With apologies to Nate who sounds like a sharp and nice guy….
Today’s “only in the Silly Silicon Alley” post comes from Nate who is a new entrepreneur in residence at Rose and therefore really deserves more respect I suppose, but his idea, parroted over at Silicon Alley Insider sure sounds dumb to me – too dumb in fact to make it through the Silicon *Valley* peer review needed since the most important Twitter folks…live there. Nate is seriously suggesting that Twitter could be quickly turned into a payment system which would immediately gain widespread use and respect in the tech community and thanks to all that use would give Twitter a valuation of … wait for it … ON BILLION DOLLARS! Just a moment, just a moment…. over at his own blog Nate’s making that valuation 1.5 billion. Hey, what’s half a billion in the bubble economy, anyway?
The idea is, I suppose, OK as an out of the box thinking experiment, and it’s true people would jump from PayPal in a New York Minute because they are so usurous with fees, but I think it’s dumb for about a billion reasons. Here are 3.5 of them:
* Nobody trusts Twitter to stay up, let alone handle their money, protect their checking accounts and credit cards, etc.
* Nobody sends a few bucks here and there very often –
* C’mon Nate, you can’t develop a billion dollar website 1.5 billion dollar website based on people sending a few bucks back and forth.
* The short symbolic chatter at Twitter will not be a comfortable way for most people to send money, even those that *are comfortable with* symbolic chatter. Moving money is important and you want some checks and balances on your own quick activity. Paypal has it’s problems, but it’s secure and intuitive for most transactions (though not all – I’d be thrilled to see some competition from Google checkout in this space).
TechCrunch is reporting that an insider at Facebook is shopping his shares at 80% off the normally quoted (and probably absurd) 15 billion dollar valuation. TechCrunch is also suggesting that even Mark Zuckerberg is willing to sell shares at a price consistent with a 6 billion valuation for the company.
Like Arrington, I’d also like to take one share of Facebook. For me please add a Coke and a Cheeseburger.
The 15 billion never made any sense, and as it becomes clearer that social networking won’t monetize well their perceived value may quickly drop below a billion, though that would still be one heck of a payday for Mark Z and the gang.
The New York Times is noting that there have been no VC funded IPOs in this second quarter of 2008, which appears to be the first time that has happened since 1978. I haven’t done enough research to suggest this is a huge anomaly but I think it is another mildly ominous happening in the world of US business economics. Last night on Charlie Rose a key guy a Llyods of London Insurance was suggesting that in his view the mortgage crisis here in the USA is not at all over, and also noted how business things are blooming and booming in Asia and India while they appear to be wilting here in the USA and Europe.
In my opinion the best we an hope for is a fairly soft landing as China, India, Vietnam, and other parts of the developing world take their (rightful) place as players in the global economy. We’ve had it pretty easy for the past 60 years after WWII reconstruction rescued many economies from post-war ruin. Unfortunately that beneficence has been long forgotten (and it helped our economy along anyway).
So tighten up that belt and start spending less, because business isn’t what it used to be and it’s not going to be back anytime soon – perhaps forever.
Seems to me that Twitter is, in fact, a very important issue with far too much discussion about downtime and not enough about why Twitter appears to be replacing blogging, Facebook, and email as the communications paradigm of choice for the digital elites, which often means the rest of the online world will soon follow.
Twitter’s system failures have become so common that several of the silicon folks like Mike Arrington are suggesting that people should be moving to other services – most noted is FriendFeed which now allows “room” conversations as a way to sort noise from signal and talk with a group about specific topics. I think if they’d come along at same time FriendFeed would be winning the war for the hearts and minds of the legions of twitterers, but Twitter has such a foothold as the microblogging / communication tool of choice it’ll be hard to unseat Twitter unless their services fail to improve over the coming months. Improvement is likely given their recent Venture capital injection which effectively valued Twitter at about 100 million – enough that money will soon pour in as needed to beef up their shaky infrastructure.
Why is Twitter important? It’s really a form of A.D.D. blogging – fast and furious with links out to full treatments which can be read only if they really look interesting. Because Twitter caters to short attention spans and also throws everybody in regardless of laptop color or digital creed, it’s going to keep catching on fast with the business and tech crowd. I am NOT convinced it’ll be a big hit for grandma or even Nascar dads, who will see Twitter for the time waster it tends to be…
Yikes.. my Twitter Deficit Disorder makes me think a blog post of more than 143 letters won’t generally get read anyway, and makes it harder to write.
Yahoo’s plans for reorganizing their reorganization have now been announced. Kara seems to have the best scoops on this.
Meet the new boss Sue Decker, same as the old boss.
I am paraphrasing somewhat, but IMHO this is the gist of the Yahoo reorganization, sung to the tune of the Who’s: “Won’t Get Fooled Again”:
Yahoo’s fighting on the screen.
Over revenues unseen.
All the money that we worship will soon be gone.
And the Yang who spurred us on.
Sits in judgement – Ballmer’s wrong!
They decide and the board all sings the song.
I’ll tip my hat to Yahoo constitution
Take a bow for Yahoo revolution
Smile and grin at the change all around me
Open my laptop and play
Just like yesterday
Then I’ll get on my knees and pray
We don’t get fooled again
[scream guest appearance by Carl Icahn: YAAAAAAAAAAAAAAAAHHHHH!]
One of the really intriguing aspects of the blogOspheric chatterfest is how the big markets tend to react to rumors from key business related blogs. When TechCrunch reported yesterday that talks between Microsoft and Yahoo had resumed Yahoo stock increased, only to fall after several other blogs reported the rumors as false or weak.
Although I have no reason to believe that Mike Arrington or Henry Blodget are trading options based on their market-moving blog reporting, I’m not at all clear it would be illegal for them to do so as long as they were reporting “real” rumors.
Henry answered at his blog that posting a false rumor to manipulate for investment purposes would likely be seen by SEC as a violation but this leaves a lot of gray areas open for an aggressive options trader/journalist.
Here’s what I just asked Mike Arrington over at TechCrunch: Mike just to set the record straight the ValleyWag poster “Mike Arrington”, who claims to have made 10k trading on Yahoo rumors, is fake … right?
More importantly I’m very interested in your views on legality/ethics of trading Yahoo options based on the rumor mill. Let’s say you heard a solid rumor that MS was about to offer $37 for Yahoo and Yahoo was going to sell. Could you legally trade on that before you posted it? One second after?
What if you emailed *me* right before you posted, I think I could legally trade based on current SEC rules, right?
P.S. What kind of Single Malt Scotch do you like? : )
Although I have no plans to manipulate any markets, it is reasonable to assume that if a market can be legally manipulated it *will be* manipulated, and soon.