Social Networks…Why Not Undervalued?

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  • on October 29th, 2007

New York Magazine has a ANOTHER Web Bubble 2.0 feature story this week , in which John Heilman now calls me a ‘clever dude’, but out of context negative (this from the magazine that wrote the most scathing Wallstrip review to date ….As Borat says…..niiiiice). That review is an awesome read now that we have proved them wrong :) . Fred has something to add to this argument as well with respect to us being quoted out of context.

Seeing that the media is nervous and cranky that we are in a social networking bubble, I thought it would make sense to look at the other side of the trade here and consider this is inning 2 or 3. I am long anyway so might as well speculate as to why it could continue.

Facebook is a benefactor of the MEGAtrend developing that is social networks. It has tapped into an amazing timing influence of cheap money, a booming global economy and venture capitalists with huge assets chasing a limited supply of MEGA deals.

I hope to continue to show you how we can continue to make money off the MEGAtrends in the public market of Search, Social Networking, Gaming, GPS, Communication and Software through Google, Apple, RIMM, ERTS, Garmin, Adobe etc… BUT ALSO contend that you can make huge money from understanding the intense smaller groups of trends that are developing and booming in all directions.

It is now almost two years since I started this blog with ZERO readers. Now I have over 3,000 subscribers (seems like a lot to me). I have leveraged my blog to build an amazing social and business network well beyond my wildest lifetime network dreams just two years earlier.

In the last 12 months I have grown my blog, managed and grown my hedge fund, built and sold Wallstrip with the help of a dispersed network of partners and friends, of course failed a few times as well, helped finance $100 plus million in real estate loans, started Biltmore Ventures (made 5 investments), been an angel in 5 investments that I actually lend a hand to in Silicon Valley, Phoenix, New York, Louisville and London and I just finally hired my first employee in 7 years.

This list is all an offshoot of my blog, the social tools I have incorporated and shows the power of the social network. ALL this possible personal growth and its offshoots was not CLOSELY possible without the social network.

In terms of friends, just this week I sat with Fred Wilson (Union Square Ventures), James Altucher (TheStreet.com), Quincy Smith (CBS) and Rikki Tahta (Covestor and Amazon.co.uk founder) four icons in the internet and stock and finance world that I did not know 12 months ago.

Obviously, MySpace was a steal based on Facebook’s new valuation, but kids in college already consider this a wasteland, so maybe social networks are like nightclubs, but I doubt it. As it relates to the behemoth that is News Corp stock, the stock has risen approximately 40 percent since the July 2005 merger. With such a conglomerate though it’s hard to figure out how much of the stock rise is general market and how much is MySpace. .

Going forward, what does that mean for other possible investments?

For one, I think Facebook is now set to do an IPO. They could use their valuation boost to do many things. They could make millions of others rich, for sure thousands.

To quickly solidify their space in business networking, they could gobble up Linked in and do an IPO right now. They may just try and figure it all out themselves.

To think that Facebook is the ultimate, or even biggest winner of this era of social networks is lazy thinking. There is too much leverage from so little to think that billions more investor capital won’t pour in to this space in the next 20 years.

What niche will trigger the next big social networking craze and trend? That’s what you should be thinking about as an entrepreneur. The tools have never been more available and starting a company never been cheaper. Media rarely asks these questions. The Bubble article above surely doesn’t.

I love referring to the simple fun book “The World is Flat’ and the term ‘Shrinking World’ and ‘Small is the New Big’. They are not just buzz phrases and/or too late to read. They are ACCELERATING in importance. I plan on continuing to look at the world with a ‘glass half full’ attitude. You should too.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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