The Earth, The Sky and Everything In Between

Hey friends and readers,

Turns out the post this weekend was the big 100, making this 101. Insert dalmatian comment here.

Thanks for hanging in there, since it only took me 6 years to get here. I promise #200 will come a lot quicker.

Because I respect your eye-time, I won't cheap-up this blog and leave it at that. Let's pick a mini-topic for today: Facebook.

I saw the movie a few weeks back. Wonderful score, entertaining movie. Completely misrepresents a lot of people, from what I hear. Even so, it was entertaining, and again, wonderful score -- tastefully understated.

I had a little realization the other morning - I'm not giving it 'epiphany' status, but certainly a lightbulb moment. In terms of revenue streams, Facebook Google and Yahoo are really in uncharted waters. Never before have companies become so big on the backs of advertising revenue. My gut tells me this strategy isn't sustainable, and we will all look back and laugh that people ever thought companies could scale the way these three have on the backs of what seem so fickle and inauthentic forms of revenue. We can hardly argue that they are producing anything that wasn't already available, and therein lay my 'ah hah' moment.

I always assumed Google, Facebook, and Yahoo started something new. The truth is, they didn't start anything at all. We assume that an effect of the internet is that the proverbial 'middle man' is removed from our transactions - that anyone, anywhere, can buy from anyone, anywhere. That is true, but you also need to know where to look. That need hasn't changed. Google, Facebook, and Yahoo have no so much invented anything or blazed any trail. Rather, they have merely consolidated a litany of middle men into a towering three.

So what are these companies, uber-capitalists, heroes of American industry, or highly profitable information leeches? I'm playing ESPNU College Town and Carmen Sandiego on facebook. I have no idea what that means as far as the distribution of my information, but I probably wouldn't like it if I found out. Maybe I should shut it down. Ditto for gmail. No doubt every word I write, including this one, and this one, is somehow contributing to Google's bottom line. Am I being sensational? Might I be correct? Would Google create gmail without a plan to make a lot of money off of it? They have a lot to pay for - they feed all their employees very fancy, expensive food, free of charge.

Anyway, I won't ramble on. I'm just saying, as fun as these guys are, especially if you've been a stockholder for awhile, the question still remains: at this fundamental level, do these companies make sense? In a practical, nuts and bolts manner, does Google's capitalization of 190 billion dollars make sense? Would anyone be surprised if something, whatever it is, caused their value to collapse under its own weight?