue growth – something that the current business ownership may not be able to achieve.

This is known as the investment standard of business value. Note that such valuations can easily exceed the fair market value of such businesses.

All valuations are forward-looking. As such, the results depend on the assumptions made – and hopes held by the acquirors!

By: emilecambry

emilecambry — Wed, 07 May 2008 00:53:30 +0000

Marcus, thanks for stopping by. I do agree with you. Haphazardly placing bets is never the right strategy, but I do feel that there are still a great deal of good opportunities for entrepreneurs to attack, and hopefully the current economic climate doesn’t inhibit those with the great ideas from taking the plunge into entrepreneurship.

By: Marcus Ogawa

Marcus Ogawa — Tue, 06 May 2008 23:23:19 +0000

I liked the article, and especially enjoyed the video. I think its a bubble, but like many other bubbles, its the ebb and flow of economic growth.

The Web 2.0 bubble is waxing, it too will wane, but in the mean time, placing your chips on the right numbers may be lucrative.