I think you have to tread lightly with the "scam" comments. I don't disagree that the bubble, for many internet firms, is ridiculous. And certainly there are some without portfolio who will NEED to buy another company that is wearing clothes.
However, since I have come to work at an internet company that is legitimate, and is producing very nicely, I have altered my view on the bubble. Previously, I thought they were all BS. Now, I have firsthand knowledge why some DESERVE their valuations - as odd as that seems. I'm not naming who I work for, so as to avoid "hype" and other claims against me. However, there is tremendous value being built at some companies that will pay off very soon (time frame 2-3 years). Being in now (on some) is a good thing.
I don't disagree that some of these companies are shells, however, and their valuations are pathetically manipulated.
BTW, I am willing to toss AMZN in among these companies...why? Because volume doesn't mean profitability, and certainly doesn't give them any advantages in a world where margins are going to be razor thin.
Somebody once pointed out if I build a website that gives $100 to everyone who sends me $95, I can get TONS of traffic. That is true. They, however, felt that the remainder could be made up in ad sales. Unfortunately, that would require a $5,000 cost per thousand JUST TO BREAK EVEN. Nobody gets more than $60 right now....and that is a number that is declining. So, these volume guys are out to lunch..... |
