Looking At The Facebook Frenzy For What It Is: Irrational Exuberance

Facebook is big. And it's getting bigger. There’s no denying that. Each and every day there are lots and lots of people joining the network, slowly but surely helping to increase its founder’s alleged net worth.

And lots of outsiders following the non-stop activity within the social network have for months now been feverishly looking for ways to, for lack of a better phrase, make a whole heckuva lot of money for themselves off the mini-boom happening within Zuckerberg’s walls. There’s been a great deal of cash funneled into the development of various Web-applications. Standalone Internet businesses established even before Facebook came to be are getting in on the action, too.

Widgets are being sold for non-widget-like numbers. High figures are being thrown every which way. It’s kind of, well, a crazy frickin’ time. Lots of overestimation going on. Greenspan would sum it up nicely. Irrational exuberance, he’d say. And he’d be so damn right. As hot a property as Facebook is right now, everyone involved with the project – from founder and CEO down to the singular teenage developer making stuff on his/her free time - to cool the hell down and put things into perspective. Yes, perspective. It’s a great thing. And, personally, I’d recommend starting the grand refresh on the financial front.

Facebook, whether rightly so or not, has already been pinned with a multi-billion-dollar valuation. That’s no secret. What is it now, $10 billion? $15? I think it’s somewhere around there. And what about those third party apps everyone’s clamoring about, those cool little nifty widgets? Some of them are pinning themselves with great bit tags of seven and even eight figures.

As much as those numbers seem to be proportional to the figures now being attached to the entire world that is Facebook, all those zeros do appear a bit, you know, excessive. Very excessive, in fact.

If one thinks logically about the current status of the great ecosystem that is the “coolest” social network on the Net, the hullabaloo in general seems non-sensical, from core to outer rim. I mean, here we have a social network – granted, it’s immensely popular and seemingly infinitely expandable – that’s not making nearly enough money on its own to even warrant the valuations it’s most recently received in the press. And regardless of that fact, the third-part world is abuzz with the clatter of calculators, punching out equally ridiculous sums that also have almost no solid grounding whatsoever.

But I suppose few concern themselves with whether they live on Cloud 9 or down here on Earth. As long as those checks get written and people and small and large businesses ensure their accounts show to be bigger than before, all is right in the world of technological commerce. Right? The bubble’s getting bigger, after all, and no point waiting ‘til it pops and the party comes to a crashing halt. Get in and get out while the getting’s still good, eh?

To be fair, Bubble 2.0 doesn’t appear nearly as chaotic as the one the world got to know in the late 90s. The tech industry as a whole has learned from its mistakes. (For the most part.) But that doesn’t mean things can’t get out of hand still. Lots of variable are at play, and as unlikely as another whopper of a crash is of coming to fruition right now, it just makes sense to be cautious. While social conservatism might have its flaws (and it’s got a hell of a lot of ‘em), a daily dose of financial conservatism never hurts.

So take a step back, folks. Look at Facebook. Look at its financials. Look at those floating about Third Party Land, and decide for yourself whether it all computes. I dare say it does not.

How about you?