Wednesday, October 30, 2013

The Grandmother and the billion dollar company

As we write, Twitter is likely to be valued at 11 billion. Facebook's current market cap, according to this article, is at 100 billion.

If you were an old grandmother somewhere in (any part of the world), who was a nosy Parker and knew something about everyone's affairs, obviously you could guide a traveling salesman to the house that is most likely to buy the stuff he peddles. But the question is, how much would that traveling salesman be willing to pay you for that information?

And the answer is - 100 billion? 11 billion? 340 billion?

What is the point? Bear with me while we explain this.

The economic value of social capital is a very new phenomenon for the human civilisation. Social capital has always existed, and has helped society immensely - as traditional medicine, gossip (and what would we be without gossip?) , product recommendations from friends (remember Amway and Avon?) .. et al.

For the first time, we see a price - a very substantial, tangible price, being put on the notional value of this information.

Is this information, inherently, worth the price we put on it? How much more do companies sell on targeted advertising vs generic advertising?

I do not have an answer. Given the size of global commerce, the numbers could be too low, or too high, depending on that crucial factor - IS the grandmother's knowledge of which house to go to, leading to a sale?

And i really think we should pause and ponder.
Social capital also has a social cost.

No comments: