Out Of Control And Good As Gold

Michael Hedges May 23, 2011 Follow on Twitter

“Modern technology is totally out of control,” the UK’s highest legal authority announced, drawing to a close another week filled with news of the unleashed and unhinged. The faster it spins, though, the more it’s worth. And the world did not end Saturday.

“Anybody can put anything on it,” said Lord Chief Justice of the Courts of England and Wales Igor Judge (May 20), referring obliquely to the legal obscurity of keeping information – true or not – off websites, particularly social media sites like Twitter. “Modern technology is totally out of control. I’m not giving up on the possibility that people who peddle lies about others through using technology may one day be brought under control, maybe through damages, very substantial damages, maybe even injunctions to stop them peddling lies.”

There are in the UK legal mechanisms, referred to as super-injunctions, meant to prevent anybody from disclosing the existence of injunctions issued, ostensibly, to protect citizens from unwanted invasions of privacy. Some citizens taking advantage of these legal provisions would like to keep their affairs – literally and figuratively – out of the newspapers and off TV. UK broadcasters and publishers have, begrudgingly, complied under penalty of law.

The Twitterati – we may call them Twats – felt no such judiciousness. After one or more Twats posted unseemly details – names and numbers - of those who may or may not have sought legal injunction to forbid UK tabloids from invading their indiscretions one football player filed suit against Twitter and “persons unknown,” presumably to have the vital details removed and, obviously, cash delivered.  UK Culture Minister Jeremy Hunt, dutifully preparing the formality of Rupert Murdoch’s BSkyB take-over, said social media was making “an ass of the law.”  Some continue to find “modern technology” irritating.

Others find it thrilling. Institutional investors and venture capital people left all self-control behind and bid up social network portal LinkedIn’s IPO (May 19) to value the company at 39 times 2010 revenue, about USD 9.5 billion. The IPO hit (May 19) at USD 45 a share and then more than doubled to USD 122. By the end of the week the share price “settled down” to about USD 100 a share.

LinkedIn brands itself a professional networking portal, for those want to keep their profile in front of everybody they’ve ever worked with. Like others in the social media genre, it is free to access. A premium service is offered but the primary revenue spinner is recruitment ads.

As the LinkedIn share price soared, all the money and finance wags tittered about bubbles. Remember Netscape, they said. Remember Pets.com, they said. Remember the Titanic. (Wait, wrong technology)

Among investors, largely of the institutional variety, the LinkedIn IPO opened the dash for the next round of internet cash after a dearth opportunities. Naturally, it created a frenzy. “Investors who like growth stocks have been stuck in a desert for a long time,” said Global Silicon Valley Asset Management  CEO Michael Moe to sify.com (May 22), “and now it's like they have found this great pitcher of water.” People begin to hallucinate on the dessert without water.

Not to worry, this well ain’t run dry yet. Russian search engine Yandex floats its IPO next. Like LinkedIn, it’s been around awhile, since 1997, building revenues to USD 429 million in 2010. LinkedIn was launched in 2003 and its 2010 revenue was about USD 139 million. Yandex has 60% of the Russian language search market. Its IPO will easily fetch over USD 1 billion. The 2005 IPO for Baidu, China’s number one search portal, raised just over USD 100 million.

Within the next year multi-billion IPOs are expected from social games maker Zynga. Yep, that’s FarmVille. The money and finance wags are already valuing it at USD 10 billion. After that is an IPO for online coupon business Groupon, which walked away from a USD 6 billion offer from Google. Groupon’s market makers, said Crain’s Chicago Business (May 20), are expecting USD 25 billion.

And then there’s Twitter. And THEN there’s Facebook. When you see your friendly neighborhood hedge fund manager come screaming down the street in that red Bugatti, heaving cans of Red Bull from the window, you’ll know “irrational exuberance” has returned.

That’s simply another phrase for “out of control,” the emblematic rationality for the huge rise in social media. That it can’t be controlled remains, in many respects, its charm. Think of snake charming.

“While modern technology has given people powerful new communication tools,” said Forbes tech writer Leo Gomes, “it apparently can do nothing to alter the fact that many people have nothing useful to say.”

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