Home Everything You Need to Know About the Social Media Bubble

Everything You Need to Know About the Social Media Bubble

Are we or aren’t we? When it comes to social media bubbles and whether or not we’re in one, there is no shortage of people willing to argue on each side of the debate. 

It doesn’t matter if Facebook finishes Friday, its first day as a publicly-traded company, with a valuation of $105 billion or $75 billion: The debate is sure to get more intense in the coming weeks, months and possibly years. Earlier this month in the buildup to Facebook’s IPO, we took a look at the social media bubble (or lack thereof) in a five-part series that was based on dozens of interviews with experts on both sides of the divide.

We opened with a comparison between the dot-com bubble to the current period, when social media companies that have no revenue model are being sold for a billion dollars or more. Later on, we compared Facebook just ahead of its IPO to America Online in the period leading up to and following its IPO.

While there is no shortage of bright people willing to argue that we are not in a social media bubble, we tended to land on the side of the argument that we were seeing the same kind of “irrational exuberance” that led to a run-up of dot-com stocks in the late 1990s and the early part of the last decade. Working under the assumption that we were indeed in a social media bubble, we speculated on which companies were likely to survive when the bubble bursts.

Finally, we talked to startup experts and found out whether a bubble was irrelevant to those who were thinking of starting a social media business. Suki Shah, cofounder and CEO at GetHired.com, told us, there may never be a better time to start a social network company.

“Small teams of smart, dedicated, entrepreneurial people are creating significant momentum and innovation in niche areas that really appeal to larger companies,” he said. “Regardless of what will happen in the future, serious entrepreneurs need to use this time to set sail.”

Image courtesy of Shutterstock.

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