The Social Media Vortex
- Joshua M Brown
- May 20th, 2012
Is social media so big and lucrative that it is drawing investment capital away from other things that really matter and need to be funded? Perhaps.
Journalist Derek Thompson has an interesting chat with entrepreneur / Berkeley and Stanford prof Steve Blank in the wake of the big IPO…
From The Atlantic:
THOMPSON: What does the Facebook IPO mean for Silicon Valley?
BLANK: I think it’s the beginning of the end of the valley as we know it. Silicon Valley historically would invest in science, and technology, and, you know, actual silicon. If you were a good VC you could make $100 million. Now there’s a new pattern created by two big ideas. First, for the first time ever, you have computer devices, mobile and tablet especially, in the hands of billions of people. Second is that we are moving all the social needs that we used to do face-to-face, and we’re doing them on a 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.
THOMPSON: That all sounds pretty good for Facebook, actually.
BLANK: For Facebook, it’s spectacular. But Silicon Valley is screwed as we know it.
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? If you’re a VC firm, you’re tossing out your life science division. All of that stuff is hard and the returns take forever. Look at social media. It’s not hard, because of the two forces I just described, and the returns are quick.
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The Reformed Broker is a blog about financial markets and the economy. Joshua Brown is a New York City-based investment advisor for high net worth individuals, charitable foundations, retirement plans and corporations... More.