by Dan Lyons Info
Dan Lyons is technology editor at Newsweek and the creator of Fake Steve Jobs, the persona behind the notorious tech blog, The Secret Diary of Steve Jobs. Before joining Newsweek, Lyons spent 10 years at Forbes.
Are we headed into another tech crash? It's sure starting to look like it—Facebook shares traded at a $56 billion valuation Friday and Groupon recently turned down a $6 billion offer. Dan Lyons on more indications of a bubble about to burst.
1. Private Tech Startups' Stock Is Soaring Stock in private tech startups has risen 54 percent in the past six months, according to a research firm called Nyppex.
2. Facebook's Valuation? $56 Billion A batch of Facebook shares traded at a $56 billion valuation in a secondary market auction Friday. Two weeks ago, Facebook was valued at $35 billion. Nevertheless, some people say Facebook is still a screaming bargain. One analyst predicts Facebook will easily be worth $200 billion by 2015. Right on! And by 2020 could be the first company with a $1 zillion market value, so buy-buy-buy, everybody!
3. iPod Nano Wristband Producer Gets $1 Million in Venture Funding A company that makes a wristband for using your iPod Nano as a wristwatch has raised nearly $1 million in venture funding.
4. Company Gets $18.5 Million to Make Pants A company that makes pants—that's right, pants!—just raised $18.5 million. On top of the $7.7 million it had raised previously.
5. Twitter Valued at $3.7 Billion Twitter just closed a round of funding at a $3.7 billion valuation, even though it hasn't generated any revenue yet. The valuation was so high that Fred Wilson of Union Square Ventures, an early investor in Twitter, declined to participate in this latest round. Wilson has been warning people that we're in another tech bubble.
6. Groupon Turns Down $6 Billion Offer Groupon, which runs online coupon deals for merchants, recently turned down a $6 billion offer from Google. They turned it down! What are these kids smoking?
7. Ex-Facebookers' Quora Valued at $86 Million in First-Round Funding Quora, founded by former Facebook employees, is a new website where you can ask questions and get answers. In its first round of funding, the company was valued at $86 million, according to TechCrunch, a blog that tracks Silicon Valley startups.
iStockphoto
8. Foursquare Was Valued at $95 Million—in June Foursquare—a site that lets you tell people what bar, restaurant, or other venue you're in—raised $20 million in June at a reported valuation of $95 million. The company had only 27 employees at the time.
Food for thought: Back in 2007, Fortune raved about how huge Second Life was going to be, and some visionary person who could see into the future because he knew so much about technology said: "In two years, I think Second Life will be huge, probably as large as the entire gaming community is today."
Caveat emptor.
Dan Lyons is technology editor at Newsweek and the creator of Fake Steve Jobs, the persona behind the notorious tech blog, The Secret Diary of Steve Jobs. Before joining Newsweek, Lyons spent 10 years at Forbes.
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You are so right. This tastes like 1998. As someone who took a futuristic idea public (one that actually did work out and survives to this day) in the 90's, I can tell you that if the business plan doesn't have a clear way to monazite the idea, sell as fast as possible. Stocks used to trade on a multiple of "eyeballs" (how many views a site would get) and other crazy metrics. I remember one banker telling me a stock would trade 30 times its most recent press release. Some will work and timing is everything, but most will find the scrap heap. My brother in law went broke shorting Amazon. He said, (rightly), they would have to sell a book to every literate American to make any money. He forgot they could also sell other things, too. There was an idea with good execution. If the idea is simply another way to sell ads, I'd take a hat.
This is another indicator of how desperate America is to regain some sense of 'leading' the world economically. We still haven't gotten our collective minds wrapped around the decimation of our manufacturing capability. So instead of producing anything tangible, we're now obsessed with putting all our eggs in the basket of figuring out how to sell more crap to people through online advertising. But what happens when we're all broke? Who's going to be buying virtual junk on Facebook then? Or clamoring to buy Groupons that we didn't really need in the first place? And how many ads is enough? Do people REALLY click on these ads (I basically just ignore them all)?!
I'd take a side bet on whether Groupon did the right thing to turn down the Google offer, and while I'd say Facebook is bargain, it is no ca 1998 flash in the pan. Twitter makes absolutely no sense to me but then neither does the number 1 TV show (American Idol), the #1 thing Americans spend money on for recreation (gambling), the #1 spectator sport (car racing) or the fact that 350,000 American women get breast implants every year.
correction, while I'd say Facebook is no bargain,
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