A billion dollars? Unless they have some faded, washed out picture of Mark Zuckerberg killing a hooker, it doesn’t make sense!
– Comedian Jimmy Kimmel on Facebook’s purchase of Instagram
A couple of things happened recently to convince me even further that the Bay Area’s social networking economy is Mark Zuckerberg’s bubble, and we’re all just living in it. The first was a truly absurd Facebook moment that happened while I was stuck in construction traffic on Blossom Hill Road in San Jose. A company called “The Mobile Screen Guys” was using a truck in the parking lot of a strip mall as a billboard to tout their services. At first I thought it was mobile screen repair for smartphones and computers, but as I read the list of services, it turns out The Mobile Screen Guys fix screens like the ones leading out to suburban backyards across America. I continued reading down the list (screen replacement, solar sun screens, pet doors, retractable screen doors …) and at the very bottom, it said, “Follow us on Facebook!” Seriously? A screen repair company has followers on Facebook? If ever there was a sign that Facebook is headed the way of MySpace, this has to be it. I don’t even want to follow Commander in Chief Barack Obama or Dictator in Chief Mark Zuckerberg (more on that later), so why would I want to follow some random guys who repair screens?
I’m one of the three people in the world who doesn’t have a Facebook page. First, I don’t want Zuckerberg and friends confiscating my private information and selling it to advertisers. Second, my life is busy enough without having to update my “friends” about what I ate for lunch. Before you send letters calling me a Luddite, let me explain a few things: I understand there is value in social media and, particularly, in technology. I grew up in the Silicon Valley, worked for Apple in the late ’80s, and was a member of the Dot Bomb One generation when I went public with LookSmart. And it is because of my firsthand experience that I can see we are heading for Dot Bomb Two, led by the overhyped, overvalued upcoming
IPO of Facebook.
The same day I found out that the Mobile Screen Guys wanted me to follow them, Mark Zuckerberg bought Instagram, an unprofitable, 16-month-old photo-sharing app, for $1 billion — reportedly 30 percent cash and 70 percent stock. The giant purchase is troublesome on numerous levels, not the least of which is it demonstrates how immature, impetuous and arrogant Zuckerberg is. With Instagram’s star — and users — rising rapidly, Zuck saw the fledgling company as a threat. He did the deal in his living room over a weekend of discussions with Instagram’s co-founder Kevin Systrom and told the Facebook board after the fact. Even more alarming, one of Facebook’s board members, Marc Andreessen, was in Zuck’s living room waiting for a meeting with the Boy Wonder when Systrom walked out. Besides being a member of Facebook’s board, Andreessen invested $250,000 into Instagram in its infancy (heck, it’s barely a toddler now), yet he had no idea Zuck had just hammered out a deal to spend a billion bucks of investor money on an app he was scared of.
If it wasn’t already clear to you — in Facebook’s IPO filing with the SEC, Zuck manages to retain control of the company, even if he dies, by selecting his successor — this incident should prove beyond any doubt that Facebook’s fate lies solely in the hands of its 27-year-old CEO, who has reportedly shown no interest, even some disdain, for the big bankers bringing his baby public. If you believe Zuck is a genius who can do no wrong, then sink your dollars into his overpriced company and go along for the ride. Personally, I’ll stick with Apple, a mature company that doesn’t try to buy its competitors — it just makes better products and leaves
them in the dust.
Right after Instagram’s founders and 13 employees won the social networking lotto, reports surfaced that the founders were partying like it was 1999 in Vegas. If that party leads us to another 1999 Dot Bomb hangover like many analysts think it will, or if Zuck stumbles and falls like the ghosts of MySpace and Friendster past, the Insta-billionaire boys club may wish they had taken that billion bucks in cash instead of stock. Not to worry. They can always get a job with the Mobile Screen Guys. We will eventually lose interest in Facebook, but we’ll always need screens.
