Beta
×

Welcome to the Slashdot Beta site -- learn more here. Use the link in the footer or click here to return to the Classic version of Slashdot.

Thank you!

Before you choose to head back to the Classic look of the site, we'd appreciate it if you share your thoughts on the Beta; your feedback is what drives our ongoing development.

Beta is different and we value you taking the time to try it out. Please take a look at the changes we've made in Beta and  learn more about it. Thanks for reading, and for making the site better!

Golden Age of Silicon Valley Is Over With Facebook IPO

timothy posted more than 2 years ago | from the what's-your-favorite-gravedancing-music? dept.

Businesses 222

Hugh Pickens writes "Steve Blank, a professor at Berkeley and Stanford and serial entrepreneur from Silicon Valley, says that the the Facebook IPO is the beginning of the end for Silicon Valley as we know it. "Silicon Valley historically would invest in science, and technology, and, you know, actual silicon," says Blank. "If you were a good venture capitalist you could make $100 million." But there's a new pattern emerging created by two big ideas that will lead to the demise of Silicon Valley as we know it. The first is putting computer devices, mobile and tablet especially, in the hands of billions of people and the second is that we are moving all the social needs that we used to do face-to-face onto the computer and this trend has just begun. "If you think Facebook is the end, ask MySpace. Art, entertainment, everything you can imagine in life is moving to computers. Companies like Facebook for the first time can get total markets approaching the entire population." That's great for Facebook but it means Silicon Valley is screwed as a place for investing in advanced science. "If I have a choice of investing in a blockbuster cancer drug that will pay me nothing for ten years, at best, whereas social media will go big in two years, what do you think I'm going to pick?" concludes Blank. "The headline for me here is that Facebook's success has the unintended consequence of leading to the demise of Silicon Valley as a place where investors take big risks on advanced science and tech that helps the world. The golden age of Silicon valley is over and we're dancing on its grave.""

cancel ×

222 comments

Sorry! There are no comments related to the filter you selected.

Facebook (4, Insightful)

partofme (2643183) | more than 2 years ago | (#40050505)

The headline for me here is that Facebook's success has the unintended consequence of leading to the demise of Silicon Valley as a place where investors take big risks on advanced science and tech that helps the world. The golden age of Silicon valley is over and we're dancing on its grave

Eh, just because Facebook is also used by millions of ordinary people doesn't mean it's not computer technology company and, even more so, doesn't help the world. In fact I think that Facebook has done immersive amount of good for the world. What have you done, exactly? This is extremely obvious to anyone who is older than 15 years old and especially for those of us who live overseas and have friends, family and people all over the world and helps to keep in touch with people easily (and no, I'm not going to bother them all by emailing them on little things).

Re:Facebook (3, Interesting)

knuthin (2255242) | more than 2 years ago | (#40050543)

This is extremely obvious to anyone who is older than 15 years old and especially for those of us who live overseas and have friends, family and people all over the world and helps to keep in touch with people easily (and no, I'm not going to bother them all by emailing them on little things).

You make a valid point, but this quoted part is pure bullshit.

The actual good Facebook has done is by contributing to projects like Cassandra and a bunch of work it did on MapReduce and Hadoop, memcached and what not. Visit their github.com [github.com] to check on that, though those aren't the only projects they worked on (more like, those are the projects they have started)

Re:Facebook (5, Insightful)

partofme (2643183) | more than 2 years ago | (#40050565)

And this is the usual geek thinking. If it's not direct binary or code, it's useless. However, in real life there are tons of other factors to consider.

Re:Facebook (1)

Anonymous Coward | more than 2 years ago | (#40050809)

True. Silicon Valley will become de-centralized, that's all. But it's hard not to admit there doesn't seem to be too much BIG thinking anymore, anywhere. Where's the PARCs? The HP garages? Big Dog is way cool but how many people will it be sent to kill before it goes commercial for the Forest Service or the Red Cross? Nobody in the masses notices these things. They're all too busy on Facebook saying OMG! or discussing the size of Kardashian's ass.

Re:Facebook (1)

enginear81 (2643075) | more than 2 years ago | (#40051169)

..the work-home relationship is so difficult to maintain

Re:Facebook (3, Insightful)

ElBeano (570883) | more than 2 years ago | (#40050651)

Do you have Aspergers? High functioning Autism? Seriously, you dissed the connections Facebook facilitates (that were referred to in the parent post) as being "bullshit" in terms of importance. All that matters to you is the technology that Facebook contributes. Technology for what purpose and to what ends? Tools trump human beings and society? I'm sure that the biggest reason people use Facebook is for its connection facilitating function. Most people don't care a great deal about Facebook's technology contributions beyond Facebook itself. Like you, I do, but I never want to lose sight of the bigger picture. Have I misunderstood you somehow?

Re:Facebook (3, Interesting)

knuthin (2255242) | more than 2 years ago | (#40051049)

Maybe you have misunderstood me.

The "connections" are a part of their business strategy. That's what they earn their revenues from: knowing who is interacting with whom, for what etc. So in a way, it is a very selfish (or mutual) thing to do.

Contributions to projects is very selfless, because Facebook is not making direct profits from making the source available (they might be making money from the changes they make, but not from making the code usable to others)

Most people do not care a great deal about Facebook's technology contributions

Agreed. But who does? Most of the technologies are not cared for even though they affect lives in large ways (MapReduce works everywhere from Google search queries, to Twitter, and Facebook. I don't know many people outside /. or IRC channels who'd even know about MapReduce)

According to me, the bigger picture here, is the obvious picture. The details seem more interesting to me. Doesn't sound like Asperger's to me. Sounds like I am just too inquisitive. ;)

Re:Facebook (5, Insightful)

Anonymous Coward | more than 2 years ago | (#40050775)

This is extremely obvious to anyone who is older than 15 years old and especially for those of us who live overseas and have friends, family and people all over the world and helps to keep in touch with people easily (and no, I'm not going to bother them all by emailing them on little things).

You make a valid point, but this quoted part is pure bullshit.

The actual good Facebook has done is by contributing to projects like Cassandra and a bunch of work it did on MapReduce and Hadoop, memcached and what not. Visit their github.com [github.com] to check on that, though those aren't the only projects they worked on (more like, those are the projects they have started)

Dude, those are mere tools.

They exist to DO THINGS.

It's the THINGS that are important.

Re:Facebook (2, Interesting)

Alumoi (1321661) | more than 2 years ago | (#40050559)

Posting on failbook that you're taking a shit is NOT keeping in touch with people. Mailing them when you have something important to share IS.

Re:Facebook (-1)

partofme (2643183) | more than 2 years ago | (#40050585)

Yes, because it's like people post on Facebook that they're taking a shit. That's the reality, yeah right.

Funny that none of the people I friend and know on Facebook don't post shit like that. Maybe it says something about your friends, or that you don't even use Facebook and therefore don't even know what you're talking about.

Re:Facebook (5, Insightful)

eyenot (102141) | more than 2 years ago | (#40050751)

The important thing is that we're close to likening posting on FaceBook to taking a shit, which -is- the reality of it.

