“Facebook hype will fade”
[A]s I read the situation, we are witnessing the beginning of the end of Facebook. These aren’t the symptoms of a company that is winning, but one that is cashing out.
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This week’s news that Goldman Sachs has chosen to invest in Facebook while entreating others to do the same should inspire about as much confidence as their investment in mortgage securities did in 2008.
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Unlike a public offering of shares, this private offering to Goldman’s clients doesn’t obligate Facebook to come clean on its real profits. It doesn’t have to submit to standard accounting practice, or indicate how well it’s really doing or isn’t doing. It gets to remain in the safe cloud of hype that protects all such ventures until they either make a real profit or die trying.
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If you were there for Compuserve, AOL, Tripod, Friendster, Orkut, MySpace or LinkedIn, you might have believed the same thing about any one of those social networks. Remember when those CD Roms from AOL came in the mail almost every day? The company was considered ubiquitous, invincible.
A great opinion piece. And it is only an opinion. But one that I share. I have been outling the parallels between Facebook and AOL for months now, and it is great to hear the same view coming from somewhere else.
You have been warned.