Sunday, January 12, 2014

You Don't Get a Billion Friends w/o Making a Few Enemies

10 Years ago yesterday - January 11th, 2004 - Mark Zuckerberg registers the domain name with network solutions from his Harvard dorm room - Where were you?

I can remember I was taking a year off from the markets after the dot-com bubble crash. Valeting cars at Jackson Gore Inn at Okemo Vt. which was one of the most humbling years of my life. My thoughts on Facebook are as follows.

I first setup a social media profile in 2005 on My-Space - before abandoning it for Facebook.This seemed to be the trend that every other person past college was doing.

When it went public in I was suspicious as there were private equity guys all over the place offering pre- IPO stock. I learned a long long time ago from one of my first mentors (Jeffrey T Wilson the founder of Broadway Trading r.i.p.) If you can get stock - you DON'T want it. This old school saying typically holds true when it comes to IPO's and secondary offerings..

This was the case with Facebook obviously - You can see a screen shot above taking the day after the IPO from my platform in the spring of 2012 - Prior to crashing this day, there are clearly well defined ECN and Exchange traps seen on the bid - a solid argument I teach in my quarterly class's ( This particular essential argument help's better identify direction. Which in this case was sharply down.

Since that day so much has happened. I was always an avid user, and the biggest bear on the stock. I just never understood the valuation - nor did I understand how they would make $. I remember near the bottom low price of the stock Barron's came out and buried it with a cover story saying it was worth $15. Barron's typically gets it right, however in this case they never could of been more wrong. Everyone's guilty of this in one shape or form including myself.

The Social Network I strongly suggest you watch, and watch again if you have already seen it. It received a 94 last I checked on Rotten Tomatoes, which is completely off the charts rating wise. To me the mark of a great film is if you can watch it over and over again. I've viewed it at least a dozen times. Its gotten better for me each time I watched it as I would always pick up on some new subtle detail. Trent Reznor won an Oscar for best musical score - Academy Award winner Aaron Sorkin "Officer and a Gentleman" "American President" (another two films I could watch over and over again) wrote it based on the book the Accidental Billionaire. 
One of my favorite scenes, and I love them all - is right in the beginning after the girl hes dating breaks up with him, then calls him an asshole. Instead of getting bitter he runs home, gets drunk, blogs about his ex, builds a website ( harvest every students picture, co-writes the algo, launches it, gets twenty thousand hits in two hours and crashes the entire Harvard network at 4am. This is how the Winklevii find him and get there idea stripped away for Exclusivity. That's what set TheFacebook apart from Friendster and Myspace in the beginning

There were so many incredible parallels from the movie to my own life on a much smaller scale, but all these companies start that way.  Small, cool and with a great idea. My experience was basically I was in the identical shoes as Edwardo Sorkin. Co-founder and CFO of Facebook.  So I can definitely can relate passionately as I live, sleep and breath this stuff until I get it right. Once again on small private LLC company scale in no way comparable in size, but the idea, concept and events were hauntingly similar. Only difference was it was my idea for the business. This was taken away from my control right after it started making real money.

Stealing or stripping the idea of the company aside, the kid who scored a 1600 on his sat's did invent Facebook, as his character Jessie Eisenberg so boldly told the Winkle-vii in deposition - "If you guys invented Facebook - you would of invented Facebook".

As of now, 10 years to the date he launched it - The company has over a billion users and a 100 billion dollar valuation - looks like there getting it right. The stock is making all time highs and has across the board white-shu firm price targets in the $62 range. Now I get it, and see how they get their revenues. I am even paying them to promote my own start-ups. They are cutting into other company's ad dollars and are set to have an evolutionary way of generating revenues. Social media I am currently extremely bullish on - including $TWTR Twitter,  $YELP , and  $P Pandora. I suspect it gets to $62 soon, then reports earnings, blows out and gets valuations increased to $80. Then it goes to $100, along with the Nasdaq that I suspect goes to 5k with a year or two. Its a must own for investors is my take. 

In my 22 years as a registered equities trader, broadcaster and publisher my takeaway is this. If they can take your idea, they will. As Sean Parker (the first CEO of FB)  played by Timberlake says when hes discussing how he founded Napster. These days it seems with most of the community on Wall St and Silicon Valley is, if you can take it away - do it - regardless of the damage it can do to your friends or family. Greed rules, which in all of its forms is part of evolution. 

The one thing I can say for sure is this. When it come to building a start-up business, you can never be to careful. It reminds of advice an old flame gave me a ways back, and she couldn't of been more on. Be strategic, never emotional, always think three moves ahead. You have to be extremely trusting on who you choose to partner into business with. No matter how good it seems. Or just don't have one, which is hard. And make sure your represented and have solid operating agreements . And then you still never know....

Thanks for reading...Tim_K 

(Disclosure, no relevant position currently)

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