Why should higher ed and ed tech people care about the valuation of Facebook? Does it really matter if a bunch of young technologists and investment bankers get fabulously rich, and if a group of wealthy, visionary or gullible investors make or lose tons of money?
I think that the Facebook valuation matters to anyone interested in the educational technology and publishing sector. I'm not exactly sure why I think this, and I'm hoping that maybe together we can better understand the meaning of the Facebook IPO.
Some questions about Facebook that I've been asking myself include:
- If in two years Facebook ends up being worth considerably less than what people are paying for shares today will we see a chilling effect on investments in the educational technology sector?
- Would a a decline in Facebook's valuation call into question the business models of other web and mobile based platforms that rely on advertising?
- Will investors be unwilling to make long term bets in education and technology related businesses given the Facebook IPO and related deals (such as Facebook's $1 billion purchase of Instagram?)
- What will it mean for smaller education and ed tech startups to attract investors and capital?
I see an enormous set opportunities at the intersection between education and technology, opportunities that have almost nothing to do with the Facebook story. The willingness of the investment community to value Facebook at $100 billion makes me seriously question how these valuations are derived.
The lack of critical, in-depth, and questioning analysis of Facebook's business fundamentals is a worrying sign about the ability of the business and technology press to adequately report on, and analyze, the potential of ed tech startups and more established for-profit education companies.
Some good things might come out of the Facebook IPO. I hope that at least some of those young newly minted Facebook millionaires decided to invest in or start their own ed tech startups. Better yet, I could imagine a scenario where Facebook gets serious about education, and decides to make substantial investments in social learning.
But despite these hopes, I can't shake the feeling that the Facebook valuation is less about business fundamentals and more about hype, hope and magical thinking.
Can you help explain why the Facebook IPO matters, or does not matter, to ed tech and higher ed?