Fred Wilson's response to "Paul Graham's Letter to YC Companies"

"If ever there was a positive sign that we are not in a bubble, the poor performance of FB on the open market is it."

The poor performance on the open market is in comparison to the offering price. If the offering price had been considerably different (for whatever reason) the performance would be in comparison to a much lower number potentially. Since the pricing decision was made by people (who have all sorts of motives) not sure that this is (although it maybe of course) representative of a positive sign of a bubble.

True, but it's a good sign that irrational exuberance is not taking hold of the open market, which was a cornerstone of the .com bubble.

I find it somewhat refreshing that with the number of people who use Facebook and feel it has significantly impacted their lives, that there wasn't a upwards pop on this.

Wait so were we in a bubble or weren't we ? And what about now has the bubble burst or not ? All of this bubble talk has been shown for what it is.

Complete nonsense. One or two companies != Bubble.

Internet VC's like bubbles.

I agree this trend the investor posited to pg is a good one. It will force startups to focus on profits not hype and VC. That will make for better startups that can perhaps become longlasting companies.

Facebook is all hype. That is not the formula for a longlasting company. As long as the hype is high, they are in good shape. How long does hype last? Our society is more deficient in sustained attention than ever thanks to the internet. Facebook needs to acquire any Facebook alternatives early and often. People are more than ready for the next new thing.

There is no value in data itself. You have to do something with it to produce income. You need a plan. Facebook lacks a plan. Facebook will stand as a good historical example for those who wantonly collect personal data and dream of its value. The amount of personal data Facebook has collected is unparalled. But that does not magicaly create a business. Unless the business is cold calling or some similarly annoying tactic to generate sales.

Facebook's business is running on hype, not data. If the hype slows. It traffic dies down, it's game over.

The idea that the sucess of Facebook is just a matter of flipping the switch and asking Facebook's users to buy things is unsupported by any evidence. However we have the dot com bubble as an example that just acquiring users without a solid business plan is not enough. Grow big, fast, is not enough. Facebook dreamers still think it is.

As investors see that the general public understands that Facebook has no plan, as reflected in the media, and that only have lots of users and personal data, investors will be more cautious. Investors read newspapers. And they believe what they read.

The hype wears off. People see that these companies are smoke and mirrors. And suddenly you can't pull another Groupon so easily.

I don't think you directly told anyone that Facebook would be a $100B company. There are plenty of wall street analysts (like Lou Kerner from Wedbush, who called for $200B facebook) to do that dirty work.

But if some analysts are pumping Facebook and no one from the silicon valley is trying to temper expectations, people assume that the valley believes the same valuation numbers. The result is long-term damage to the credibility of SV and a contraction of the investment supply. After all, if someone comes up next year and describes DuckDuckGo as a $100B company, why would anyone believe the valuation? Everyone would point to Facebook and give it a much lower valuation even if it probably deserves a much higher one.

To make it clear, I think that this type of chicanery from wall street is scorned yet expected in the eyes of most people. We have all accepted the fact that they will pump stocks, especially at the top (http://www.scribd.com/doc/86194691/Long-Good-Buy was Goldman's paper which essentially gave a bullish case for equities at the top). But there is still some credibility lent to silicon valley, which people should not squander in the interest of one investment.