The digital frontier has emerged as a new marketing medium. The sheer number of users visiting digital/social media sites have peaked the interest of investors who see the money making potential of “billions of eye-balls”. However, the recent poor performance of the Facebook IPO has shaken the confidence of investors, believing that this entire social media/digital phenomenon will end up like the dot-com bust. The writers discuss the differences between this current situation and the dot-com bust and the misunderstanding of this business model as well as the conflict of the perspective between Silicon Valley and Wall Street. The writers ultimately believe that this digital/social media business model will not die, but rather currently in the midst of development and growth.
I believe that the writers make a strong point in stating that this digital/social media business model is real. It simply boils down to whether the business fundamentals are there. Does one have a product that will please the customers? Will customers come back for the product? Etc. These digital/social media sites have a captive audience, Facebook with over a billion users, Twitter with over 500 million. It is simply a matter of how these companies are able to utilize their users to successfully develop as a company. Another observation is that there is a misunderstanding between Silicon Valley and Wall Street. The cultural difference, business model difference, and generational difference of Wall Street investors who may not understand social media and the digital phenomenon all contribute to the misunderstanding between the investor and a digital company. This difference could account for the disappointment of the IPO.