Thursday, 17 September 2009

Remember the dot com mania ....

Sure public memory is short; but that short ? Especially when it comes to your hard(ly) earned money ?

Twitter is raising funding at a valuation of $ 1bn. That’s right; ONE BILLION. How do you ascribe that sort of valuation to a company that hasn’t made a cent and that has no idea how to make a cent ?

This is exactly what happened during the dot com craze. Get the eyeballs. To hell with revenues, let alone profits. Mad valuations. And when an occasional guy like Warren Buffet said the emperor is wearing no clothes, he was written off as an old geezer who “doesn’t get it “.

Now has all this been forgotten ? One billion for Twitter. Did somebody say we are in the midst of a financial crisis ?

I am gobsmacked. Forget learning any economics or going to business school. Just stand on a street corner and punt like crazy. I am an old geezer and I “don’t get it”. For, you see, I don't tweet.

15 comments:

thethoughtfultrain said...

Me gob smacked too! I'm a twit who doesn't tweet either! Poor play of words but couldn't resist! :D

athivas said...

My God!!$1bn? Twitter? Cannot think of other social networking sites, think alone the monster Google!!

mahesh said...

Wonder if they had come one year ago before Lehman would they have added another zero...

Sandhya Sriram said...

there is projection that end 2013 twitter would touch 1.54 billion in revenue and 111 million $ in earnings. even if that arbid estimation is correct, it still dosent really justify the current valuation.

But when President Obama can use twitter for his election campaigns, no wonder, it can challenge the market with the perceived premium.

Anonymous said...

Ridiculous! But hey, you can have a piece of the magic too if you want...

http://dealbook.blogs.nytimes.com/2009/09/17/buying-shares-in-private-start-ups/

Ramesh said...

@thoughtful train :) A poet always shows !

@Savitha - Google's huge valuation, I can understand. They make a load of money. But Twitter ??

@Mahesh - For sure.

@Sandhya - From where. They do not have a revenue model as yet.

@Anon - Interesting link. No thank you; I want no part of this madness !

A journey called Life said...

i wish more old geezers graced this world

Srivats said...

Ramesh I dont tweet and I dont quite understand the valution of 1 billion :P

Aashish said...

We all have come across strange, weird and useless things on the Internet, but Twitter has got to be the stupidest. What in the Lord's name is "micro-blogging" anyway? Imagine Ramesh's musings / rants 160 characters-wide, sent via his precious dual SIM China mobile!

Ramesh said...

@AJCL - Boo Hoo; I'm not an old geezer !! Just joking OK ...

@Sri - you don't Tweet ?? Are you allowed into the ranks of the twenty somethings if you don't ??

@Aashish - Hee Hee; welcome back to commenting ; hugely missed your wise and humorous takes.

Syed Aleem said...

In this world if you don't attempt you are insane. Look at few companies today who crafted new stragegy some 20 years before today they have become giants. Yes economics did not work at that time as well.

One more recent example is facebook which started very late.
Entire industry spoke against them when they continued to incur losses. Today they have turnaround their business & now all those who spoke against are not available on the net.

Very few companies which found solace in their old business & culture are licking their wounds having not even attempted when everyone tried & succeeded in their business.

I remember one phrase for these twitter- Think big, start small & move fast.

We don't know what twitter has already thought of & only time will tell us their story.

Ramesh said...

@Aleem - Nice point. Agree that you have to do something different, but I still don't agree with the crazy valuations. Still, I'm an over cautious investor and you're a risk taker - so maybe you'll have the last laugh !! Don't think that will happen in Twitters case though

Aashish said...

Have been on the road quite a bit, and the BlackBerry browser lets me read, but doesn't seem to support comments - I've been reading, nevertheless :-)

WagonR said...

Communication becomes shorter and shorter and Twitter is the latest one to drive this madness. One Billion valuation !!! Oh God..

Ramesh said...

@WagonR - Thanks for visiting. Yes the market need is there and Twitter is a great service for many. But they have no business model; hence the incredulity at the valuation.

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