WE CAN HAVE IT ALL
Facebook came along at a time before the recession really hit; a time when “the sky is the limit” was still the prevailing feeling about Internet moneymaking potential. The world had already seen the collapse of the dot-com bubble, and yet there seemed to be the pervading belief (and reality in some cases) that millions of dollars were there to be made on the Internet if one just mined for them properly. And this began a second, smaller, Internet speculation bubble – one that would see MySpace (a company which is still losing money) sold for the astronomical sum of $580 million dollars based on imagined earnings potential. A potential that may have been realized, had the company been properly managed. Sadly, Facebook is in a privileged class when it comes to proper corporate management in the last several years.
There are some who believe that the first Internet bubble burst led to the far more damaging housing bubble and credit crisis. According to Yale Economy Professor, Robert Shiller, who accurately predicted the dot-com and housing busts, the sub-prime crisis is due to, “the irrational exuberance that drove the economy’s two most recent bubbles–in stocks in the 1990s and in housing between 2000 and 2007.” That “irrational exuberance” is defined here (by a laymen wading her way through this mess) as the “fairyland method of financial investment,” - in other words, the willingness to invest, loan or spend money on a venture that has no practical guarantee of a return.
In the case of sub-prime mortgages, there was pretty much a guarantee of failure, in fact, the investment houses bet on it [check out the wonderful documentary Inside Job for more on that story]. Now, the Dot-com bust was likely due to misplaced confidence and greed, and the housing and credit crisis due to evil. Yet, everyone involved was to some degree culpable in the sense that they (and we) were willing to indulge in unnecessary excess, to the detriment of the collective whole. The willingness to invest in a dream is a beautiful thing; the willingness to haphazardly invest in a dream which has no solid foundation in reality is a dangerous thing.
Just like other Internet ventures before it, millions of dollars were invested in Facebook, which at the time was just un-manifested potential. As both Zuckerberg and Sean Parker said in the film “we don’t even know what it is yet.” Yes, venture capitalists invest in “un-manifested potential” all the time – in a sense, that is the very nature of their business. But the Internet boom represents an ever-increasing rise and decline of services.
Facebook did become profitable in 2009, which was ahead of the projected schedule, yet it could have just as easily gone the way of MySpace had we as an increasingly fickle consumer base found a different service that we preferred; or if it had suffered the same reckless mismanagement that so many other companies did. Of course none of this is really so new – speculation has gone on for a very long time, as have bubbles and bursts. This is just the current ideation.
THE EXCEPTION TO THE RULE
If the Internet were the Wild West, then Internet ventures would be akin to gold-mining and Mark Zuckerberg would represent the exception to the gold-mining rule. The guys that actually found gold. Like Less Than Zero, The Social Network represents the exception, rather than the rule.
Yet it is the exception that most people choose to believe in, that most of us want to believe in. The exception is as seductive as it is elusive, and when there is a failure to temper the dream with a healthy dose of realism, it can be dangerous.
In Wall Street: Money Never Sleeps Gordon Gekko talks about how we all “drank the same Kool-Aid.” For most of us, that “Kool-Aid” was the idea that “no matter what we do, things will only get better.” Many made financial decisions based on the message in that Kool-Aid, and decided to worry about the repercussions of those decisions, as Scarlett O’Hara would say, “tomorrow.” Well, tomorrow is today.
WE SHOULD HAVE IT ALL
“Entitlement” is a word we hear used a great deal. Corporate entitlement, personal entitlement, who is entitled to what and why. Much is made of what we may or may not be owed, with little thought to where it came from, or what we owe in return. There is a certain sense of entitlement inherent in the belief that everything should always get better, and that it necessarily will.
There is also a deep sense of entitlement inherent in the characters depicted in The Social Network.That sense of entitlement is perhaps most effectively expressed when Zuckerberg attests that the Winklevoss twins are upset because, “for the first time in their lives things did not work out how they were supposed to for them.” How many of us have felt that things as they are right now “are not like they are supposed to be?” If we really look, we will see that our idea of “supposed to be” was likely based on a fantasy.
Entitlement is an undercurrent that runs through every aspect of the The Social Network. Mark Zuckerberg felt entitled to co-opt the germ of the idea for Facebook, and effectively outmaneuver the originators of the idea. The Winklevoss twins felt entitled to 65 million dollars for coming up with the vague idea for what was essentially nothing more than a Harvard exclusive dating site. Eduardo Saverin felt entitled to maintain a massive stake in Facebook, despite that fact that he had (according to the film) a diametrically opposed vision for its future.
Sean Parker felt entitled to stake a claim in a company he had no part in the inception of, and to oust one of its co-founders. With the creation of Napster, Parker also helped to propel the now mass assumption that we are all entitled to free media – that we are entitled to simply take what others worked their whole lives to build and create. Parker looked at “bringing down the record companies” as something that gave him bragging rights, that set him apart, and made him special with no sense of consequence for what he did. No sense of care for, or even awareness of, the lives and livelihoods that his actions affected.
Change can, and must, happen. Change can be positive, even if it comes in the form of a temporary dismantlement of what was previously established. What is disturbing in The Social Network is the flagrant disregard for the real-life people impacted by the changes these characters were affecting.