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The tech bubble math is back!

Social Networks, Web 2.0 No Comments »

To probably no one’s surprise, the math behind the overevaluations of companies during the tech bubble is back. Take a look at the Techcrunch article fubar-grows-over-3-million-percent-in-a-year. It feels like back in the times when your boss is offering you a dramatic 30% raise and you can’t help but point out that 30% more on $20k is still only $26k which is still a pittance… So here we are at Techcrunch, an arguably respectable technology magazine, and they present that some company had a 3 million percent increase in traffic in one year. This makes no sense to me, but who gives, right? Well, here is my math.

I don’t know what they used as the basis for their calculation (monthly figures, YTD etc.), but let’s assume they were looking at the change in monthly traffic, then all this means is that Fubar started at 201 visitors last year and has 6.6 million now. Which is a fantastic feat, but means that they just started last year. When we look at growth percentages, we are not interested in a one-off, but in a trend. If the figures mean anything, we would like to predict what’s gonna happen next year. And by no way will Fubar be able to repeat this, because it would mean that they will have to attract 215,966,322,000 monthly visits by March 2009. And that would make everyone of us (6.6 billion worldwide) have to visit their site 33 times per month! Good luck…

By now you gotta be asking yourself what this website is actually about?! It’s an online social network centered around the concept of meeting up in a bar over happy hour. Prost Fubar!

There was actually some useful pieces of information in the article. Who would have known that Orkut, Google’s social networking site, is growing (again)? Looks like their Open Social strategy of providing a common platform for integrating online social networks is attracting some attention!

And finally, I see LinkedIn growing at 729%. For a long time I have been refusing to join any of these online communities, but I must admit I gave in two years ago and joined LinkedIn. And it has been a very positive experience so far, allowing me to keep in touch with many ex co-workers and business partners who I would have struggled to keep in touch with otherwise. I mean, who is still interested in occasionally meeting a former colleague or business partner over a pint in a bar? Fubar, anyone? Cheers to that again…