How much thought and value do people place in FaceBook updates? Little to none. People just spontaneously update to it almost all day long.

Not that they necessarily take a shit while posting (some do) but that the two acts are pretty close in terms of how much social consciousness they actually require.

Oh, by the way, I just won three golden cookies on Tropical Bat Farmer. You know you want to play.

Re:Facebook (5, Insightful)

crawling_chaos (23007) | more than 2 years ago | (#40050795)

So kids, how does it feel to be your parents talking about how this e-mail thing is a waste of time and when you want to talk to someone you should pick up the phone or write a letter?

Re:Facebook (2)

CapOblivious2010 (1731402) | more than 2 years ago | (#40050837)

So kids, how does it feel to be your parents talking about how this e-mail thing is a waste of time and when you want to talk to someone you should pick up the phone or write a letter?

Phones? You had phones? Why, back in my day, we had to yell really loud!

(now get off my lawn!)

Re:Facebook (0)

Anonymous Coward | more than 2 years ago | (#40051103)

You could just yell? You spoiled urban kids. Where I leved you had to ride for 6 days an a camel before you get within a earshot of somebody.

Re:Facebook (3, Funny)

Bing Tsher E (943915) | more than 2 years ago | (#40050861)

The alternative to 'this email thing' is not picking up the phone or writing a letter. It's fucking doing stuff in the real world.

Also, only adolescents, and people immersed in the 'permanent adolescence culture' get all worked up about 'becoming like your parents.' It's a thing called growing up.

Remaining an immature twerp for your entire life isn't a viable alternative to growing up. Unless you're Dick Clark, I suppose (and even he got to die, eventually). Don't retard your development into adulthood in the name of a stupid meme pop culture embraces.

Re:Facebook (2, Insightful)

crawling_chaos (23007) | more than 2 years ago | (#40050949)

Must have stung pretty hard to get that kind of rise out of you. It might be hard to accept, but there are fully functional adults who use FB to keep in touch with old friends and extended family while also leading productive lives out in "the real world" as we called it back in the 80s. I remember how self-righteous people were back then about not watching TV, as if watching a little bit meant that you suddenly turned into a couch potato who never left the house. Those people turned out to be the ones who had the most problems with life balance at the 20 year reunion, in my experience. But carry on. We older folk are laughing with you, as we see our own hangups echoed in new technology, at least most of the time. Now get off my damn lawn.

Re:Facebook (2)

partofme (2643183) | more than 2 years ago | (#40051089)

This is absolutely true. It seems like most Facebook haters are those who themselves have very narrow life and therefore cannot comprehend the idea that other people might like to use Facebook and other things on top of their other stuff.

Re:Facebook (4, Insightful)

ToadProphet (1148333) | more than 2 years ago | (#40051177)

Or how about some of us don't want to hand over a one-dimensional record of our lives to a third party that may or may not be up to no good?

Re:Facebook (1)

Deep Esophagus (686515) | more than 2 years ago | (#40051347)

I don't put anything on Facebook that I wouldn't say in public, even though I have all my private data limited to friends I personally know (unlike some FB users, I don't "friend" any random passerby who sends a friend request, or friends-of-friends, etc.) So if that worries you, don't do it... but I am aware of the cost of having a "free" way to keep in touch with friends and relatives all over the world, and I'm willing to pay that cost.

Re:Facebook (1)

sesshomaru (173381) | more than 2 years ago | (#40051413)

I use Facebook almost identically to the way I used to use Geocities, and the wheel turns...

Re:Facebook (0)

Anonymous Coward | more than 2 years ago | (#40051265)

Pot, meet Kettle.

Re:Facebook (1)

i_ate_god (899684) | more than 2 years ago | (#40051153)

there is a lot of value in those updates, both commercially, and socially.

Re:Facebook (0)

knuthin (2255242) | more than 2 years ago | (#40050591)

Unfriend or unsubscribe.

Re:Facebook (1)

thePowerOfGrayskull (905905) | more than 2 years ago | (#40050711)

Posting on failbook that you're taking a shit is NOT keeping in touch with people. Mailing them when you have something important to share IS.

Because hyperbole alone is a fantastic way to make a point.

Re:Facebook (2)

Bing Tsher E (943915) | more than 2 years ago | (#40050875)

So you are making the claim that people only posting updates or sending email when they have something actually relevant to say is hyperbole? What's your point, anyway?

Re:Facebook (2)

Exitar (809068) | more than 2 years ago | (#40050733)

"If I have a choice of investing in a blockbuster cancer drug that will pay me nothing for ten years, at best, whereas social media will go big in two years, what do you think I'm going to pick?"

FB is helping the world more than a cancer drug? Really?

"Sorry dude, your illness should have been cured by now, but nobody is developing new drugs anymore. Anyway, you can still play Farmsville while you're waiting to die"

Re:Facebook (1)

Anonymous Coward | more than 2 years ago | (#40051155)

"FB is helping the world more than a cancer drug? Really?" No, that wasn't the point. FB had a quicker return to the investor, so that's where the money went. The point was exactly the opposite of what you thought - a faster return on an investment (that is of questionable value to anyone other than the investor) is considered more attractive than a beneficial (to others or humanity in general) return further out in time. It clearly distorts investors' decision making away from things that could have lasting and real value, and toward a quick buck.

I don't use FB, and I will not invest in it. I see too little lasting value in it as a service or as an investment.

Re:Facebook (3, Funny)

Bing Tsher E (943915) | more than 2 years ago | (#40050827)

What the heck is 'immersive amount of good'? Have you been hanging around people who use 'friend' as a verb too much lately?

Re:Facebook (1)

garaged (579941) | more than 2 years ago | (#40050917)

As much as I like the utopia, facebook is by no means my first xommunication option, I was using gtalk, IRC and even skype way before facebook existed

I have been in contact with old "friends" thanks to facebook in the last two years, but I dont think I won a lot by that, I was able to make it just OK the last 15 years I didn't knew anything about all of them anyway

Re:Facebook (1)

dave420 (699308) | more than 2 years ago | (#40051473)

You are comparing real-time chat and voice communication with Facebook, which also offers those *and* a way to communicate with someone who's currently offline, share photos, videos, etc., and not to mention integration with pretty much every piece of hardware out there. You're being slightly disingenuous with your comparison.

Re:Facebook (-1)

oztiks (921504) | more than 2 years ago | (#40050939)

Oh leave the poor academic pottering around in his study thinking up these mind boggling scenarios. This is just yet another example of how too much school and not enough practical creates what I'd like to refer to as "academic world".

People in this world don't work more than 4 days a week and no more than 3 hours per day, they think they're better than everyone else, dictate at parties about their superior intellect and talk about how great they are because they had dinner with some famous politician 6 years ago.

Meanwhile if they actually got out in the real world they could never top the corporate ladder because they cannot grasp the concept that money has to come from somewhere, you do infact have to get up before 10am and that the idiotic business senarios they learned in uni really counts for shit. Granted the knowledge they pick up at uni when excersiced in the right circumstances is very useful many fail to understand that the practical application of this know how is not nearly as polished as what is in their text books.

