Golden Age of Silicon Valley Is Over With Facebook IPO 222
Hugh Pickens writes "Steve Blank, a professor at Berkeley and Stanford and serial entrepreneur from Silicon Valley, says that the the Facebook IPO is the beginning of the end for Silicon Valley as we know it. "Silicon Valley historically would invest in science, and technology, and, you know, actual silicon," says Blank. "If you were a good venture capitalist you could make $100 million." But there's a new pattern emerging created by two big ideas that will lead to the demise of Silicon Valley as we know it. The first is putting computer devices, mobile and tablet especially, in the hands of billions of people and the second is that we are moving all the social needs that we used to do face-to-face onto the computer and this trend has just begun. "If you think Facebook is the end, ask MySpace. Art, entertainment, everything you can imagine in life is moving to computers. Companies like Facebook for the first time can get total markets approaching the entire population." That's great for Facebook but it means Silicon Valley is screwed as a place for investing in advanced science. "If I have a choice of investing in a blockbuster cancer drug that will pay me nothing for ten years, at best, whereas social media will go big in two years, what do you think I'm going to pick?" concludes Blank. "The headline for me here is that Facebook's success has the unintended consequence of leading to the demise of Silicon Valley as a place where investors take big risks on advanced science and tech that helps the world. The golden age of Silicon valley is over and we're dancing on its grave.""
Facebook (Score:4, Insightful)
The headline for me here is that Facebook's success has the unintended consequence of leading to the demise of Silicon Valley as a place where investors take big risks on advanced science and tech that helps the world. The golden age of Silicon valley is over and we're dancing on its grave
Eh, just because Facebook is also used by millions of ordinary people doesn't mean it's not computer technology company and, even more so, doesn't help the world. In fact I think that Facebook has done immersive amount of good for the world. What have you done, exactly? This is extremely obvious to anyone who is older than 15 years old and especially for those of us who live overseas and have friends, family and people all over the world and helps to keep in touch with people easily (and no, I'm not going to bother them all by emailing them on little things).
Anytime someone proclaims the death of anything (Score:4, Insightful)
Re:Facebook (Score:5, Insightful)
Re:Oh noes (Score:2, Insightful)
Also, it's not like they can loan money to every new comer. It takes time and work to evaluate potential ideas. There are risks involved. Yet, venture capital is one of the actual things that greatly increases innovation. But don't let that get into the way of your rant.
Spurious valuation too (Score:5, Insightful)
The conditions under which Facebook would be really worth $100 billion are that somebody with $100 billion in cash was prepared to offer that much for it, and it was accepted. The IPO is, in effect, designed to prevent us finding out the true market value of the company. All we know is that people who almost all already had shares were prepared to exchange them for Facebook shares. Those people might have thought that their shares were about to tank, or that they might make short term profits. We don't know.
The historical analogy, although the exact terms of the deal were very different, is the Time Warner/AOL merger. The merger valued the entire group at around $350 billion. It turned out that the analysts and the investors were comprehensively wrong.
Don't get me wrong; in the Wall Street casino, people may get rich dealing in Facebook shares. But, as set up at the moment, the actual value of the company cannot be inferred from the share price, and all the predictions of a change in world culture are as reliable as the same predictions that were made about the AOL merger.
How did the economy get so disfunctional? (Score:5, Insightful)
From TFWU: "If I have a choice of investing in a blockbuster cancer drug that will pay me nothing for ten years, at best, whereas social media will go big in two years, what do you think I'm going to pick?"
How did the economy get so skewed that something that is a real product which can serve a social good is ignored for sheer speculation?
And don't give me: "Rapid communications makes the economy more efficient" The economy was OK, even better, before Facebook. The economy even was OK before the internet, it just took a little longer to get things done( which may not be a bad thing). Also, efficient for who? Efficiency depends on where you are standing and how you measure it, e.g. immediate expenditure vs long term expenditure and immediate gain versus long term gain.
Basically people are speculating on a toy.
Re:well... (Score:5, Insightful)
The problem with research is that it is open ended. You don't know what will happen. You have to explore many blind alleys before you you get something to work. But if you didn't explore them you'd never learn anything.
If you know what the result will be, how long it will take, and how much it will cost it is not research.
Re:Facebook (Score:4, Insightful)
Re:Facebook (Score:5, Insightful)
The important thing is that we're close to likening posting on FaceBook to taking a shit, which -is- the reality of it.
How much thought and value do people place in FaceBook updates? Little to none. People just spontaneously update to it almost all day long.
Not that they necessarily take a shit while posting (some do) but that the two acts are pretty close in terms of how much social consciousness they actually require.
Oh, by the way, I just won three golden cookies on Tropical Bat Farmer. You know you want to play.
Netscape redux (Score:5, Insightful)
If I have a choice of investing in a blockbuster cancer drug that will pay me nothing for ten years, at best, whereas social media will go big in two years, what do you think I'm going to pick?
Remember the spectacularly huge Netscape IPO in 1995. Then this quote would've been:
If I have a choice of investing in a blockbuster cancer drug that will pay me nothing for ten years, at best, whereas web browsers will go big in two years, what do you think I'm going to pick?
Observe spectacular failure of VCs who failed to think for themselves, and just followed the herd long after the peak had passed.
Same story, different year. The smart money is still investing in biotech, which actually has a real impact on our lives. Nothing to see here...move along...
Re:Facebook (Score:5, Insightful)
This is extremely obvious to anyone who is older than 15 years old and especially for those of us who live overseas and have friends, family and people all over the world and helps to keep in touch with people easily (and no, I'm not going to bother them all by emailing them on little things).
