Posted by: Rob Hof on October 3, 2007
Seems like everybody’s talking about how much more tech companies are worth than you think they are. Henry Blodget—yes, that Henry Blodget—thinks Google could hit $2000 a share. Facebook might be worth $10 billion-plus, if rumors about Microsoft’s interest are true. TechCrunch, the uberblog about new Web companies, could sell to CNET for $100 million, suggests Douglas McIntyre at 24/7 Wall St.
OK, so Silicon Valley is almost as much about the money as the technology. All I know is, when people in the technology biz start talking numbers more than ideas, you know something’s out of whack.
It’s not even that all these numbers are entirely ridiculous. Could Google stock reach $2000 in years or even decades, as Blodget suggests? It’s already at $583, so why not? Of course, that stock almost certainly will take quite a roller coaster ride in coming years, and you’d be better off investing in index mutual funds as Blodget also suggests. But how ridiculous would a $600 Google share have sounded three years ago when the company went public?
Facebook for $10 billion-plus? Yeah, that seems a bit much. Unless you’re buying just the 5% piece Microsoft might be considering. In which case it’s chump change.
TechCrunch for $100 million? Completely ridiculous. (Just kidding, Mike!) I doubt CNET is in a position to pay that much, since that’s almost 13 times its 2006 profits. (And anybody that does buy it had better hope TechCrunch founder Mike Arrington himself stays on, because once he’s gone, so are my and many others’ TechCrunch feed subscriptions.) But given the blog’s following and reader engagement—what other blog gets so-o-o-o many comments?—the valuation doesn’t seem outrageously out of line.
But all that’s beside the point. I guess money is an easy proxy for importance in technology to anyone who isn’t paying close attention to it. But we’ve seen this obsession with valuations before, and that movie ended badly. Let’s get back to the garage.