By Conor Sen May 25, 2011 11:30 am
Houses and durable goods aren't the future of the US economy. Neither are commodities. It's the virtual world people are gravitating toward.
The point of this piece is to provide intellectual justification for how LinkedIn (LNKD) could be worth $25 billion in five years, and how Zynga might be worth $25 billion in five weeks. Yep, the maker of Farmville and Mafia Wars is looking to IPO, perhaps as soon as next month, and with roughly $1 billion in revenues and $500 million in profits over the past year, a $25 billion market cap is a possibility.
Kevin Depew wrote back in 2008 in Five Things You Need to Know: Social Mood Shift Brings Stark Changes about the re-pricing of financial and intangible assets that was likely to occur as a result of the socionomic shift of the last cycle:
Little did we realize how right he was -- Facebook, LinkedIn, and Zynga were hard at work building multi-billion dollar businesses around the idea of virtual, or intangible, assets, and relationships.
This is the future, what Professor Pinch and I are calling the data economy, and what I intend to keep writing about until it becomes widely accepted.
That brings us to this morning's durable goods print, which was weak, falling 3.6% vs a consensus drop of 3.0%. This comes on the heels of yesterday's new home sales report, which shows the housing market continuing to bounce along the bottom. Who cares? Houses and durable goods aren't the future of the US economy. Neither are commodities. Rick Bookstaber put it better than I, noting:
That brings us to a final point, on credit and interest rates. Rising economic themes are capital-light. Food trucks and CSA (community-supported agriculture) programs instead restaurant chains and global agrobusiness. Cloud computing and tablets/smartphones instead of a large IT footprint. Renting instead of owning. Why are people worried about a spike in interest rates and the damage it will have on the economy when our lives will increasingly demand less and less credit? Why can't the government run large deficits for a few more years in this environment?
Sounds crazy, I know. Sort of like saying the US could have the biggest boom it ever had without a corresponding increase in per-capita oil consumption.
Kevin Depew wrote back in 2008 in Five Things You Need to Know: Social Mood Shift Brings Stark Changes about the re-pricing of financial and intangible assets that was likely to occur as a result of the socionomic shift of the last cycle:
But this mania has created the overvaluation of all financial assets. So what is left that is undervalued? Intangible assets; relationships, time, quietude, reflection -- objects/ideas that are difficult to define and whose value deflated in the mania of accumulation of all manner of consumables and financial assets.
But now social mood is shifting. As a consequence of that shift many intangible assets will be re-priced.
Little did we realize how right he was -- Facebook, LinkedIn, and Zynga were hard at work building multi-billion dollar businesses around the idea of virtual, or intangible, assets, and relationships.
This is the future, what Professor Pinch and I are calling the data economy, and what I intend to keep writing about until it becomes widely accepted.
That brings us to this morning's durable goods print, which was weak, falling 3.6% vs a consensus drop of 3.0%. This comes on the heels of yesterday's new home sales report, which shows the housing market continuing to bounce along the bottom. Who cares? Houses and durable goods aren't the future of the US economy. Neither are commodities. Rick Bookstaber put it better than I, noting:
People who are staring at a tsunami of demand for commodities from the developing world and predicting a doomsday of $400 oil and $4000 gold are missing the longer-term retreating tide of demand as citizens of the developed world actually demand decreasing amounts of energy, large goods, and heavy infrastructure. We won't be packing up and moving to Mars, as the science fiction solutions to resource depletion propose. We will pack up and move into the virtual world.
That brings us to a final point, on credit and interest rates. Rising economic themes are capital-light. Food trucks and CSA (community-supported agriculture) programs instead restaurant chains and global agrobusiness. Cloud computing and tablets/smartphones instead of a large IT footprint. Renting instead of owning. Why are people worried about a spike in interest rates and the damage it will have on the economy when our lives will increasingly demand less and less credit? Why can't the government run large deficits for a few more years in this environment?
Sounds crazy, I know. Sort of like saying the US could have the biggest boom it ever had without a corresponding increase in per-capita oil consumption.
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