Come on guys, do we need to do this again? I am going to remind you all of a little quote from Einstein. “The Definition of Insanity is doing the same thing and expecting different results” Should we drive up valuations based off a trend and only all get caught with our pants down looking like a bunch of idiots for jumping on the bandwagon….again? Didn’t we already do this? When will we learn?

AOL’s recent purchase of Bebo, the teeny bobber website, for $850 million dollars (90 times revenue) was a knee-jerk fad buyout in some type of response to Microsoft’s recent investment into Facebook, valuing the that company more than Ford; 15 Billion Dollars.

This is ridiculous. The moment that Bebo or Facebook comes up with a revenue model to match their current valuation, they will lose their market share and someone else will just start up the next up and coming website and the Facebook/bebo/Myspace following will all leave and go there. We need to all remember that these companies do not have software that is unique or business-changing. They are banking that the kids that occupy the sites, whom hate big business, advertisements and all things corporate, will respond favorably to a revenue model. Facebook is already 0/1 with their advertising model when their community went ballistics over their Beacon platform.

What is next people? Are we going to start investing in grocery store delivery businesses with no revenue for $500 million dollars again as well?

Danny DeMichele

This entry was posted on Friday, March 14th, 2008 at 10:58 am and is filed under Online Marketing. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.