Friday, May 2, 2008

The problem with Facebook

This chart says it all. A new study discovers that the vast majority of Facebook apps are an utter waste of time. But oh yeah — Facebook is worth $9 billion, or $15 billion. And Slide is worth half a billion because it makes that super important FunWall application. Um, right. Kids, let’s face it. Facebook is Webkinz for adults. Facebook is a Ponzi scheme. A handful of VCs have created the illusion of an actual market by funding apps companies and then doing deals with each other — passing cash back and forth among to make it look as if money is being made.

What really freaks me out is that when you mention this to the VCs, they say, “So what? What’s wrong with that?” I used to think they were being coy. But I’ve come to believe that they actually don’t know what’s wrong with that. Worse yet, they all give me this sad look, like I’m some crazy old uncle at Thanksgiving dinner who just doesn’t “get” the whole Web 2.0 thing.

Sigh. Maybe they’re right. I guess I’m getting old. But I really miss the days when people in the Valley made actual products.

Tuesday, April 29, 2008

Alley Insider creates Bubble 2.0 keepsake

Silicon Alley Insider has published “an index of the world’s most valuable digital startups.” See here. Basically it’s a list of pie-in-the-sky valuations for companies like Facebook and LinkedIn.

To make it fresh and dynamic, they somehow yoked these made-up numbers to the NASDAQ so their made-up numbers change into new made-up numbers all day long. That way all these little freaks working for worthless companies will click on that list all day long, like lab rats trying to get another hit of cocaine, thereby generating loads of stupid traffic for Alley Insider. And trust me, that’s the real point of this list. It’s a cheap ploy for ginning up traffic.

Money quote about the dynamic bullshit valuation changes: “This will tell you how much your stock options are worth right now,” they say.

Folks, if you’re working at any of these “digital startups” you really don’t need Henry Blodget’s Silicon Alley Insider index to tell you what your options are worth right now. I’ll tell you the answer right now. They’re worth nothing. That’s for most of you anyway. Because one day very soon this whole crazy mess is going to blow up and you’ll be looking for work at Starbucks again, just like you were after the last bubble burst.

My advice? Print out this crazy list and pin it to your wall and wait for the crash. Then you’ll have a wonderful keepsake by which to remember Bubble 2.0.

Because if there’s any sure sign that the end is near, it’s the fact that Henry Blodget is publishing an index with ridiculously high valuations for companies that don’t actually make products and don’t have revenues. What drives this ridiculous man? Why the obsessive need to hype and tout? Is he not satisfied to have played a starring role in the greatest financial mess of our lifetime? Now he needs to do it again? It’s like a real-life version of Groundhog Day. Or one of those rings of hell in Dante’s Inferno where people are condemned to keep performing the same sinful acts over and over again into eternity.

I’m told Henry Blodget is driven by a desire to redeem himself. I know what you’re wondering: If that’s the case why doesn’t he go do some kind of charitable work in the Third World instead of touting worthless stocks? (For the answer to that question, see the story of the scorpion and the frog.)