Don't get me wrong I think this sounds like an excellent idea that could turn out to be an excellent company. It's just such a large amount of money to raise that it kind of raises the question of what game the VCs and/or founders are really playing.
It seems like at this point there might be a possibility of VCs planning on Facebook and Twitter going public and either being acquired at an inflated price with all that new capitalization or going public themselves in the wake.
It is always wise to invest at the start of the bubble and withdraw your money before the euphoria peaks. Maybe they are hoping to create a bubble with these ridiculous deals.
I am setting up a photo-sharing company, like, now.
It still isn't clear to me that if there was a sudden readjustment of these overvalued companies how many companies would really be effected and what it would mean for the sector as a whole. I don't think its defining the whole sector the way it did in 2000. It might mean bad things for VCs in general, but maybe this is the economy working VCs out of the system.