Sunday, July 10, 2011

IPO Crazy Now. Dead End Later?

“CNBC reported yesterday that LivingSocial was in talks with banks for an IPO, without naming them.” “LivingSocial, led by co-founder Tim O’Shaughnessy, raised $400 million in April, valuing the company at $3.5 billion, two people said at the time. The company will generate $1 billion in revenue in 2011, they said.”

WOW, another internet company hoping to issue a $1 Billion IPO. I know I’ve seen this before. Oh yeah, the boom and bust of dot-com companies in year 2000. That was great time where anyone with an idea and no sales or profit could be worth $1 Billion. These IPO are great for the short term because most investors are buying just thin-air potential speculation. It’s like me telling people Justin Bieber is the next Michael Jackson when Justin hasn’t even had any consistency in album sales.

I think with time most of these businesses like GroupOn, LinkedIn, FaceBook, Twitter, are going to end up like MySpace, Yahoo, AOL and unrelated, maybe Windows OS because :

• People gravitate to anything new and better
• People might be using certain sites like LivingSocial due to financial problems (US economy)
• People think it’s overcrowded
• It’s no longer cool.
• They’ve reached their peek
• The Founders have no larger than life Vision

I think what I would advice any business mind or IT mind is to build “The Matrix”. Yes the matrix system from the movie “Matrix”. A system that life is fully immersed in a world and people can’t live without.

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