A Twit, A Tweet, A Twollow And A Bubble Soon To Follow

A Twit, a Tweet, a Twollow and a Bubble Soon To Follow
MAY 22, 2011 BY ERIC RICE

Somewhere in America there is a room full of Angel Investors listening to a pitch from a young entrepreneur selling him “the next Facebook”. This group of older investors listens to the entrepreneur with his or her fate already determined before they walk in the door.
They have heard the terms Tweet, Twit, Twitter, Facebook, Fan page and all the others, yet still couldn’t tell you how to use them or how they will make money. But that matters not, they are wanting to jump in the social media pool no matter what.
It is now officially a cliché, ‘it’s like the next Facebook”. Does anyone understand the power of magnitude that Facebook really has? If they did, they wouldn’t even try using this term with a straight face.
Everywhere you look there is a Twit, a Tweet, Twollow and there is a bubble soon to follow. I can see the cover of The Wall Street Journal already, “Investors left bitter, for investing in Twitter”, or perhaps The Onion, “It might be smarter to put your head in the sh**ter than put money in Twitter”.
Those rooms full of Angel Investors have one thing on their minds, placing money in tools. Ah yes, ‘find me tools and patents and I am in!”, they say. Constantly overlooking the importance of the carpenter. Normally in a traditional business, which social media certainly is not, tools are very profitable. Imagine being the guy that invented and patented the screwdriver, he does pretty well. However in this market, we are going through things we have never seen before.
We are seeing businesses that have never existed and revenue lines we didn’t even know were possible a decade ago. Which spawns the question, are carpenters more important than tools? I believe they are in this era. Digital tools have such short shelf lives it is almost a waste of time to invent half of them. Unless they can help do the following things they have a very short shelf life:
Capture user data from open source markets
Create and distribute content efficiently
End piracy in the music business
Make the ease to mobile easier
It seems as though the nineties never happened. I feel like I am looking in the eyes of gambler that only remembers the hands they won and forgotten all the hands they have lost. So why are we in such a rush to put money into companies that produce no cash all over again?
The answer is simple, boredom. Most of the money that is out there, and there is a lot of it, is from the 90′s bubble and before. The players that still have money are certainly in control again and they know it. They are looking for certain things in an investment, just like they did in the 90′s and it is chilling frankly.
I cannot stress this enough, this is not the internet boom! The internet is here and being used by all, relax. The next wave of investor dollars is going to be in this current tail end of social media explosion, mobile technologies (which is where I would be focusing) and internet TV networks. I already know of 3 right now that have funding of more than $500 million, so be on the look out.
The truth is that most social media companies have become nothing more than a smart teenager that always seems to trick his parents into lending them money. This is not to say that there aren’t some amazing ideas and tools out there, because there are, I see them everyday.
The problem is that most of these businesses get so engrained in their own kool aid that they forget tot go out and make money. I remember my grandfather telling me as a kid, “don’t invest in anything that doesn’t pay you” and that seemed pretty smart to me.
LinkedIn going public was a good thing, I never said it was a good investment, long term. It is a traders dream and it will do well, for a while. LinkedIn has a nice niche and it is a good thing for the economy, however, don’t look to social stocks to solve your solvency issues in the future.
By Eric Rice
Lone Wolf Inc.

About the Author:
Eric Rice is the creator of Lone Wolf Inc and a main thought leader in social media monetization practices. His experience and creativity in the social media space is utilized daily to design innovative content, delivery, and targeting. Eric has built 3 other companies on the premise of social media marketing with his own money and has been designing and implementing successful campaigns for more than 3 years.

Article Originally Published On: http://www.articlesnatch.com

Tags: angel investors

, eric rice

, lone wolf inc

, social media

, bubble

, twitter

, facebook

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