Re:Facebook (5, Informative)

timeOday (582209) | more than 2 years ago | (#40051235)

Your ignorance boggles the mind:

Now teaching Entrepreneurship at three major Universities and the National Science Foundation Innovation Corps (I-Corps), Blank co-founded his first of eight startups after several years repairing fighter plane electronics in Thailand during the Vietnam War, followed by several years of defense electronics work for U.S. intelligence agencies in "undisclosed locations...."

Subsequent to dropping out of the University of Michigan, Steve Blank arrived in Silicon Valley in 1978, as boom times began. His early startups include two semiconductor companies, Zilog and MIPS Computers (now MIPS Technologies); Convergent Technologies; a consulting stint for Pixar; a supercomputer firm, Ardent Computer; peripheral supplier, SuperMac Technologies; a military intelligence systems supplier, ESL; Rocket Science Games.[3] Steve co-founded startup number eight, E.piphany, in his living room in 1996. After retiring from E.piphany the day before its IPO in September 1999, Blank served on two public boards (Macrovision and Immersion) and several private companies. He continues to selectively invest and advise Silicon Valley startups such as Votizen.

Would it kill you to do a quick check on wikipedia before expounding away?

What have you done, exactly? (1)

mapkinase (958129) | more than 2 years ago | (#40051101)

That should be a law analogous to the Godwin law, that says: if you say "What have you done, exactly?" you lose.

Re:Facebook (0)

Anonymous Coward | more than 2 years ago | (#40051207)

What have you done, exactly?

I read about a strawman in the first post!

IRL I would just punch you in the face and follow that up immediately with the reply "Punched a smartass in the face, what have you done, exactly?

Re:Facebook (3, Interesting)

Anonymous Coward | more than 2 years ago | (#40051253)

Don't give credit to Facebook for that which existed long before them.
There is no "innovation" behind Facebook, it is merely a social/business/etc contract between a vast amount of interested parties to create, maintain, and improve upon (in their own self interest) conduit for information storage and exchange between people.
Why do they do this? Simple, information and advertising.
Before Facebook there was Myspace, Geocities, ICQ/AOL Instant Messenger/etc. Email, Bulletin Board Systems and vast amount of websites serving a small community.
The main difference now is that Facebook is basically a combination of all of that and serves a more global audience.

"Immersive amount of good for the world"?

The question is, are they doing "good" for the world?
How can we trust a single company with so much personal information?
And now that the world of money and markets is involved, where is it going to take us?

I fear the power that this provides to immoral people and institutions.
I hope that those involved are neither unethical or naive in what is in their hands.

They are not the first, nor the last, and anyone thinking otherwise, is far from wise.

Re:Facebook (2, Insightful)

GameboyRMH (1153867) | more than 2 years ago | (#40051357)

In fact I think that Facebook has done immersive amount of good for the world.

By destroying humanity's concept of privacy, serving new forms of digital crack for the weak-willed to become addicted to, commercializing and commoditizing our relationships, and enabling a new golden age of corporate and government surveillance?

What have you done, exactly?

A lot more good than they have, that's for sure.

What Facebook IPO? (5, Funny)

Colin Smith (2679) | more than 2 years ago | (#40050515)

Morgan Stanley had to buy back all the stock to prevent it turning from Facebook into Faceplant. They'll have to sell it all over again.

Spurious valuation too (5, Insightful)

Kupfernigk (1190345) | more than 2 years ago | (#40050607)

One of the biggest pieces of statistical bullshit is "market cap" when most of a company's shares are nonvolatile. In this case a market only exists in a fraction of the company, and the share price is unchanged. To argue that if the 10% of a company that is liquid shares is traded at X, its total value is 10X, is completely wrong, no matter how popular it is with people whose job it is to hype shares.

The conditions under which Facebook would be really worth $100 billion are that somebody with $100 billion in cash was prepared to offer that much for it, and it was accepted. The IPO is, in effect, designed to prevent us finding out the true market value of the company. All we know is that people who almost all already had shares were prepared to exchange them for Facebook shares. Those people might have thought that their shares were about to tank, or that they might make short term profits. We don't know.

The historical analogy, although the exact terms of the deal were very different, is the Time Warner/AOL merger. The merger valued the entire group at around $350 billion. It turned out that the analysts and the investors were comprehensively wrong.

Don't get me wrong; in the Wall Street casino, people may get rich dealing in Facebook shares. But, as set up at the moment, the actual value of the company cannot be inferred from the share price, and all the predictions of a change in world culture are as reliable as the same predictions that were made about the AOL merger.

Re:Spurious valuation too (1)

Anonymous Coward | more than 2 years ago | (#40050715)

Market cap is useful to know when you're buying or selling stock. If you buy Facebook now, it's because you think the entire company is worth $100 billion - or you think a greater fool will come along who'll think it's worth even more than that.

If insiders decide they want to suddenly sell all their stock, the market cap will take a huge drop. On the other hand, if some extremely wealthy group were to decide they wanted to buy out the company and take it private, they'd have to pay a lot more than $100 billion - since all that buying would drive the price higher.

Re:Spurious valuation too (1)

demachina (71715) | more than 2 years ago | (#40050863)

No one can buy out Facebook by buying shared on the open market. Only a tiny fraction of the shares are on the market at this point.

Zuckerberg appears to be planning to hold a majority of the shares for the forseeable future. His board has absolutely no power as a result. The only way to buy out Facebook and take it private again would be for Zuckerberg to sell it. For all practical purposes Facebook is still a private company, it just has a fraction of its shares on the market.

Its probably one source of unease with investing in their shares. One person has total control over the company, he can do pretty much whatever he wants with it and no one can stop him.

Re:Spurious valuation too (5, Interesting)

ediron2 (246908) | more than 2 years ago | (#40050969)

I watched the last 8 mins of trade and **SAW** the huge buys (didn't know who was making them at the time). Something's sour here, indeed.

Having said that, either you're engaging in pureplay sophistry or your understanding of how stocks prices, market cap, and profit interact are pretty damn weak. Handwavy bullshit everywhere.

Market cap is useful. Personally, I only care once I see P/E, which is a Share Price vs. Profit ratio. Newbie rule is that high P/E's (above 10-20) are signs of inflated stocks. Right now, stuff I buy has values like 12, 17, 11, 48, and 7. Seeing n/a or - makes an investor's job harder, since it means 'we lost money last year'.

Applying just this rule, here's what we get: I was considering Red Hat (RHT - hate 'em, but they're 'executing' a profitable business better than Ubuntu or Suse), but dropped that idea because they've got a P/E of 71. Eew, Fsck That. Everyone else already is overpaying a 'but they'll grow' premium for RHT; so much so that RHT has to about triple in size to be worth my investing in a company I can't stand. OTOH, I overruled disdain and bought MSFT at a P/E of 11.

From there, what you can do to find an economic edge is limitless. Stock trading's possibilities for seeking an edge via statistics and predictive models is the proverbial "elephants all the way down".

