The Social Web Index … All-Time Highs in Pressure and Price and Shame on Facebook

We are all sharing at some amazing times.

The Social Web is accelerating at Supersonic Speed. It’s scary but fun to be a part of it.

There are so many interesting parts to the Goldman Sachs $gs investing in Facebook $fbook news.

New York Times gets the breaking news love. Andrew has hustled for a long time so kudos ( I mean the guy used to have to do Wallstrip to get attention) . That said, big woop as I care what my friends and fellow investors think on Stocktwits, Twitter, techmeme and the blogosphere. I have not gone to Facebook to read the news or weigh in. I got the news on Stocktwits.

When Time Warner bought AOL, a real top in internet valuations was put into place. Does a deal like this mean a bigger long-term top in Social Media valuations is at hand? If so, when?

Facebook could literally tie up tens of thousands of engineers. Is that good?

For Goldman Sachs, this is a no lose situation. If it works, they get the IPO and make some money. That is their job. They got off so easy with the government that this is like Vegas money they probably thought would be the taxpayer’s at some point a year back.

I think that Google has to buy Twitter and that will start to be a meme soon. It’s a chess game and nuclear war now in the social space.

The only thing I DO know is that Goldman could give a rat’s ass about the social web and sharing. If they are the top in social web, it’s small potatoes. The war in bonds, currencies and commodities is where the real money is at. This is play money. I hate that Facebook is letting them in.

This is not a coup for Goldman Sachs, this is a shame for the social web.


Disclosure – Long Google

PS – The pricks at Goldman Sachs have set up a ‘special purpose’ vehicle to make this investment and resell it down the road. I remember when ‘special purpose’ made me smile.


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  6. Giorgio says:

    By deploring “a shame for the social web” you are arguing in a moral way. Morality is a crutch when arguments are lacking. FB is a way to monetize solicited content with a blatant disregard for any social decency.

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  9. Kevwood says:

    Does this mean i have to call Goldman Sachs to close my facebook account. Still trying to delete my profile.

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  12. RAY says:

    Goldman Sachs to me is the epitome of corporate evil. Evil is a word I do not throw around casually. I am with u brutha.

    FB will use hat money to build out the data crunching infrastructure for their facerank aka social search and for their location based game/ad platform. I intend to intercept them on the latter.

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  16. LECHSAM group says:

    Howard, this may be reaching but the special vehicle GS have created seems very similar to the move they made with the mortgages. That said, do you think they see cracks in Facebook’s business model?
    Personally, I think Facebook have done a so-so job of creating revenue and real value. That said, should they go public and be judged on the performance metrics of real companies the stock would decline after the initial hype. I think that is why they are using private money to strengthen their revenue streams (via “strategic” acquisitions) prior to actually going public, because while hot air may rise, it is still just hot air and that is not worth much…. and a large part of what Facebook is at this point is HOT AIR.

  17. William Mougayar says:

    Techcrunch estimated that Twitter was worth $1.7 billion in June 2009 when FB got valued at $10B.
    So, does this put $TWIT at $8.5B?
    Well, I spend 100X time on Twitter than on FB and derive 1000X value from Twitter than FB, so $TWIT should be worth more to business users, no?
    Either $TWIT has done a poor job at monetizing their valuation or $FBOOK’s valuation is a bubble. Perhaps a bit of both.

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  19. William Mougayar says:

    Can the US government or SEC block this transaction?
    This insanity is the exact same thing that can later crash markets and ruin more lives that it benefits.

  20. gbattle says:

    Actually, Goldman can’t lose in this scenario because the special purpose vehicle used for their high networth clients to invest in Facebook actually harkens back to the late 90’s internet IPO market, where investment banks rewarded their best clients with a taste of the IPO selectively. Effectively, this is a synthetic IPO. These perks are precisely what Google fought against with the auction model – fair distribution of IPO shares at the opening price. These non-dollar (but very profitable) perks are an endemic in an industry built upon quid pro quo meets reciprocity. You are right though – Facebook is small potatoes to Goldman. Any Facebook position they take will be immediately sold at profit to their best clients. What better, more trusted way is there to satisfy the insatiable institutional demand for a pre-IPO name?

    Further, the idea that social media is a sector is false. All media is internet addressable, and all internet addressable media is social. By the engagement numbers, email and SMS kill Facebook, Twitter and YouTube, but we don’t think of email or SMS as social media let alone the stalwarts of the so-called sector.

  21. Max Zeledon says:

    I’ve been following you since 2006 Howard and you have never been a big Facebook fan anyway. But here is the thing, and let’s put aside silly predictions for a moment (I know you’re not into that), and let’s say Facebook goes public and everyone makes money. Then what? What does it mean for the social web? Will it contribute to more innovation? Or does Facebook become another AOL? Again, I can care less for Facebook because I don’t use it and I don’t have money in it. But I do believe Facebook will kill innovation and that affects everyone. That Google, Facebook, and Apple control all the top engineering talent in this country can’t be good. But maybe I’m wrong. Oh, why would Google want to buy Twitter? Seriously? Why would they pay to please all that vulture capital?

    • i think its part of the new volatility. top tech is the new monopoly so big
      swings. yahoo had all the brains and they leaked out and started this new
      wave of innovation in early stage with talent and money. like big violent
      sea waves

      • Max Zeledon says:

        Onto a totally different topic now. Isn’t it funny how so many market “experts” were calling for a new normal. Remember Mohamed El-Erian on CNBC telling everyone that there would be no growth opportunities in America, or the developed world? Shit this Goldman-Facebook love fest just pissed on that thesis.

      • Max Zeledon says:

        Happy new year to you, too! I can’t believe I didn’t say that fist. How rude. I’m extremely happy to see StockTwits is doing so well. I’ve been meaning to shoot and email. And great interview with Mark Cuban.

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