Google Plus Busts The Social Boom

Apr.25.12 | About: Facebook (FB)

Google (NASDAQ:GOOG) Plus may be that company's most controversial product yet.

Some like it. (I do.) Some hate it. (I do, sometimes.) It is designed as much to inform the base search engine as it is to add GoogleTime, as regular users quickly discover.

If you are one of these people, try this experiment. Sign out from your Google account. Start private browsing on your browser. Then go to and do a search and look at the results. Then turn off private browsing, sign back in and do the same search again. Feeling lucky? That's the power of Google Plus. The more you use it, the more value it provides.

It's not time that determines what an Internet stock is worth. It's value. The perceived value you get from the time you spend, the per-minute value if you will. This was proven true over a decade ago, when the Yahoo (NASDAQ:YHOO) "portal" fell to Google's rigorous focus on search. It is still true.

This has provided some headwinds for Facebook (NASDAQ:FB), the most eagerly-anticipated IPO since, well, since Google itself. Kim-Mai Cutler of TechCrunch has calculated the damages. Revenue down, new hires harder to attract with stock, advertising revenue actually down.

At this point delaying the IPO is not a cure. (Back up, and turn the hype machine up to 11, then crush the accelerator.) Criticizing Mark Zuckerberg is no help. (He's not susceptible to the "adult supervision" dodge that did in Steve Jobs back in the day. Lesson learned.)

The plain fact is this. Facebook is a maturing company.

As I wrote last year, in one of my first posts at SA, this is where the social bubble busts.

Not when someone takes out a public company at an inflated price, as in the dot-bomb, when Time-Warner bought AOL and thus set a ceiling price on Internet assets. When all the private shareholders who've acted like they have fortunes try to cash-out and find there is no flood of greater fools on the other side of the sale door.

The bubble starts to bust the day Facebook goes public. It blows wide open the day lock-up periods expire and everyone tries to cash out. At that point we know the maximum value of a social networking company. Everyone's in. Time to sell. But you couldn't?

Poor darling.

Disclosure: I am long GOOG.