Silicon Valley: From Rarified Air To Exhaust Fumes
As we sit here today the IPO that was supposed to prove that the dream of “its different this time” were still alive-and-well, has shown it is anything but. The real crush for the “crushing it” crowd is this – the reality that proves that the party is over came from both a business and service whose main product did nothing more than augment reality as to add cartoon features to pictures then disappear into the ether. And this you were told was why it should be worth 10s of $BILLIONS of dollars in market cap.
As inane as that was, what became all too surreal was when this concept was applied to its S-1 where the reality of its business plan appeared to be nothing more than a “pig in lipstick” matching its core product features.
And “The Valley” along with the entire tech world in general not only believed it, but argued that this business was worth those $10’s of BILLIONS of dollars even though the company itself stated in its own business plan that not only was it not profitable – it may never be.
Sounds logical only if you live in the augmented business view of “The Valley.” Too the rest of us in the real business world? It’s crazy talk. Plain, and simple.
The compounding issue that Snapchat™ is generating (for it’s not reserved solely within the virtual world) is the near laughing-stock faces that appear to be growing across one of the most least informed investor public of this era: The hordes of Millennials who lined up to be “first” much like they used to for an iPhone® release (remember those?) and bought shares as soon as they became available to the public at $24. And the higher it went, the more they bought, and the better the felt.
Then, as soon as it begun – it was over.
To truly understand just how quickly this entire debacle in the making has fallen, let me express it this way:
Since going public on Thursday, March 2nd, its shares had risen some 44% from its IPO price of $17 to its opening exchange price of $24 to then zoom to near $30. This was greeted with exuberance and cheer not only for those who got in line to be “first.” But was also used by much of the tech press as to show just how “worth it” this debut and idea was.