Social Media's Future: Sell! Sell! Sell!

Imagine your best Jerry Seinfeld impersonation and repeat after me “What’s the deal with Facebook? It isn’t a book, and it’s not for your face!”

Sorry, that joke might have been funnier back when Facebook was still sort of new.

Actually I love Facebook. It really is a hodgepodge digital network for news of all types whether friends or national interest. Plus there is something addicting about the scroll function; it’s like an endless morass of sweet stories and cat videos followed by vile ranting and virtue signaling from college freshman (Yes Tom… we all think Tibet should be free). Trying to scroll to the end is like trying to run through a park fountain without getting wet. You know it’s impossible but the thrill is too much to resist. So you scroll. Until the time gets away from you and re-evaluate how pathetic your life is that you just spent hours reading other nonsense and believing most of it (is it just me?).

The point is we all spend time and money on things we enjoy and believe in. Or at least, we support financially organizations, communities and projects we understand and have some relationship to. For instance, I give money to the church I attend because I love the cause. Christian churches are community centers that help the poor and bring people closer to Christ and (hopefully) into a relationship with the heavenly Father. I understand how they are funded and what those funds purchase. Most people support what they can see and understand. I can see a useful value in social media but not an investment opportunity, partly because most tech companies don’t have machines and factories. So if the business goes bankrupt what is left to sell off? maybe some intellectual property in software which, by the way, got shared through open sourcing.

Even the worthwhile bits aren’t really worthwhile.

This is where my tech knowledge gets me into trouble. I don’t usually write about tech companies because…well, most of it goes over my head. I can turn on my computer (Yay!!!) and upload some photos to a sweet desktop icon that says “photos” (although very slowly). I get the business side of Silicon Valley, whiz kids and their fiefdoms. I can’t figure out how Facebook, twitter, and other social media sites are worth billions and can round up enough investors for an IPO. Advertising is supposed to be enough revenue? Sorry I don’t see how to squeeze real value out of these companies that isn’t at least partially a promise on advertising dollars. Nothing wrong with it of course, it just doesn’t equal value in the traditional sense of the word. They don’t crank out widgets which can be priced or have machinery with fixed costs.

Look I get it OK, I am the kid with the crayons and coloring book trying to stay inside the lines while everyone else is painting on canvas and listening to Mozart. I still say San Francisco and the whole tech world is sitting on a bubble that grows every time a new app gets talked about. Also, if the software your company invented is so great why are you sharing it? Sell it man! I am less of a naysayer on the tech world and more of a skeptic. I’ll admit to missing out on what are some great buys because I frankly don’t get most of it.

So there is your advice kids; firstprinciples doesn’t understand it; it must be voodoo. 

Most of it is just my personality. When it comes to technology and newer different ways of doing things I am a little tepid.  I’ve always believed though, invest in what you know and stay away from what you don’t. There are exceptions of course; learning about new companies and products is part of making money. If after a full day of studying and reading about the latest R&D in an industry, you still feel like the kid with the crayons? Stay away. I am not the type to come home after a hard day of work and utter the phrase “I just got a great tip on a can’t lose investment honey!” The good part of that though is that I’ll never come home and utter the phrase “I just got a great tip on a can’t lose investment honey!”

So be yourself and buy what you know. In the meantime if a social media company bombs and loses money for shareholders, don’t say you weren’t warned. We saw this in the late nineties with the overvalued dot coms selling pixie dust and dreams to investors who didn’t understand what they were buying (especially pixiedustanddreams.com, they really cleaned up). It was the new, hot thing and they were ‘all in’ like a Texas hold ‘em rookie. I realize many of these companies do fine and in most cases the financials are sound and here to stay. I just need to catch up.

Until then I’ll keep my pessimism and approach life like Jerry Seinfeld “What’s the deal with…?”