On: FB down 8% at opening

[TomGullen]

Why anyone would buy FB at over 100 P/E is beyond me. The general sentiment of the buyers is that "Facebook COULD earn a lot of money". When has that sort of line ever worked for startups? If a startup says something like that, everyone asks "Well why haven't you yet then?"

Small businesses/startups on Dragon's Den get laughed out the room when they try and broker a price based in part on the 'potential' of their business. Why is it different for Facebook?

[gruseom → TomGullen]

Amazon, of course. They were widely laughed at too. I remember the favorite joke of the people who used to ridicule them: "we lose money on every transaction and make it up in volume".

[rosenweiss → gruseom]

If you look at their latest numbers, you will see that the joke was not far from the truth. Once the growth phase is over, reality bites in, hard.

[majani → TomGullen]

The 'Dragons' are mostly value investors, not growth investors. They want high cashflow investments in which they can share the dividends.

[IsaacL → TomGullen]

"When has that sort of line ever worked for startups?" When pitching to every tech VC and angel investor ever. It's assumed that "home-run" startups are going to be chasing large potential markets.

http://www.bothsidesofthetable.com/2011/12/27/should-startup...