Alex Brummer

Investment Special: The social network bubble

Are investors repeating the mistakes of the dotcom era?

issue 10 September 2011

It’s an irritating daily occurrence. The names of two or three people I barely know pop up in my inbox asking me to join their ‘professional network’, LinkedIn. Early on, I was tempted by the idea that being part of this family might widen my range of contacts, and perhaps also my story-gathering capacity. But then I realised that anything that had grown so big and amorphous was hardly likely to be a source of exclusive information.

Nevertheless, social networks from LinkedIn to Facebook are the new investment fad. Having been wrong about Google when it first floated — my view was that legal disputes over content meant that it could never work — I hesitate to be dismissive about the current generation of tech giants.

The movie The Social Network has redoubled the fame of Facebook and its co-founder Mark Zuckerberg. The power of social media has been displayed both in the Arab Awakening and in our own August riots.

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