Today Fred Wilson writes:
We are crossing a huge chasm from an industrial society to an information society. And there is immense pain in that transformation.
Absolutely true. To have a measure of how painful that transformation will be, take a look at this table comparing employees and shareholders value.
Information age companies created 10x capital value (market cap) with 0.4x labor (number of employees) when compared to industrial age companies.
Much of the bubble talk surrounds five companies: Groupon, LinkedIn, Zynga, Facebook and Twitter. Mr. Thiel estimates that those five companies account for three-quarters of the value of new Web companies and, he said, five companies do not make a bubble. If they did, we have bigger problems, he said. “We need technology for our society to get better in the decades ahead,” Mr. Thiel said. “So if you say there are not even five good companies, that even those five companies are fake, that is saying that our society is completely stagnant and that nothing is happening at all.
The huge audience for its games—Zynga has a total of 275 million active monthly users across all its titles—helped Zynga generate about $400 million in profit last year on approximately $850 million in revenue, said another person familiar with its finances.
I don’t fucking want innovation,” the ex-employee recalls Pincus saying. “You’re not smarter than your competitor. Just copy what they do and do it until you get their numbers.
We’re profitable and we’ve been profitable break-even or profitable every month since September 2007. We haven’t spent a dollar of our venture capital [~$39 million —Ed.]. We do spend a lot of money on advertising when we want to, like when we launched Farmville. We spent a couple million dollars advertising it and we’re not shy about that.
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Zynga co-founder and CEO Mark Pincus on profitability and online advertising shifting from marketing expense (“you don’t know which half gets wasted”) to sales cost (investment driven by analytics and metrics, there is no budget but only informed investment decisions)
The Profitable, $100 Million-A-Year Startup You’ve Never Heard Of