Back to FB's value: Let me take your 2nd 'graf and say the truth vs. your spin: The conditions under which FB would really be worth $100B are that someone buys all shares available at the asking price associated with $100B, and/or if FB has profitability and business growth that fit such a share price. The first one's getting some serious propping up by institutional investors. That's spooky as fsck.

So, let's look at Facebook's P/E: 88.xx -- (whistles /) Huh. That's pretty damn steep. It really is analogous to AOL-TimeWarner's albatross pricing. Or a bunch of dot-coms. But it's also close to RHT at 71. And freakin' AT&T is selling at a P/E of 48.

Again, what's Facebook worth? Well, a good question is: Between RHT, T (AT&T) and FB (all overvalued according to P/E) : which one's going to do a better job of carving new income streams and profitabilities out of the next 3 years? And if FB deflates to 30 bucks a share, would you change your opinion if it was more profitable per share than T and RHT? If we shrink FB shares to make a P/E of 12, we get '

No conclusions offered -- I'm just watching the show. Full disclosure: I own some MSFT and T, but no FB or RHT. My brother bought some FB, though. When I started writing this, I would have said 'dumbass brother'. Given the ways I could monetize a billion users without even touching their personal information... hmm.

Re:What Facebook IPO? (0)

Anonymous Coward | more than 2 years ago | (#40050617)

step 1: establish a price in the public's mind, even if you have to buy it back again to do so.
step 2: feed it to the public at that price over the upcoming weeks or months
step 3: profit.

What? No missing step?! They did it! They really did it! The bastards figured it out!

Actual buyback (5, Informative)

Kupfernigk (1190345) | more than 2 years ago | (#40050649)

Sorry for double post. I just noticed the exact figures in the Telegraph:

Share price implausible [telegraph.co.uk] . The tl;dr is that of $16 billion, nearly $12 billion had to be bought by the usual suspect banks: Morgan Stanley, JP Morgan and Goldman Sachs. Among all the hype, that is actually a huge failure.

Re:Actual buyback (2)

TubeSteak (669689) | more than 2 years ago | (#40050977)

The tl;dr is that of $16 billion, nearly $12 billion had to be bought by the usual suspect banks: Morgan Stanley, JP Morgan and Goldman Sachs.

Sounds like Facebook made a mistake changing their expected IPO price from $28~$35 to $34~$38
The big banks stepped in to save face, which makes a mockery of all the talk about "intense demand from retail investors"

Re:Actual buyback (0)

Anonymous Coward | more than 2 years ago | (#40051479)

well it's not abt saving face but a contractual obligation... The banks promise to raise X which means they buy whatever is left in the event everything does not sell and in most cases they will sell it on very soon...

Oh noes (1)

Swampash (1131503) | more than 2 years ago | (#40050525)

Venture capitalists' ability to make billions of dollars for no effort is being threatened!!11

Re:Oh noes (2, Insightful)

partofme (2643183) | more than 2 years ago | (#40050597)

For no effort? Excuse me, but venture capital is integral part of current day innovation and companies. Without that capital there would be tons of products and ideas that would never see the day. It's also one of the reasons why U.S. has climbed on top of tech industry.

Also, it's not like they can loan money to every new comer. It takes time and work to evaluate potential ideas. There are risks involved. Yet, venture capital is one of the actual things that greatly increases innovation. But don't let that get into the way of your rant.

Re:Oh noes (1)

GameboyRMH (1153867) | more than 2 years ago | (#40051435)

If only people could fund such ideas themselves and weren't fully dependent on an ownership class to set up anything bigger than a lemonade stand...

Re:Oh noes (2)

CapOblivious2010 (1731402) | more than 2 years ago | (#40050857)

Venture capitalists' ability to make billions of dollars for no effort is being threatened!!11

Yes, those greedy bastards - providing money to startups who otherwise might never get off the ground. I hate people like that!

P.S. The hip term is "vulture capitalists" - if you're going to be snarky, at least do it right.

I would hedge and diversify (0)

Anonymous Coward | more than 2 years ago | (#40050533)

If I have a choice of investing in a blockbuster cancer drug that will pay me nothing for ten years, at best, whereas social media will go big in two years, what do you think I'm going to pick?"

Anyone who thinks they know what's going to be big in a couple of years is fooling themselves. And if they're predictions come to pass? They got lucky.

For every person who "knew" there are hundreds who also "knew" but failed. Of course that one person will pat himself on the back (along wth other business people) thinking, 'Yep. I knew all along. And here's my next prediction ...."

So what does a mere mortal do?

Hedge and diversify. That's what the best venture capitalists do. They put relatively little amounts in many ventures with the expectation of a single digit percentage actually hitting (gambling speak used intentionally).

And many serial entrepreneurs try and try and try again and hopefully, maybe hit it big. Richard Branson's career is a perfect example of that. For every 10 businesses he starts maybe 1 succeeds - and he's Richard Branson. Just think what the odds are for us.

Of course you have the one hit wonders who hit big the first time out and think they're geniuses ... they're the most annoying to listen to about "how they did it".

Risk/reward (0)

Anonymous Coward | more than 2 years ago | (#40050539)

"If I have a choice of investing in a blockbuster cancer drug that will pay me nothing for ten years, at best, whereas social media will go big in two years, what do you think I'm going to pick?"

Depends. The cancer drug is probably going to be enormously successful, making it lower risk. Whereas expecting your shared in Facebook to be worth the same amount within two years is almost certainly an extremely risky move: hell, they didn't even shift from their opening price on the first day. Your shares in Facebook could be worth half a Friendster in two years time!

what? (4, Interesting)

Anonymous Coward | more than 2 years ago | (#40050549)

I read the summary and am completely baffled by the train of thought.
The conclusion doesn't follow from the premises (which themselves are unsupported conjecture).
What is this insane troll logic?

Academia into FUD? (0)

Anonymous Coward | more than 2 years ago | (#40050551)

Confusion over media venture opportunities versus hardware & hardware control opportunities is a big miss.
The professor is ignoring the arenas outside social media.

So it has to be either/or? (1)

Anonymous Coward | more than 2 years ago | (#40050553)

One region can't do basic science/engineering along with social networking at the same time. That's just not how things work.

Or maybe a blogger needs a catchy headline so he can get noticed by the tech press.... gee that's never happened before.

Re:So it has to be either/or? (1)

plopez (54068) | more than 2 years ago | (#40050653)

resources are finite. To give to one you often have to take from the other.

Re:So it has to be either/or? (1)

thePowerOfGrayskull (905905) | more than 2 years ago | (#40051001)

resources are finite. To give to one you often have to take from the other.

Not when you have multiple supplies for those resources. So one investor chooses to invest in social media - that opens the door for another investor to stake a claim on the Next Big Technology Innovation. There is a diverse group of investors - and they invest in diverse things. While at the individual level there is opportunity cost, in aggregate there's no reason to think it would work out that way (and the professor interviewed in the article gives no reason or evidence to support that it might).

Re:So it has to be either/or? (1)

plopez (54068) | more than 2 years ago | (#40051185)

You don't get it. If one does not invest you still lose that investment. if potential investment = x + y and y goes elsewhere then actual investment = x. Unless y=0, which is silly, xx+y. Get it?

Or are you assuming the second investor has infinite resources?

Re:So it has to be either/or? (1)

plopez (54068) | more than 2 years ago | (#40051199)

looks like the inequality didn't go through. I should read "x is less than x+y".

Re:So it has to be either/or? (1)

Bing Tsher E (943915) | more than 2 years ago | (#40050915)

When the marketing slime move in (that's basically what 'social networking' is) it sucks all the oxygen up. They employ a lot of really talented people in selling shit instead of creating useful things.

I notice a lot of really 'intelligent' people have jumped into this thread to defend Facebook and 'social networking.' It's really sad that they've invested their lot into marketing culture. At the end of the day, being a fucking salesman is an empty existence.

Anytime someone proclaims the death of anything (4, Insightful)

cualexander (576700) | more than 2 years ago | (#40050557)

They are usually incorrect unless it's a living thing. The PC has been dead more times than I can count. So has the web. Move along, nothing to see here folks.

Re:Anytime someone proclaims the death of anything (0)

Anonymous Coward | more than 2 years ago | (#40050603)

unless it's a living thing

Except of course when you're Mark Twain

Who writes this shit? (1)

Anonymous Coward | more than 2 years ago | (#40050567)

Can I be the first to say, what utter bullshit, Farcebook is just another precious bubble, it wouldn't surprise me to see Farcebook die long LONG before Silicon Valley does...

Re:Who writes this shit? (5, Interesting)

broknstrngz (1616893) | more than 2 years ago | (#40050629)

I wish I could agree with, but I can't. You see, Facebook uses the single most readily available resource humanity has - mediocrity, an outlet of which it essentially is. The vast majority of people are simply statistics. Nobody knows or cares about them except maybe for their relatives and a handful of acquaintances. Every like they get, every stupid comment on a picture they post compensates for their lack of self esteem and fuels their exhibitionism. Facebook it's not something you grow out of, but rather something you grow old into, because the older you get, the better you realize you're not worth much.

Re:Who writes this shit? (2, Interesting)

Anonymous Coward | more than 2 years ago | (#40050803)

I don't agree, I still think it will die a very timely death and rightly so, I even think Twitter is a better service, they don't sell peoples info down a river like Farcebook either. Can't wait for the bubble to best, like the MySpace bubble did and the geocities one before that!

real value (2)

e**(i pi)-1 (462311) | more than 2 years ago | (#40050589)

It will not only be important to estimate what "value" really is but how robust it is. If you make a technological leap which needs a lot of research investment and which is difficult to copy, then this is value which is robust. Real resources like oil or level of education are such robust values. FB has generated a lot of robust value in building up all the infrastructure and code. But the value of FB includes also networks of people which is also value but is fragile because it is based also on reputation and coolness. If you sit on a real goldmine, you do not have to be cool. You will make money. If you sit on a virtual goldmine like FB, you have to remain popular to please investors and make money. This makes me side more with Steve Blank in the economist opening statement. However, facebook now also has the power to grab and crush smaller competitors and harvaest their talent. The fact that they get the best in the industry might mean that they will start entering more robust markets like entertaining, news etc. This makes me believe also Ben Horowitz. We will have to wait and see.

well... (2)

buddyglass (925859) | more than 2 years ago | (#40050599)

Facebook must be offering something to the world or it wouldn't have hundreds of millions of active users. It isn't a cure for cancer but it isn't nothing either. The crux of the Blank's argument seems to be that venture capitalists like to invest in things that will make them money and that social media is now more likely (or perceived to be more likely at least) to turn a profit than advanced science. I'm tempted to say that if your cancer research doesn't appear to have any more potential than the next cockamamie up-and-coming social media company then maybe your cancer research doesn't deserve investors.

Re:well... (4, Insightful)

plopez (54068) | more than 2 years ago | (#40050643)

The problem with research is that it is open ended. You don't know what will happen. You have to explore many blind alleys before you you get something to work. But if you didn't explore them you'd never learn anything.

If you know what the result will be, how long it will take, and how much it will cost it is not research.

Re:well... (0)

buddyglass (925859) | more than 2 years ago | (#40050839)

I think I can produce a cure for cancer by mixing together some household cleaners and injecting them directly into the veins of cancer patients. Will you invest in my company? I don't know whether it will work, but that's the point of research isn't it? I'm not sure how much it will cost either; I might need to try lots of different types of chemicals before I get the right combination. So I think I'll need a couple million dollars.

All ridiculousness aside, the point of the above is that research can look "more" or "less" promising. You never know with certainty that it will pan out, but certain propositions present as "more likely" or "less likely" to produce a working product. The "more likely" propositions are the ones that attract investors. You really don't want capital being squandered on research ventures (such as the one I described above) that are so unlikely to produce results that they're basically a waste of time. That's misuse of capital.

Re:well... (0)

Anonymous Coward | more than 2 years ago | (#40050899)

Penicillin

WoW syndrome (0)

Anonymous Coward | more than 2 years ago | (#40050621)

Most likely, seeing Facebook's success the developers will try to copy Facebook's model, rather than put it in actual work to figure out how to do things better. The end result will be an oversaturated market of Facebook-likes and a graveyard of models (both Facebook-like and non-) that couldn't compete because they didn't start at Facebook's level right now, even if they have most of the features and promise to be better in the future. Some models will survive but ultimately will only service niche markets. Others will be dropped because the developers aren't seeing their costs being recouped in two years, and others will die because the costs of development were too much for them.

Eventually, years later when people are kind of using Facebook, but are kind of bored with it too, someone will finally come out with a Facebook-killer model that's almost exactly like Facebook, but has better features and appeals to a geeky base (like maybe /.book or Face/.?). That model will become a success in its own right, but not as much of a success as they were hoping, and it still won't take much away from Facebook's out of control success.

Unfortunately, this prediction can't be completed at this time as WoW is still king of the MMO's. It's probably a good idea to continue betting on Facebook for a good long while.

How did the economy get so disfunctional? (5, Insightful)

plopez (54068) | more than 2 years ago | (#40050625)

From TFWU: "If I have a choice of investing in a blockbuster cancer drug that will pay me nothing for ten years, at best, whereas social media will go big in two years, what do you think I'm going to pick?"

How did the economy get so skewed that something that is a real product which can serve a social good is ignored for sheer speculation?

And don't give me: "Rapid communications makes the economy more efficient" The economy was OK, even better, before Facebook. The economy even was OK before the internet, it just took a little longer to get things done( which may not be a bad thing). Also, efficient for who? Efficiency depends on where you are standing and how you measure it, e.g. immediate expenditure vs long term expenditure and immediate gain versus long term gain.

Basically people are speculating on a toy.

Re:How did the economy get so disfunctional? (1)

rmstar (114746) | more than 2 years ago | (#40050677)

From TFWU: "If I have a choice of investing in a blockbuster cancer drug that will pay me nothing for ten years, at best, whereas social media will go big in two years, what do you think I'm going to pick?"

How did the economy get so skewed that something that is a real product which can serve a social good is ignored for sheer speculation?

