A few months ago media announced the addition of LinkedIn, the social network focused on sharing information between users with professional backgrounds, to the stock market in the United States. The announcement, for various reasons and situations, revived the eternal debate about the viability of business models (or lack thereof) in technology companies.
Many critics, especially after the crisis of the "dot.com bubble" continue to insist that companies in this industry remain creating business models which are not sustainable in the long term. Among other reasons, they blame the venture capitalists (VC's) for providing tons of money into these companies that have not even proven that their products or services may be successful in the marketplace. This has caused many people wonder what´s the real value of companies with millions of users such as Google or Facebook. This coupled with that for years with investors speculating that these companies can achieve in the medium to long term, causing a long period of time before they receive a single dollar in revenue.
The story tells of companies like Google that had impressive headquarters, hundreds of employees, millions of dollars in investment for years but did not record a single dollar in revenue. All this while developing a business model that would allow him to make a profit through (initially) a clever advertising scheme paid by its customers.
The same debate is on Facebook. Apart from breaking into the social networking world with a platform that allows users to exchange information, communicate with people, etc., it also has provided a platform for people exposed to the world, show their interests, life daily, feelings and ideas. There is no more powerful marketing tool : to play with people's feelings. However, if you put all that aside, what is the real value that Facebook provides a person who invests considerable resources in a company which to date has not been incorporated into the stock market? Many critics claim that the database that contains millions of user data from Google and Facebook is the true value. What they could not do to many others with this information. How much is it worth?
Recently , writer Antoni Piqué reflected on the magazine Expansion about the legacy of Steve Jobs. Like many other thinkers of technology he emphasizes that Apple's true legacy is to have created and shown the world that a technology company could develop a business model capable of providing a service / product that the masses are willing to pay a relatively high price for them. Pique himself ponders that this legacy is mainly powerful today where the industry meets many open-source fans that while innovation has driven the industry, they also tend to adopt dogmatic positions, particularly in the areas of profitability of selling technology services.
While technology companies represent unique business opportunities they should remember that at the end of the day they are still businesses and while some rules and trends may not apply to them, there is no way to provide high quality services to users if they do generate no profit for the company that develops them. In this there is no dogma to change the cruel reality of the market.
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