The Bubble 2.0
Ok, everyone already knows about the bubble. But all this time it was only getting bigger and you could play along. Is it about to explode?
Zuckerberg, the owner of Facebook, recently sold a cut of Facebook for $40 million dollars in cash. He sold for Lincolns and Washingtons something that still has a negative cash flow (debt) and it’s living out of VC money.
Now Digg is also for sale. For $300 million bucks.
So, two interesting points. The first one, that clearly gives a bold meaning to the expression Bubble 2.0, is the value based on “growth potential” (which is a brand new keyword for business plan aka how to generate money out of air and dust) at which these companies are rated. Facebook is claimed to be worth $15 billion dollars. Excuse me? That’s more than Ford that despite its terrible financial situation (negative net cash flow, huge liability and small equity) it still has $256 million in assets — that’s money. What does Facebook have, exactly, besides 200 developers that need to be fed and gracefully paid?
The second interesting point is that these guys, close to the industry, truly realize that this lunacy is about to end and venture capitalists about to retract. What is worth $15 billion today will be worth a couple thousand dollars tomorrow. So they hurry up trying to sell it for a still ridiculously overpriced value. Will they make it? There are still plenty of lunatics breathing.
Now the bonus question. How long would it take for a website like Digg to generate $300 million dollars to payback the investment?
That’s exactly the kind of attitude that will burst the bubble. They’ve been trying to sell digg for a while now. Seems like they’re getting desperate.
Actually i think that the Facebook sellout thing was a rumor and was debunked by Zuckerberg himself…
As for Digg.. 300 mil for a sinking ship?? I guess it’s now or never, so they might as well bluff their way through to freedom. Time to bail!