Do Pinterest and Snapchat represent the next bubble? The NYTimes explores this question and brings up some important issues.
Issue #1, many of these companies are generating little to no revenue, and even those who are, like Twitter, are not yet turning a profit. This means that investors are willing to place significant bets that these companies can turn users/eyeballs into money, a feat that has proven illusive to many in the past. Snapchat is an interesting example: will this messaging service run its course and lose steam, or will users continue to be fascinated by its uselessness? How can Snapchat monetize? The appeal is evident, the monetary potential is not.
Issue #2, many of these companies are being valued at $1bi or more, making them virtually immune to acquisition. This means that these companies must go it alone, and actually become profitable businesses. No small feat but business models that don't involve selling actual goods or services.
Issue #1, many of these companies are generating little to no revenue, and even those who are, like Twitter, are not yet turning a profit. This means that investors are willing to place significant bets that these companies can turn users/eyeballs into money, a feat that has proven illusive to many in the past. Snapchat is an interesting example: will this messaging service run its course and lose steam, or will users continue to be fascinated by its uselessness? How can Snapchat monetize? The appeal is evident, the monetary potential is not.
Issue #2, many of these companies are being valued at $1bi or more, making them virtually immune to acquisition. This means that these companies must go it alone, and actually become profitable businesses. No small feat but business models that don't involve selling actual goods or services.
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