The separate planet that the technology economy seems to occupy is more clearly visible than ever this week. While the Eurozone plunges deeper into crisis with the prospect of the Greeks leaving the single currency, and the UK economy lurches from one bad news story to the next, in both Silicon Valley and Silicon Roundabout the sound of jeraboam corks popping has been louder than ever.
One tech story has mattered more than any other this week, or this year for that matter. That is the quite staggering $104 billion IPO for Facebook, an internet business started eight years ago by a college supergeek. As Mark Zuckerberg rang the ceremonial bell to open the NASDAQ floor, and shares jumped instantly on opening from $38 to $42, the ker-ching resonated right the way round Planet Tech.
The Facebook IPO is by quite some distance the biggest in technology history – raising 10 times as much as Google from shareholders on day one. And the fact that its IPO is three times the GDP of Kenya, and roughly the same as the amount loaned to Greece by the European Central Bank for its first bailout, puts the scale in serious context. (Perhaps if the Greeks are unhappy at the strings attached to the next bailout they could go huddle round Zuckerberg’s hotdesk.).
Sceptics are of course watching and waiting for the bubble to burst. General Motors was among the high-profile doubters this week, when it pulled its paid ads from the social network, and doubtless set pre-float pulses racing round Facebook HQ. Here, the Telegraph nicely summed up its scepticism by arguing that ‘Facebook has too many friends and not enough customers.’
Quoting Sir Martin Sorrell, CEO of the world’s biggest advertising group, WPP, who suggested that social networks were “not the right context” for commercial advertising because they interrupt a process that is supposed to be informal, the Telegraph hit at the main doubting point: that despite its colossal popularity, its ability to make money is far from certain. After all, does anyone out there ever click on a Facebook ad?
But of course it’s not just about the advertising. Facebook is the largest online repository of personal information on earth. It holds more than 100 pedabytes of our documents and photos (that’s 100000000000000000 bytes, by the way) – 100,000 times the size of the US Library of Congress. It is of course the promise of the jam tomorrow from all this information in the new media age that has the business world salivating. After all, ‘data is the new oil‘, as many have claimed.
Time will tell, of course. That astounding first day of trading could well fade in the memory, and prices diminish, as the company comes under more critical public scrutiny. Meantime, look at the excellent animation from the Guardian for more wow-wee stats about this incredible modern business story.
Back here in Tech City, businesses have yet to reach the stratospheric heights of Facebook, of course, and the valuations on sale are relatively trifling. But the success stories from Silicon Roundabout do keep on coming. Just this week DIY website builder Moonfruit was celebrating after news broke that it had been bought by Yell for £18 million in hard cash. CEO and founder Wendy Tan-White will feel vindicated for 12 years of hard graft, as well as considerably better off. Mike Butcher at TechCrunch reported this week that she’ll be staying on, thanks to a £2.7 million set of golden handcuffs.
Elsewhere, news is emerging of new funding rounds for the UK with ever-more eye-watering sums to fund expansion. Watch this space, or News at Ten, as the story of the success of the tech sector goes ever more mainstream.
The Tech City phenomenon is receiving BBC radio coverage right now, with Fi Glover’s One to One series profiling successful Shoreditch startups. The show is nothing if not upbeat about the tech economy. Last week she profiled SongKick’s Dan Crow, and this time she met Makie Lab’s Alice Taylor.
Most founders here doubtless dream that they’ll be the next tech billionaire – and for some, you wouldn’t rule it out. As Britain dives deeper into double dip, the corks are popping all the way round Silicon Roundabout. Let’s just hope we don’t hear the pop of any bubbles round here any time soon.