The Social Networking Service Evaluation Bubble [Infographic]

A while back, we were amazed by the fact that you could actually earn millions of dollars by starting a website. Some people did it, and they were the winners of the IT boom not too long ago. In the end of that particular bubble, you didn’t even have to have a website in order to earn millions off of it. You might look like a big question mark right now, but that’s actually true. At the end of the whole IT bubble (the first), you could just have an idea for a site and a reason why it would become a success, and venture capitalists would spend millions on it, making you a very happy person. You will be quite interested in knowing that it’s actually happening again.

The social media bubble is yet a second stage of the IT bubble. Facebook is evaluated at 75 billion dollars, and Twitter is at 7 billion right now. Yeah, that’s a lot of money when you start converting it to lollipops or Ferraris. These companies are of course worth the money, depending how you look at it. Their user bases are the two largest; therefore, the evaluation is of course a good estimate for what they would get if they would ever decide to sell.

However, did you know that today we’re at the same stage as we were at the end of the first IT bubble? Today you only need a mere idea and a plan, and you will get an investment that could potentially make you a multi-millionaire. As a matter of fact, there is a company called Color.com which doesn’t have a single user yet. They acquired the domain Color.com for $350.000, and now in 2011, they managed to get an investment of 41 million dollars. And yet again, remember they don’t have one single user yet. That’s what I call an early evaluation bubble that of course will not be able to be sustained if this spreads further into the social media sector. This is just a reminder for what is possible to achieve today, and also a little warning that we might see the cracks forming in the social networking business, however in an early stage.

GPlus.com put together a really interesting infographic that will have you thinking not only once but twice over your investment in social media when it comes to hard cash. Of course, you should not worry about the websites ever going out of business. Social media is the future tool to engage, and as long as these companies stay fresh and innovate, they will probably be around for many years to come. However, if you are planning on investing money, you should really think twice about who you’re giving your mulah to. It could very well be the smartest thing you ever did. #JustSaying

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Over Evaluation of Social Companies

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