Hey patio11, thanks for the thoughtful analysis of my article.
Your logic makes sense, assuming in fact Zynga does have sustainable profits, which might be true (although I guestion whether simple web games are a defensible business, competition easily cuts it).
But, assuming that is true and you are right, does that still justify Facebook's valuation if it is entirely dependent on one company, Zynga? I would conclude that Zynga would be worth quite a lot, but that would make Facebook's position quite a bit weaker, do you agree?
Also, the feedback loop is that Facebook's valuation and success spurs people and investors to start companies and then advertise them on FB. This has been my experience talking to many (not all!) would-be entrepreneurs and investors in new york and the valley. I'm interested in learning about different experiences you may have had.
"(eMarketer estimates Facebook took in) $740 million coming from major marketers like Coke, P&G or Match.com...
Interestingly, Google itself was the fifth-biggest advertiser for the same period, as it was looking to market its Chrome web browser. "
http://adage.com/digital/article?article_id=148236
It's very hard for me to look at a company doing $740 million in revenue from the likes of Coke and Proctor & Gamble and say that it's not sustainable. I'll admit it's possible they are all just blowing their money away, but that seems less and less likely.
Right, I think the article misses one of the purposes of advertising. Coke doesn't target ads at people googling "soft drink". Facebook seems like as good a place as any for the kinds of subliminal advertising that Coke does.
Your logic makes sense, assuming in fact Zynga does have sustainable profits, which might be true (although I guestion whether simple web games are a defensible business, competition easily cuts it).
But, assuming that is true and you are right, does that still justify Facebook's valuation if it is entirely dependent on one company, Zynga? I would conclude that Zynga would be worth quite a lot, but that would make Facebook's position quite a bit weaker, do you agree?
Also, the feedback loop is that Facebook's valuation and success spurs people and investors to start companies and then advertise them on FB. This has been my experience talking to many (not all!) would-be entrepreneurs and investors in new york and the valley. I'm interested in learning about different experiences you may have had.