It’s time for a humble brag to remind myself and maybe the one or two people who read this blog how good I am at predicting stuff. For months, I had been writing that Snapchat is worth at least $10 billion and sure enough:
Snapchat Valued at $10 Billion
Most people are clouded by a lack of imagination or obtuseness, resulting in being wrong most of the time. The idea that an app that generates no revenue can be worth billions of dollars is inconceivable, and yet such a high valuation not irrational given Snapchat’s enormous growth and monetization potential from its millions of users and billions of daily ‘snap views’. The left said Facebook was a bubble in 2007 when Microsoft bought 1.5% of the company, valuing it at $15 billion. Now, just seven years later, Facebook is worth $175 billion and generates billions of dollars a quarter in revenue. So much for that ‘obvious’ bubble. The only thing worse than a liberal’s prediction is the president he voted for.
To predict well, you have to open your mind to things that upon first glance may seem illogical, but upon closer inspection are not so crazy. You have to cast aside your cynicism and instinctive tendencies to immediately dismiss what you dislike or don’t understand. Many of failed prognosticators try to draw historic parallels (America is in decline like Rome the most common one), and while there many convincing similarities, often there are subtleties between past and present that result in wildly diverging outcomes, which many people fail to pick up, but not me.
For many years, the left has said web 2.0 is just like the 90’s dotcom bubble and will have a similar implosion, and yet, eight years later, it’s still going strong with no hints of collapse. Whether it’s the double dip recession that never came, Bay Area real estate and web 2.0 being a bubble or stock prices and college tuition being too high, the left has cried crisis so many times that no one listens to them anymore. The original 90’s tehc bubble lasted just 7 years from 1993 to 2000. Valuations were obscene, with many companies having scant revenue and little growth as well. Millions of dollars were being funneled into companies that had next to no potential.
Now compare that to the web 2.0 boom where there is more money chasing fewer, higher quality companies. Tiny, low-quality companies get little to no VC funding and have to grovel for a pittance on kickstarter or ycombinator. The future of web 2.0 is higher valuations for all of the leading companies, with absolutely no collapse. Here are my predictions of valuations for the leading companies within the next 2-3 years:
Snapchat: $30-50 billion. Buyout or IPO
Uber: $60-140 billion. IPO
Pinterest: $15 billion. Buyout
Air B&B: $40-60 billion (as valuable as Priceline). IPO
Tinder: $10 billion. Buyout
All of these valuations will be attained. Uber and Air B&B seem awfully high, but these are not just websites but rapidly growing disruptive businesses.