What actually happened is that the writer of that article outed himself as being a prick who'd never do anything, no matter how important, if there's no money in it for him (one also wonders about all those things he'd do for enough money). He's so full of it, he cannot even conceive of other people doing things for other reasons than money exclusively.

Of course people will invest in blockbuster cancer drugs (well, we first need a blockbuster cancer drug).

Re:How did the economy get so disfunctional? (1)

Anonymous Coward | more than 2 years ago | (#40050719)

I don't understand some people. If I had even a 50/50 chance of producing a blockbuster cancer drug I would put everything I have into it.

I couldn't give a damn if I die penny less. However if I had the chance to change the world for everybody and I didn't take it I would hate myself for the rest of my existence. (I don't care about changing the world in terms of getting political power or making money (Beyond a reasonably comfortable life).

Most people almost certainly me included will probably add very little of value to the world during their lifetimes.

If you are in the position to make a difference but yet choose not to make it you are the very worst type of person imho.

Re:How did the economy get so disfunctional? (2, Interesting)

Anonymous Coward | more than 2 years ago | (#40050771)

You're forgetting that a good many people in finance, and I've known a few, are basically: greedy, self-righteous, "I got mine, fark, you", gimme more, entitled a-holes. The ones that aren't, well, they don't last too long before finding something else. My friend quit a big firm rather than be what they wanted him to be.

Re:How did the economy get so disfunctional? (1)

Mindcontrolled (1388007) | more than 2 years ago | (#40050817)

It's the free market - fucking over progress for this quarter's profit since its conception. Humans work this way. We are idiots without being constrained.

Re:How did the economy get so disfunctional? (0)

Anonymous Coward | more than 2 years ago | (#40050853)

This isn't the economy we're talking about - this is indeed speculation, the sort of speculation that so obviously overvalued dotcom companies in the late 90s which is exactly what the speculators want; the ability to sell hyper-inflated stocks to gullible speculators who will suffer the loses when the group-think finally wakes up. A little research shows the speculators hands at work,Goldman Sachs and General Atlantic making some very "shrewd investments" back in 2011 and now more than doubling that over the course of a year.

This is just another bubble being created (see the above and facebooks recent acquisitions - all just moves to fuel the bubble); expect to see social media related stocks go through the roof for 18 months or so and then be relegated to junk status.
 

Its just an evolution and not a deprecation. (0)

Anonymous Coward | more than 2 years ago | (#40050689)

Evolution of technology splices into various directions.
It may have seemed silly but the first examples of the mobile phones went in all different directions .. simply because as a mechanism they didnt know which features would be most important. No-one devising the SMS system could have even contemplated its usage in something like Twitter.
The smart money will move towards the direction it most likely sees the future interests being. Even with the internet as a whole .. we've gone from heaps of one-off pages in cyberspace .. to cyberhubs directed by more relevant search algorithms.

The future is unpredictable. Evolution of computer systems is reaching a point where the computer itself remains a minor element and the important part of the mechanism remains what social value it can generate. Games .. social interactivity tools.

Social mechanisms are a reflection of how technology will be used. Think of tamagotchi, they were a first level social interaction device. Its not only going to get more interactive .. its going to get a lot more social.

Netscape redux (4, Insightful)

optimism (2183618) | more than 2 years ago | (#40050757)

If I have a choice of investing in a blockbuster cancer drug that will pay me nothing for ten years, at best, whereas social media will go big in two years, what do you think I'm going to pick?

Remember the spectacularly huge Netscape IPO in 1995. Then this quote would've been:

If I have a choice of investing in a blockbuster cancer drug that will pay me nothing for ten years, at best, whereas web browsers will go big in two years, what do you think I'm going to pick?

Observe spectacular failure of VCs who failed to think for themselves, and just followed the herd long after the peak had passed.

Same story, different year. The smart money is still investing in biotech, which actually has a real impact on our lives. Nothing to see here...move along...

Re:Netscape redux (2, Interesting)

Anonymous Coward | more than 2 years ago | (#40051387)

The smart money is still investing in biotech, which actually has a real impact on our lives. Nothing to see here...move along...

I don't know why you say this. The life sciences venture market is well known to be moribund (consider even just this one article [lifescivc.com] ) with overall returns negative and venture funds dying. Your specific case is worse: the med device sector is where any action, such as it is in life sciences, is happening. Pharma and biotech are really in trouble. In fact the whole biotech subsector overall may historically never have made a profit, with the gains of a few offset buy the larger losses of the rest.

Sadly the US VCs seem also to be abandoning the energy sector as well. There's more action outside the US.

(ref: I say this all as someone who has founded venture backed companies in software, hardware, pharma and energy. I rather doubt that YMMV)

You know... (0)

Anonymous Coward | more than 2 years ago | (#40050759)

Everything that can be invented has been invented. There's no possible way that something will come along that will usurp some tech with something better that will make someone billions

Why is this a surprise? (0)

Anonymous Coward | more than 2 years ago | (#40050777)

This is not a matter of SV being or not being an interesting place to invest VC money. This is about people not buying anymore vaporware.

FB is an empty shell, with no technology behind, making a ridiculous revenue compared to their stock value.

A PE around 100? Are you kidding me? Seriously, this would have been barely bought in 1999, but in 2012? Come on.

Look at the PE of healthy companies. It is less than 1/5th of that. This is were you want to look at, investing your money.

The comparison with a blockbuster cancer treatment drug is just silly. You are mentioning something which would be the Millennium Invention, of course that would draw investor (and I mean, anyone of them) money.

reminds me of demise of ATV (1)

k6mfw (1182893) | more than 2 years ago | (#40050789)

I'm noticing more hamsters doing their video stuff over iphones and neglecting amateur television (ATV). Yes, iPhone is easy and ATV takes work but there is loss of individuals doing hands-on experimentation.

Specious logic (or lack a complete lack of logic) (3, Insightful)

Anonymous Coward | more than 2 years ago | (#40050859)

This guy sounds like another tech hipster to me.

No one will invest in a company making a super cancer vaccine? One would only make $100M from it? The author clearly knows nothing about the biotech field. People *are* investing in biotechs right now. The idea that people won't invest in other areas because one company made money is simply not in line with real world behavior going on right now.

In terms of Facebook, we'll see how that whole thing pans out for the people who are making Mr Zuckerberg rich right now. I suspect that the Facebook IPO will fall into the category of "moving money from the unwise to the unscrupulous" (much like most of the earlier dotcom IPOs). The Facebook insiders are making money. The underwriters are making money. I don't think the people buying Facebook are going to make money.

Since when is /. a dating site? (0)

eyenot (102141) | more than 2 years ago | (#40050869)

Let's play a game. Right now, you have a choice between two things. You get to choose which one, but only one. You pick one, and you lose your chance to have the other.

So, these two things are,

(a) a cure for "cancer" (all of them? your favorite one? I dunno, just make something up.)

(b) hmm... ten million dollars, all yours. Let's call it "out the door", as in, "after taxes" or "protected in special accounts", you know, real-actual ten million dollars for you to spend.

