I guess the size of a community and the amount of revenue doesn't really go hand-in-hand in the Web 2.0 world after all. I see a similar pattern in YouTube as well. Digg seems happy though. Then again, no one bought it at a ridiculously high price yet.
Maybe I'm onto something here. Something Warren Buffett knew way before any of us.
According to the “Oracle of Omaha”, and probably the most successful purchaser of businesses of all time, a business must have three main characteristics if he’s going to buy it, or even just buy shares in it:
- Is the business simple and understandable?
- Does it have a consistent operating history?
- Does the business have favorable long term prospects?
Which pretty much means that he only invests in Brick and Mortar companies with physical indications of good fiscal policy and future vision. This saved him from the dot-com bubble (or the burst rather) and probably will save him from the Web 2.0 bubble too.
I wonder whether they read books like “The Warren Buffett Way” or numerous citations from them found all over the internet (where I read most of it) anymore. NewsCorp’s purchase of myspace.com for $580 Million, Microsoft’s grab of 1.6% of Facebook for $240 Million (giving Facebook a paper value of $15 Billion) and Google’s purchase of YouTube for $1.6 Billion suggest they don't.
Food for thought ...
