Is this the second Dot.com bubble?

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Is this the second Dot.com bubble?

Postby headhonchoII » 10 Apr 2012, 11:54

Facebook just paid 1 BILLION USD for Instagram- a company that was founded in Oct 2010, that is a simple photo sharing app (which isn't even a new trick except for adding filters) and only just last week added an Android app.

Sorry...but WTF?
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Re: Is this the second Dot.com bubble?

Postby StuartCa » 10 Apr 2012, 11:57

I haven't read the articles about it. But I wouldn't be surprised if Instagram have some technology patents that Apple want to exploit. Still makes you wonder, if for that price it wouldn't be cheaper to throw bodies at the problem and do it in house.
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Re: Is this the second Dot.com bubble?

Postby GuyInTaiwan » 10 Apr 2012, 12:09

You think it's just now that there's a problem?

I still don't understand why everyone is so moist over Facebook or 90% of other online companies. What the fuck do they actually do and how the fuck do they actually make anyone money? The whole bloody thing is one massive speculation.
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Re: Is this the second Dot.com bubble?

Postby Adam_CLO » 10 Apr 2012, 12:18

Draw Something is an app with 10 million users. They got bought out last week for $200 million.
Instagram has 30 million users - just on iOS devices. They released their app on Android last week and got 1 million new users on the first day so there is still a lot of growth potential for them. They are now worth $1 billion.
Facebook has 800 million users and is expected to be worth around $100 billion when they IPO soon.

If you can create a product with millions of users, you can expect to do very well.
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Re: Is this the second Dot.com bubble?

Postby ChewDawg » 10 Apr 2012, 12:22

Definitely not. The VC money is not even comparable to what it was in the late 90s before the first .com crash. It is much more cautious/harder to get seed money now. There will still be acquisitions like this with big players seeing small ones they like and want to buy, but there isn't the same amounts of money going into VC now or the reckless spending of money.
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Re: Is this the second Dot.com bubble?

Postby headhonchoII » 10 Apr 2012, 12:31

That's what I read aswell. Still spending 1 billion USD like that points to a tremendous waste of money. Avoid buying their shares. All these companies are heading for a fall...Facebook, Zynga, Groupon. To my mind Google and Microsoft are still going to be a good bet long-term.
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Re: Is this the second Dot.com bubble?

Postby headhonchoII » 10 Apr 2012, 12:35

Adam_CLO wrote:Draw Something is an app with 10 million users. They got bought out last week for $200 million.
Instagram has 30 million users - just on iOS devices. They released their app on Android last week and got 1 million new users on the first day so there is still a lot of growth potential for them. They are now worth $1 billion.
Facebook has 800 million users and is expected to be worth around $100 billion when they IPO soon.

If you can create a product with millions of users, you can expect to do very well.


I agree that the amount of users is impressive, and it's definitely worth $$$. It is a good way to get rich quick if you have the right idea and implementation. But not 1 billion $$$. Because in the end you have to monetise a product. You've also got to see what the threshold barrier is. For a photo sharing app the threshold is exceedingly low. It is obviously just to ramp up their hits and userbase just prior to IPO. Some bean counter did a calculation on how much the share price would go up extra but they ignore that within a year instagram will probably be renamed onceagram.

There is a fundamental problem with Facebook's valuation, which is that they will soon max out on growth. Uh oh. I guess there is some type of curve that the user base follows, many people don't use Facebook very often after a while. This will become apparent when new user registration slows dramatically.
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Re: Is this the second Dot.com bubble?

Postby GuyInTaiwan » 10 Apr 2012, 13:45

Adam_CLO wrote:Draw Something is an app with 10 million users. They got bought out last week for $200 million.
Instagram has 30 million users - just on iOS devices. They released their app on Android last week and got 1 million new users on the first day so there is still a lot of growth potential for them. They are now worth $1 billion.
Facebook has 800 million users and is expected to be worth around $100 billion when they IPO soon.

If you can create a product with millions of users, you can expect to do very well.


I have a Facebook account (though I don't use it very much). I'm not quite sure how Mark What's-His-Face? is going to make any money from me. Having 800 million users doesn't mean diddly if most of them are freeloaders like me. Maybe I'm wrong on this and whilst I am an infamous tight-arse, everyone else is buying golden sheep (or whatever they do on Farmville) with their credit cards.
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Re: Is this the second Dot.com bubble?

Postby tomthorne » 10 Apr 2012, 13:48

GuyInTaiwan wrote:
I have a Facebook account (though I don't use it very much). I'm not quite sure how Mark What's-His-Face? is going to make any money from me. Having 800 million users doesn't mean diddly if most of them are freeloaders like me. Maybe I'm wrong on this and whilst I am an infamous tight-arse, everyone else is buying golden sheep (or whatever they do on Farmville) with their credit cards.


I would guess that they sell data. Data mining into 800 million must provide some very valuable information.
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Re: Is this the second Dot.com bubble?

Postby cfimages » 10 Apr 2012, 13:51

tomthorne wrote:
GuyInTaiwan wrote:
I have a Facebook account (though I don't use it very much). I'm not quite sure how Mark What's-His-Face? is going to make any money from me. Having 800 million users doesn't mean diddly if most of them are freeloaders like me. Maybe I'm wrong on this and whilst I am an infamous tight-arse, everyone else is buying golden sheep (or whatever they do on Farmville) with their credit cards.


I would guess that they sell data. Data mining into 800 million must provide some very valuable information.


Companies and individuals pay to serve ads at the side of the screen. That's how they (FB) make their money.
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