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Et Tu Facebook?

As of today, and assuming you haven’t already given enough of your life to the social networking juggernaut, you can double down with a share or two of Facebook’s common stock.  Now I’m not a licensed investment advisor so I can’t tell YOU what to do. But I will tell you what I’M going to do.

One word: FLEE.

Listening to CNBC while driving to an appointment yesterday, I heard a commentator rave about this “historic investment opportunity,” saying something like:

“Even at this valuation level, Facebook’s stock is cheap.  With that huge behavioral database, they'll find a way to monetize their 900 million users...”
Notice the choice of language.  It's not “They've FOUND a way..."  It's "They'll FIND a way..."  In the future.  Someday.  Hopefully.

But the future's a tricky thing.  All along, I’ve assumed the right sequence of events is this:
  1. Find a way to make money (i.e. a business model.)
  2. Make money (i.e. prove that your business model actually works.)
  3. Go public.
  4. Get rich.
Apparently I’ve been misinformed, and the correct sequence actually is:
  1. Go public.
  2. Get rich.
  3. Find a way to make money.
  4. (Optional) Make money.
Sounds eerily like the first dot-com bubble back in the 1990’s, when it was all about eyeballs and hits, and investment bankers tossed bushels of cash at every twerp entrepreneur who correctly (if accidently) spelled ‘www,' assuming that, somehow, somewhere, eyeballs would magically turn into earnings.

We all know how well that turned out, yet here they are again, telling us that a good story and hope matter more than bottom line results.