The Newest Status Symbol
Here in Palo Alto (whose weather, for the benefit of snow-bound Chicago viewers, can be seen here) there's a weird new phenomenon going on. It basically involves a person being given the opportunity to be made rich beyond the dreams of avarice and then refusing that offer.
It's the newest kind of status symbol. Just yesterday, the founder of Path.com – a startup about which I've never heard anything – was offered $100,000,000 (that's one hundred million dollars – – say it Dr. Evil style for the full effect) by Google, and he told them to go jump in a lake. It seems Google is becoming a bit of an expert in getting the cold shoulder:
I was sort of wondering what kind of amazing, world-changing application could come from a new company that would garner such a high price tag. Well – brace yourselves – here it is:
Yep. It's an iPhone application that lets you share pictures in some oh-so-sexy social way. I'm guessing their annual revenue is $0,000,000 right now.
Groupon's recent dismissal of Google's $6,000,000,000 offer was even more extraordinary. It wasn't that many years ago that Apple had a market cap of about that amount. Now an online coupon provider with countless imitators has done the same.
My view is that this is just a new twist of what the Silicon Valley went through in the late 1990s, except this time, the payday is massively inflated purchase prices from giant firms as opposed to IPOs. Back in the late 1990s, when I saw firms like TheGlobe.com (remember them?) go public to wild acclaim, I figured I must be somehow retarded in not understanding what was happening. My fears of retardation lasted years, actually, because the bubble blew up from 1995 to early 2000, but in the end, the bubble burst.
This new bubble could have years of life left. We could well see Facebook go public, and Groupon, and LinkedIn (hell, they are coming public – what – this week?), Zynga, and God knows what else. Successful IPOs – and Lord knows Facebook's will be successful – will just spur on smaller companies to join the frenzy. We could well be in the equivalent of 1996 right now when viewed through the lens of the 1995-2000 bubble. Irrational markets tend to chafe me, but there's nothing I can do about it.
As for the folks turning their noses up at getting insanely rich, it could go either way. The founders of Google tried to sell their product to Yahoo for a million dollars back in 1998 or so, and Yahoo told them to get lost. If you had asked the Yahoo management team what the chances were of those kids completely crushing Yahoo within a few years, they would have been too busy laughing to give you a probability.
On the other hand, the guy who founded Pointcast back in 1994 (or thereabouts) was offered $400 million by Rupert Murdoch, and after he refused, Pointcast wasn't around very long until it became utterly irrelevant. Something tells me he wishes he had said yes.
Note to Google: if you want to buy a really nice financial blog for $50 million, I won't say no. I'll even keep writing for you for a while. Drop me a line.