Thursday 8 March 2012

Facebook, the fragile pot of gold

Facebook is worth about $100 billion. It must be one of the most valuable businesses in the world. For example Apple is valued at $500 billion but Apple is truly an exception being worth more than Poland!

When you think that Facebook exists in the ether, in the form of electrons or whatever you call them it makes you think. Facebook is not tangible. The equipment that stores the website is tangible but Facebook in not tangible in the same way that the stock and equipment at Apple is or the manufacturing base at Apple is.

The entirety of the core assets of Facebook are invisible. Without the website there would be no Facebook. All the staff would have to be laid off. The company would have near zero value.

As we gradually evolve from hard information on paper to digital information worldwide we are in danger of losing a lot more, a lot more quickly if things go wrong.

Apparently there have been complaints about the integrity of Facebook's API. "API" stands for 'application programming interface', whatever that means! Let's just say that the hour or so of downtime yesterday 7th March 2012 was due to faulty programming. The engineers were forced to turn off the Facebook website in order to fix the problem. That was a drastic and dramatic step to take and the worst position that Facebook has been in for four years.

It must be a kind of a nightmare keeping all the balls in the air at Facebook as it has expanded so rapidly. The hardware involved must be massive. Apparently they have thousands of engineers.

The point is that never has so much money be tied up in so little in the way of actual tangible asset. I wonder if the recent downtime has brought that home to the people who value internet businesses?

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