RogerAndMike.com :: In my opinion, “Are we in a social networking bubble?” is an example of a rhetorical fallacy. It assumes that social networking companies are either wildly overvalued like it’s 1999, or correctly/undervalued and there’s nothing to worry about. Framing questions honestly and in a truth-seeking way is one of the most important skills of the innovator or investor. My hope is to tackle the question of social networking valuations with this in mind.
[Mike:] The question, “Are we in a social networking bubble?” misses the point. The more important question is, “Where are we in the social networking wave, what is the valuation environment given where we are, what are the criteria for success, and what are the warning signs?”
By mapping the typical progression of valuations and investor sentiment to technology waves, I hope to show that investors and the market almost never know how to correctly value important disruptive technology companies.
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