Opinion

The Edgy Optimist

Tweeting our way forward

Zachary Karabell
Nov 11, 2013 18:21 UTC

Twitter’s initial public offering last week was everything that Facebook’s botched offering a year and a half ago was not: the stock was reasonably priced; management wooed investors; and the company neither promised the moon nor the stars, and was rewarded with a substantial amount of cash raised, a stock that went up more than 75 percent, and a valuation of $25 billion.

Though shares pulled back sharply — and predictably — the day after its IPO, Twitter has now joined the pantheon of leading social media companies. It has yet to make a profit, but unlike the 1990s Internet comets it is routinely compared to, it is making substantial revenue (on pace for just under $600 million this year). That is substantially less than Facebook was making when it went public ($3.7 billion), but more than LinkedIn was generating when it went public in 2011 (estimated at $220 million).

That said, at its IPO Twitter was valued higher than either Facebook or LinkedIn at the time of their public offerings. In that sense, Twitter’s reception does raise a vital question: are these companies doing more than making their founders and investors rich? Are they doing more than satisfying some nice need of their customers? Are they, in short, changing the world the way they claim? Or is that claim just a useful marketing device that makes otherwise pedestrian businesses appear to be something far grander, convincing investors to pay more than they would for equivalent businesses in more prosaic industries?

I’ve been wondering about this question for several years, and for now, it remains a question. The hype and draw of social media in its many and various forms is undeniable. Whether it is the Twitter IPO, or Yahoo’s $1 billion purchase of Tumblr, or the panoply of new companies that pop up in Silicon Valley and NYC’s Silicon Alley, these companies have buzz and they also garner income. Because so many of them serve as new media companies, occupying the same general space as journalists, they garner attention. Yahoo’s Marissa Mayer gets substantial press, far more than the chief executive officers of many companies many times larger. The same can be said for Twitter and before it Groupon, Zynga, and a host of others whose size was modest compared to many public companies, but whose profile was anything but.

Ask denizens of the Valley what they think, and they’ll say that companies like Twitter command premiums and generate buzz because they are transformative. They are transformative the way that Apple, Google, Microsoft and Oracle were transformative. They change the way consumers and businesses live and function, and they make it possible for people to connect ever more seamlessly to the products, services and people that they wish to and need to. Or so the argument goes.

Two cheers for the tech industry’s goofy energy

Zachary Karabell
May 24, 2013 18:49 UTC

The national conversation of late has revolved around a trio of Washington scandals, a weather disaster, and the seesaw views in financial markets about whether crisis looms. Yet for all their prominence, none are as tied to trends that will shape our collective future as the myriad of events that took place this week in New York City under the banner of “Internet Week.”

Now in its sixth year, Internet Week is a loosely coordinated series of gatherings ranging from daylong symposiums to open houses of tech companies large and small to the Webby Awards, which is the online version of the Oscars. Topics cover the gamut from healthcare in the digital age to marketing your startup to crowd funding. The attendees are young and at times terminally hip. The whole thing is, quite frankly, fun.

The events are filled with strivers and startups. Some may be bought in a few short years, at massive multiples, as Tumblr just was by Yahoo; some may soar higher and become the next Yahoo or Facebook; many will fail. But the collective outcome points resoundingly toward creativity, innovation and continually morphing modes of commerce and connectivity. Half of it may be frivolous, but what matters more is that half of it is serious about changing the world.

Massive, open, online disruption

Zachary Karabell
May 17, 2013 12:19 UTC

The United States has a problem: rapidly rising student debt. It also has a solution: online education. The primary reason for spiraling student debt is the soaring costs of a college education at a physical college. Online education strips away all of those expenses except for the cost of the professor’s time and experience. It sounds perfect, an alignment of technology, social need and limited resources. So why do so many people believe that it is a deeply flawed solution?

Because it means massive swaths of higher education is about to change. Technology has disrupted many industries; now it’s about to do the same to higher ed.

But it is the students who need aid, and not the financial kind. They have too much of that as it is. The amount of student debt is large and getting larger. It will top $1.1 trillion this year; two-thirds of college students will graduate with debt. The average debt burden is $27,000, though that is skewed higher by a small percentage who owe a lot more. Forty percent of students owe less than $10,000. The amount of student debt has doubled since 2007, tripled since 2004, and many economists believe that the effect on the overall economy is negative.

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