Tuesday, December 4, 2007

The Power Of Web 2.0 - And the Myth of Google and FaceBook

The more time i spend delving into all that is web 2.0 and the more closer we get to the Launch of the the Brain Make Over Beta Site, the more perplexed i become by certain factors.

Firstly, we live in an age where Google (goog) is quoted at some $681 at time of writing which gives the company a valuation of approximately $213Bn. This is for a company that if my memory serves me correctly has about $11Bn of revenue and $4Bn profit.
Do I use google every day, resoundingly YES,
Do i think that Google has a fantastic search algorithm, again YES,
Do i believe that the company is worth 20 times its revenue and more than 50 times its profit, one second, did i just say 50 times their profit...something must be wrong with my calculator, maybe i have time warped back to 1999 and we are pre millennium and euphoric with Greenspans low interest rates!!!

Do you guys that own google stock realise that even if Google gets the 700mhz cycle and enters the cell phone market and even if they build solar plants and land a man on Mars, the potential earnings growth for the next decade has already been accounted for .... so here is my question...... Larry Page, Sergey Brin and Eric Schmidt are all bright and talented boys....so why do they own stock. If i was them, which obviously i am not, I would sell my stock and by someone like Microsoft who has a market cap of about 30% more 307Bn but has over $12Bn in profits on $50Bn+ of revenues. Lets throw in that this company fits the dynamics of both a Growth and an Income stock.

The second question is that of FaceBook, again valued at somewhere in the $10-15Bn range with revenue of less than $300m. This is another disruptive technology (I believe it is disrupting email as a more fluid and fulfilling interaction if i am to understand the hype correctly.) Like Skype this is all great but where is the revenue stream, the market is captive (which means they will surely leave given enough time) and it really serves little or no useful purpose!!! Did i just say that out loud, blasphemy. But in reality, there is a novelty in finding people i had long forgotten about and would have had no way of getting in touch with. However did i really want too, will i be able to strike up a stirring friendship and get something meaningful outr of the relationship.

So they counteracted this with a genius like devilishly cunning move (similar to the Fed increasing the Discount window to save the banks in August) of creating applications and opening up their platform. But Google copied the rapidly with a far larger network and there is still that huge issue of stick ability! Does anyone really stay on the site that long. You want to check what you friends are doing now, ok cool, i am gone see ya!!!!

So where does this all leave us, Web 2.0 the new internet will in my opinion soon cede itself to Web 3.0 which for me is interactive application based internet usage. whilst currently available i am talking about the web as a medium for absolute harmonization and integration of all facets of life........ Big, Bold and Brash maybe ..... or some would already say we are there ....... I will continue further when i explain the concept of Brain Make Over within the next month, so hold that thought.

Copyright Jonathan Rose 2007 - Creative Commons License

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