Now I know, it makes your ancestors proud of you as they watch from your version of Heaven while you give the materialist world the finger and settle on the fast-track to eliminate population control.

And I know it makes drunk girls feel emotionally drawn to you when you say that you'd die an epileptic moron in the streets, wearing nothing but washrags and puke, with a huge grey beard, penniless (not even secretly hoarding a miserly stash of monies in a big house protected by hundreds of feral cats), if it meant that no more little, gurgling babies or big-eyed kittens,l or sweet old grandmothers with birds' nests in their hair, or Mr. Working Joe (that sledgehammer-swinging madman who just wans to bring home the chitterlings) would die of cancer any more.

But you're not fooling anybody who isn't a moron. Unless you're already situated in a comfortable and secure lifestyle with a guarantee of moderate wealth (middle to upper-middle class) for the rest of your life barring the calamitous malfunction of civilized society, you're going to say those things over and over until you get up to the actual choice, and you're going to actually choose the ten million dollars.

You're going to shake your head and say "you know, though, at the end of the day, you just hafta do what you hafta do, you know? There'll be other people to carry on the strugglez. Maybe I'll even donate some of this, my money."

The thing is, you don't have to be dishonest. You do realize, don't you, that it's a win-win situation no matter what you pick. Either way you're going to impress somebody. "Wow that guy would save the world if he was Superman!" or "Wow that guy is hard-up for ten million dollars!"

I just look forward to a world where nobody buys that stupid, driveling, bleeding-heart bullshit any more. Any inbred hillbilly can say he wants world peace, but not even his fellow inbred hillbilly brethren believe him for a second.

Why you would parade that shit in front of /. is beyond me.

Re:Since when is /. a dating site? (1)

Dusty101 (765661) | more than 2 years ago | (#40051051)

Wow, & I thought that I was cynical.

I take your point that a lot of people would take the money & run, but I would respectfully argue that that's by no means everyone.

Tim Berners-Lee and Linus Torvalds are two obvious Slashdot-friendly examples of people who chose not to.

As to the specific example cited, I think you'd at least find at least a few people who've lost loved ones to cancer who'd also choose the "Heal the World" option...

there's more to it... (4, Interesting)

Ralph Spoilsport (673134) | more than 2 years ago | (#40050889)

combine the effects the article talks about with "Good Enough Computing" (GEC). GEC capped out printing technology when the dots were too small for people to see. We don't bother with 50,000 dpi printers because anything higher than 600 - 1000 is a complete waste of effort. The printing engines saturate the market, and the rate of profit falls in competition - the printers become expendable and the profit is then made on Ink. Not hardware. Ink. (I use iPhone and iPad generically in the following - I don't really own one or the other...)
It used to be that really high end machines were needed to do audio synthesis. I now have a mellotron on my iPhone and iPad. The iPad, for audio editing, is GEC.
It used to take a super high end computer and a fleet of striped SCSI drives to edit the simplest SD Video. Now, you can edit insanely high quality HD video on a fucking laptop. It is only a matter of time before I can edit video from a Red camera on an iPad. At that point, the iPad is GEC.
Fashioning devices on a 3D printer is presently the domain of a laptop. It's just a matter of time before it is on an iPad or an iPhone.
Again, the iPhone and iPad are GEC. The article talks about investments in things non-Web2.0, and it is largely correct. However, even the digital substrate of Web2.0 is under constraint of GEC. If you live 80 year from cradle to grave, that's about 29,220 days. If you were born with the ability to read from birth and read one book a day on a kindle or iPad and each book was about 5 megs on average - (picture books eat a lot of space compared to text) then you're only talking 146GB of storage. That's GEC...
If you listen to music 16 hours a day from cradle to grave, that's only 28 TB @ 256kbps compression. And if you listen to every song twice, that's 14 TB. And if you listen to every song 4 times, that's only 7 TB. And if you listen to every song 8 times, that's 3.5 TB. And if you listen to each song 16 times, that's only 1.75 TB - a 2 TB drive can be had for less than $100. That's GEC....
And video? Do the same math. If you watch a movie (or basically 2 hours of video) a day every day from cradle to grave, and it's 2GB per hour, that's 4GB per day, or about 117 TB. So, what will store a LIFETIME of entertainment? about 120 TB of storage. If the storage trends of the past 20 years hold, I would suggest that a 120 TB drive will be available for less than $250 (in 2012 dollars) in less than 10 years, possibly less than 5, and probably no more than 15 years.That's GEC in storage.

Soooo, what happens when we put all that together? The internet will cease to be a space for file trading thanks to the concerted actions of governments and IP capital. File trading will go to Sneakernet, and the sneakernet will consist of PirateBoxes in cafes and friends attaching their Thunderbolt drives at home, and moving stupendous amounts of data between machines and watching them on flat screen TV or on their audio kit which will run off the wireless video card in their iPhone or iPad. GEC. Basically, innovation at that point, as in BASIC innovation will cease. Content, as in something stored, simply evapourates onto a "life drive" of media files. Encumbered with patents and a ceiling of perception created by the human sensorium, GEC will reign until the industrial system turns the planet into a smoking dead husk. The biosphere collapses, cities flood, people starve, but damn - did you see American Idol last night? Fuck - that chick sings like an angel...

The age of stupid is over. FTFY (2)

WOOFYGOOFY (1334993) | more than 2 years ago | (#40050913)

Impartial, disinterested, university funded R and D - which is what everything from music synths to Google started out as:

http://facts.stanford.edu/research.html [stanford.edu]

-is a natural force for good in developed countries and it's never going to be "over" unless that developed country is "over" .

The leveraging for "Yearbook On The Web !!! " -type opportunities to make money off people naive enough to surrender their most intimate details to a group of total strangers whose sole aim is to monetize same, well, that may be over.

If you compare FB with Google, the differences tell the real story. FB could be replaced in functionality by any number of me-too--products because its peculiar success is not borne of any kind of technological breakthrough but only the fact that it, and not some other equally ordinary-technology product, was the victor in a product space with network effects strong enough to create a natural "winner take all" market.

Meanwhile, Bing is still trying to be 1/10th as good as Google is at doing what it does, despite billions of dollars at the M$'s disposal and some of the best minds in the world working for them.

When the story of the internet is told, it will go like this- DARPA, FTP, email, the web, HTML, Mosaic then Google. Those are the big events. Those are the technological breakthroughs that that literally changed the world. FB will be a footnote.

So to the extent that FB's value is an exercise in bubble economics and phantom value, maybe this is the end of SV's love affair with this kind of thing. That proposition is dubitable since people with too much money generally earned it by doing wholly useless things like co-locating their servers closer to NYSE's servers to give them a multi-billion dollar edge when doing flash trading -

http://theweek.com/article/index/204396/wall-streets-secret-advantage-high-speed-trading [theweek.com]

and having custom FPGA made for them in order to grind out nanosecond advantages over their competitors in high frequency trading -

http://www.impulseaccelerated.com/app_financial.htm [impulseaccelerated.com]

so it's unlikely these same people are going to have the fine antenna necessary to distinguish innovations which create revenue opportunities by delivering real, ongoing value from those that have "Hindenberg " painted in man-sized letters on the side: http://www.youtube.com/watch?v=F54rqDh2mWA [youtube.com]

Long live the free market and real innovation delivering real value to the lives of real people . Here's to you.

