Friday, July 27, 2012
Often they promise to bring you relief from things like standing on lines. Or they are a new way to connect into a "community" of the like-minded. Or they allow you into the lives of interesting people via their tweets, comments and photos.
My first question on viewing such properties is always, yes, always the same.
How do they make money?
The response of the pretty little things is always the same as well. First, they seemed stunned. They look at me as if I suggested putting the golden arches on the Mona Lisa. Then they look back at me blankly. Finally they mutter something about selling the data they collect.
In the wake of the precipitous drops in valuation of Zynga and Facebook, when, it appears to be people smarter than I in the ways of finance are beginning to question the real worth of such binary entities, I think my question reverberates.
It seems to me that since, roughly, the first dot-com boom in 1999, we have been living through the ones and zeroes equivalent of the California Gold Rush. We meet in the 21st Century hipster saloons and trade paper marked with maps to properties that will make us rich beyond our wildest dreams.
We spend fortunes on these deeds. We commit to them. We build communities around them. And then we dig up pyrite--Fool's Gold.
If you talk to most small business people--people who have bricks and mortar to worry about, they'll tell you, almost immediately, that they're breaking even, or making money. No dry cleaner will ever tell you that he cleans and presses for free but will make his money selling his customers' data.
This, simply is a ludicrous notion.
But then again, I'm old-fashioned.
Posted by George Tannenbaum at 8:15 AM