

The Competitive Advantage Period: Critical for valuing tech companies - wcgortel
http://www.capatcolumbia.com/Articles/FoFinance/Fof1.pdf

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wcgortel
Thought this might be a useful addition to the discussion about "is the tech
market in a bubble?"

If you're going to talk about how over/under/fairly valued these companies
are, it seems necessary to me to ask questions about their competitive
position.

The snapchat valuation seems lofty (and I wouldn't defend it) but I could see
it as reasonable if an investor believes that they have a reasonable chance of
continuing to cement their competitive advantage. They are stealing market
share among youth from facebook, and could extend that into a relatively
meaningful and durable business once they begin to advertise.

Note that Facebook has begun effectively monetizing its mobile users: it's
possible. This is probably not the right space to launch into some detailed
work on Snapchat, but I doubt the valuation is driven by "lol IDK" idiocy on
the part of the group backing them.