Instant messaging protocol (2)

Kupfernigk (1190345) | more than 2 years ago | (#40051147)

Looking at your list, Facebook has a huge deployment of an instant messaging system using XMPP. If your list went FTP,SMTP,HTTP...XMPP rather than mixing protocols up with companies it might make more sense.

The issue for Facebook, however, is that none of the other protocols made anybody silly rich, and XMPP is a freely available and very easy to deploy server based system. I do wonder how many "investors" realise just how much of Facebook's technology is replicable at very low cost.

Re: The age of stupid is over. FTFY (0)

Anonymous Coward | more than 2 years ago | (#40051335)

Let me fix this for you...

When the story of the internet is told, it will go like this- DARPA, FTP, IRC, email, the web, HTML, Mosaic, Google, Bit Torrent, copyright enforcement, dark nets.

Re: The age of stupid is over. FTFY (1)

Opportunist (166417) | more than 2 years ago | (#40051417)

Let me fix this for you...

When the story of the internet is told, it will go like this- DARPA, FTP, IRC, email, the web, HTML, Mosaic, Google, Bit Torrent, copyright enforcement, dark nets.

You mean DARPA, FTP, IRC, email, the web, HTML, Mosaic, Google, BitTorrent, copyright enforcement, [classified, not suitable for your consumption]

Social Media is a safer, easier road (2)

CuteSteveJobs (1343851) | more than 2 years ago | (#40050955)

I read the summary and am completely baffled by the train of thought. The conclusion doesn't follow from the premises (which themselves are unsupported conjecture). What is this insane troll logic?

It's not insane logic at all. If you're an investor and you have $xK to invest what would you invest in? Hard high-tech like cancer research (lots of work, time and money, higher risk, low chance of success) or social media (much less work/time/money and a higher chance of success). Zuckenberg didn't get rich curing cancer, he did it inventing a social media website. This is why investors and entrepreneurs flock to social media projects and ignore the hard stuff.

Both (0)

Anonymous Coward | more than 2 years ago | (#40051073)

"If I have a choice of investing in a blockbuster cancer drug that will pay me nothing for ten years, at best, whereas social media will go big in two years, what do you think I'm going to pick?" concludes Blank.

Blockbuster drugs being developed get significant investment by Silicon Valley? That's news to me, since I thought they were either developed by a number of large pharmaceutical companies, or by startups by a handful of students who pray that their company gets bought out by large pharmaceutical companies or dies from lack of funds. In the later case, the investors who propped up the startup will either get their windfall when the pharmaceutical company buys them out in a few years (which will be some number of years much less than ten).

Also, who claimed that medical advances and programs for the masses are mutually exclusive? I don't think that's true [slashdot.org] .

So what? (1)

slashrio (2584709) | more than 2 years ago | (#40051077)

If everybody expected huge returns on facebook stocks then the price of those stocks would go sky high and investors would rather consider some tech-stocks with big returns, maybe, in 10 years. Problem solved, the market did all the work.

This is not good /. entry (1)

mapkinase (958129) | more than 2 years ago | (#40051167)

and phrases like "golden age", "everything" in the text don't help either. When people start talking like that, I am always tempted to remind them how incredibly redundant we are on all levels. How absurdly whimsical our demands are that drive the market. That is that if you consider only one big scale that there is: which is survival of human race.

Nothing is over until is over. Facebook grew up to the ability to sell shares. That's all that happened, nothing more. The fact that is the "biggest" in whatever sense they mean it, does not mean anything. We also had the most expensive ever artwork sold every year or five years.

Why go after VC? (2)

caffemacchiavelli (2583717) | more than 2 years ago | (#40051227)

If the VCs you're talking to are all switching to social media now, you're probably talking to the wrong guys anyway. Sure, there might be a few who understand the risks and opportunities, but blindly following trends smells like ignorance, and ignorant investors are the worst you can get. If you have to follow the Silicon Valley model, concentrate on the folks who specialize on deals within your particular industry.

Also, VC doesn't appear to be the smartest choice here anyway. Apply for grants, talk to people who understand the problem your startup is going to solve, start a Kickstarter, go to banks (rarely works, but when it does, it does) and if that's not enough, try VC. I'm not saying VC is always a bad choice, but it's real usefulness is in rapid business development, not starting a brand new, R&D-intensive enterprise, which is kind of implied by will pay me nothing for ten years.

Where's the SV for economics? (1)

caffemacchiavelli (2583717) | more than 2 years ago | (#40051367)

If I have a choice of investing in a blockbuster cancer drug that will pay me nothing for ten years, at best, whereas social media will go big in two years, what do you think I'm going to pick?

If you can't get the thing properly patented, you're not going to fund it with social media in or out. The trouble isn't social media, it's that monetization is a really limited incentive within an industrial society where lots of great ideas fall into the category of public goods or reduction of externalities that just aren't incentivized properly and hence never get realized.
Say you come up with a great project to revolutionize education, health, energy or transportation - it might be to disruptive for governments to fund it (assuming there's a budget), but if there's no way to exclude non-buyers from benefiting, you're not going to get private funding either.

If there's revolution of thought within this century, I'm predicting it'll be in economics. I'm fine with a market economy for consumer products, but it shouldn't be the only game in town.

Small correction (1)

caffemacchiavelli (2583717) | more than 2 years ago | (#40051389)

"Consumer products" is a bad choice of words, I'm using it as !=public goods, not !=B2B/B2G

This trend has just begun? (1)

Deep Esophagus (686515) | more than 2 years ago | (#40051371)

we are moving all the social needs that we used to do face-to-face onto the computer and this trend has just begun.

Did I just imagine the social groups that built up around dialup BBSes (which is how I met my wife), Usenet, even MUDs and web forums before Facebook ever came along? People were griping that computers were eroding the value of face-to-face communication almost from the first email that was sent out.

I'll certainly agree that Facebook has accelerated that trend, but it's a trend that began 30 years ago.

Investors taking risks? (1)

Opportunist (166417) | more than 2 years ago | (#40051397)

Hello, the 1990s called, they wanted their investment strategy back. Get with the times, man! Investing today means identifying a company that's climbing, showering the creator in money and hyping his product, pushing him to an IPO, hype it some more and milk it, then dump it, sell off the husk and move on to the next.

The idea of "high risk" vanished from VC's considerations a while ago. By now, there's so many upstarts vying for your money that you can easily wait and see which ones will thrive and which ones will wither that you can sit back and relax until you KNOW what will soar before you pump your money in. The fun part is that they can't even say no, because they're usually not the only one in the market and if they say no, number 2 will say yes and with their money become number 1 over night and you will disappear into oblivion.

This is high reward with essentially no risk for VCs. And you want to tell me they will stop doing that? For real? VCs may be much, but stupid they're not.

Load More Comments
Slashdot Login

Need an Account?

Forgot your password?