Selling Face.

It’s today! Face Book is being sold at $38 a pop and Mark Zuccaberg et al are going to make so much money their personal tax bills of around $1.5 billion will pay off 25% of California’s current deficit. It values the site at around of $104 billion, more than many multinational companies actually producing things. That means in these dire economic times there are still enough deluded people willing to stump up that huge amount. Who are they? What are they thinking? Current profits from Face Book are around $1 billion, 1% of that valuation when most companies expect to produce around 10%. That means Face Book will require strategies to extract a further $9 billion a year from its users. Now I don’t know about you but I dip into FB to hear from friends, which is rarely more than marginally interesting. I don’t go there to buy things. I use it because it’s free and there’s no intrusive advertising. Where Google search earns money by providing me with results from companies that pay the most per hit Face Book doesn’t provide anything like searches, adverts, cheap deals etc. The intrusion required to earn that extra $9 billion will definitely turn me off. It’s on a knife-edge for me as a user as it is. It may have 90 million users but their allegiance to it is paper-thin so a viral whim, a change in fashion, another smart bedroom boy etc could kill it off with a mouse click. But on the bright side say it continues to make $1 billion a year. It’s valuation would then sink to ~£10 billion, and somewhere there will be losses of $90 billion that will feed back into the banking system and cause us more austerity. And Mark and thousands like him will, perfectly legally, walk away with our money in their back pockets. Each and every one of us has become the lender of last resort to a finance system gone mad.