Are the valuations of the Web 2.0 social media companies realistic?

Are the valuations of the Web 2.0 social media companies realistic? || “The tech bubble is coming. Prepare yourself.” http://ow.ly/5x6vt

Tech Bubble - Comparison between 1999 and 2011

As much as I think these charts tell an interesting story about America’s love of innovation and technology, I think that the comparison really isn’t entirely valid.  Perhaps a better comparison would be to have a look at other companies with a market valuation in the same neighborhood (as of 05-Jul-2011):

  • Cisco ($86.2 billion valuation; $40.0 billion revenue; $7.8 billion net income)
  • EMC ($57.5 billion valuation; $17.0 billion revenue; $1.9 billion net income)
  • Hewlett-Packard ($75.6 billion valuation; $126.0 billion revenue; $8.8 billion net income)
  • Qualcomm ($97.1 billion valuation; $11.0 billion revenue; $3.2 billion net income)
  • SAP AG ($74.6 billion valuation; $17.9 billion revenue; $2.6 billion net income)
  • Average ($78.2 billion valuation; $42.4 billion revenue; $4.7 billion net income)
I admit that this is not the most scientific analysis but I think most people will appreciate the purpose of this exercise.  The very description of a “bubble” conjures the image of something that piques one’s curiosity but is tragically fleeting.  When you look at the list of companies above it is no coincidence that these are the bellwethers of their respective market segments and their business models have withstood the test of time.  Can you see Zynga, Twitter, LinkedIn, Groupon, or Facebook putting up these kinds of numbers?  What about in a year?  In five years?  Some companies definitely “cross the chasm” – just ask Google – and some definitely don’t – just ask Boo.com.

Three quarters of a billion customers, that has to be a record

Facebook logo

Image via Wikipedia

Three quarters of a billion customers, that has to be a record || “Facebook hits 750 million users milestone” http://ow.ly/5qNni

Music festivals, the social media of the 1960s

Music festivals, the social media of the 1960s – “Buffalo SpringfieldFor What It’s Worth (Monterey 1967)” http://ow.ly/5l3DZ

I just passed 1,000 real (i.e., people I actually know) connections on LinkedIn

I just passed 1,000 real (i.e., people I actually know) connections on LinkedIn. Hooray for business-focused social networking.

Business networking

[Update: 18-Oct-11]
Now with 1,101 direct contacts my network reaches into some pretty interesting places.  For starters I now have over 280,000 second-degree (i.e., friends of friends) contacts which is a pretty incredible feat in and of itself but I also have more than 8.6 million third-degree connections who can be reached through one of my friend’s friends.  Regrettably – although for obvious reasons – my network is still very United States focused with the top areas of regional access being large domestic metropolitan areas such as Chicago, New York, and San Francisco.  A few days ago I used the LinkedIn Labs InMap experiment to visualize just how my network looks when all of the interconnections are visualized in a single two-dimensional data map.

Check it out.

Hopefully everyone is sitting down for this announcement

Hopefully everyone is sitting down for this announcement – “Social Media Has Little Impact on Online Retail Purchases” http://ow.ly/4IBSw

Just arrived at PearsonCite in Denver

Pearson PLC. Logo

Image via Wikipedia

Just arrived at #PearsonCite in Denver. Should be an interesting few days. Today’s agenda is heavy on social media, analytics, and content.

Everyone knows LinkedIn but what else is out there for job seekers?

Image representing LinkedIn as depicted in Cru...

Image via CrunchBase

Everyone knows #LinkedIn but what else is out there for job seekers? – “5 Online Communities to Help With Your Career” http://ow.ly/4hYbC

Good advice from the folks at Mashable

Good advice from the folks at #Mashable – “HOW TO: Create a Blockbuster Mobile App” http://ow.ly/4hPzz

Social responsibility during a crisis explored

Social responsibility during a #crisis explored – “What Responsibility Do Social Media Users Have During a Crisis?” http://ow.ly/4gMvh

Decent connection between units of social media influence and revenue

Image representing Facebook as depicted in Cru...

Image via CrunchBase

Decent connection between units of #socialmedia influence and revenue – “#Facebook ‘Likes’ more profitable than tweets” http://ow.ly/4gpeH