You make a valid point, but this quoted part is pure bullshit.
The actual good Facebook has done is by contributing to projects like Cassandra and a bunch of work it did on MapReduce and Hadoop, memcached and what not. Visit their github.com [github.com] to check on that, though those aren't the only projects they worked on (more like, those are the projects they have started)
Dude, those are mere tools.
They exist to DO THINGS.
It's the THINGS that are important.
Re:Facebook (Score:5, Insightful)
Specious logic (or lack a complete lack of logic) (Score:3, Insightful)
This guy sounds like another tech hipster to me.
No one will invest in a company making a super cancer vaccine? One would only make $100M from it? The author clearly knows nothing about the biotech field. People *are* investing in biotechs right now. The idea that people won't invest in other areas because one company made money is simply not in line with real world behavior going on right now.
In terms of Facebook, we'll see how that whole thing pans out for the people who are making Mr Zuckerberg rich right now. I suspect that the Facebook IPO will fall into the category of "moving money from the unwise to the unscrupulous" (much like most of the earlier dotcom IPOs). The Facebook insiders are making money. The underwriters are making money. I don't think the people buying Facebook are going to make money.
Re:Facebook (Score:2, Insightful)
Re:Facebook (Score:5, Insightful)
Or how about some of us don't want to hand over a one-dimensional record of our lives to a third party that may or may not be up to no good?
Re:Facebook (Score:3, Insightful)
In fact I think that Facebook has done immersive amount of good for the world.
By destroying humanity's concept of privacy, serving new forms of digital crack for the weak-willed to become addicted to, commercializing and commoditizing our relationships, and enabling a new golden age of corporate and government surveillance?
What have you done, exactly?
A lot more good than they have, that's for sure.
Re:Facebook (Score:4, Insightful)
How much thought and value do people place in FaceBook updates? Little to none. People just spontaneously update to it almost all day long.
Then you need to cull your friends list, and learn how to hide app posts.
Looking the top of my feed, I see:
1. Pat's dad died, he made a joke about him playing poker with John Wayne.
2. Grant is looking for people to help with his deck today (I'm heading over after lunch).
3. The Geek Group [thegeekgroup.org] is looking for people to help with demolition at their new facility.
4. Doug is really pissed about Dan Harmon and most of the creative staff getting fired from Community.
5. Jessica is auditioning for a harpist position with an orchestra, and excited that her 10-week-old fetus is hearing Gershwin for the first time.
I do have a friend (a housewife) that posts about 80 times a day about what stupid, inane things her children did, but I've just hidden her from my feed, because I'm a bastard and don't care about them that much. It wasn't hard. But everyone else on my friends list is like me - kind of minimalist. We don't treat FB like a 15-year-old girl just discovering Twitter.
Re:Facebook (Score:5, Insightful)
> I don't put anything on Facebook that I wouldn't say in public, even though I have all my private data limited to friends I personally know
What you say in public is transient and taken in context. What you say on FB is permanent and can be largely devoid of context. I'm also pretty sure you change your content based on who might overhear you IRL, whereas you have really no clue who might be listening on FB.
> but I am aware of the cost of having a "free" way to keep in touch with friends and relatives all over the world, and I'm willing to pay that cost.
No, you clearly aren't aware of the cost. You have no idea, nor do I, how deep down the data mine we'll go or who will be doing that mining. Yes, your anti-fascist statement on FB might be applauded loudly today and put you in favourable standing, but what if the far right gains power in your country? Or what if that dude you friended not so long ago happened to have an affinity for explosives in his underthings?
We collectively don't understand all the implications, so don't be so naive to claim that you do. If you're doing anything more than updating your friends on your bowel movements then it's pretty much guaranteed that someone, at some point, will have material to use against you. The only questions are whether it will be relevant in your lifetime and whether they'll have significant power.
Re:Facebook (Score:5, Insightful)
While Facebook is no doubt technology and very useful, there is point lurking in the article.
There is 'shallow' innovation and 'deep' innovation.
Deep innovation requires very specific knowledge and advanced study. I can't just wake up one day and decide to build a CPU company or GPU. I know the basics, but I have no idea where to start with manufacturing it, advanced optimizations... to make it a useful product. Similarly with the example in the article... that of advanced drugs.
'Shallow' innovation is something a decently intelligent person can grasp in short time. Websites like Facebook are just that. Most of us could build Facebook. Most of us didn't of course, but we could have.
I want to emphasize, I'm not saying shallow innovation is bad. Shallow innovation is good. I only use the word shallow in relation to the depth of knowledge needed to reasonably enter the field.
Now if investors can make money on such shallow innovation, they're not likely to invest in the deep innovation. A valid point I think... but not one we can do much about. It's more a reflection of what is needed now in terms of the market and the lack of long term profits in long term R&D.
Re:Facebook (Score:4, Insightful)
And that's where I disagree. Facebook is also a net positive for humanity because it makes us more connected, and provides us with a social platform for people to interact and share content and collaborate socially.
Human beings are social creatures, and is it any wonder that a social media platform like Facebook is so popular? Anything that makes us more interconnected and drives to humanity being a "singular" community is a net positive, IMO.
Besides, curing cancer is great for the X% of people who suffer from cancer, while Facebook is great for pretty much anyone who wants to get online and interact socially. So what do you do once you've survived cancer? That's right, you can then hang out with your friends and family, which is what Facebook lets you do. ;-)