Left Behind In Social Media Investing = Private Equity ?

Foreword

I have always only held Lee Kuan Yew in awe (and even a bit of fear), tried hard to fit the mould and kept my mouth shut in public. Now I shall miss you. You were one class act !

Rest in peace.  And I hope all those who cry and promise to do you proud keep to their word. I will not make promises I cannot keep but I will just do my best, as you had.

This post was written for www.hnworth.com, a site targeting high net worth individuals in Singapore.

Have fun reading !

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Fans of Warren Buffet know that he does not ever invest in something he does not understand and for most verbal learners like me, 2 dimensions is the best I can pull off at times which makes the virtual world of technology a challenge to imagine as opposed to the bread and butter business of Coca Cola that we can easily identify with.

Needless to say I am pretty bad with Minecraft, the best selling computer game of all time. Despite the numerous Minecraft themed birthday parties I have attended with the son, I continue to marvel at how the kids navigate through those 80’s DOS looking graphics for hours on end, spending off their mother’s credit cards, playing online with thousands of others around the world.

Well, the creator of Minecraft has just cashed out to Microsoft for $2.5 bio and is comfortably retired and even more comfortable with being a one hit wonder, buying a nice $70 mio Beverly Hills mansion that we can salivate at.

http://www.forbes.com/sites/erincarlyle/2014/12/18/minecraft-billionaire-markus-persson-buys-70-million-beverly-hills-contemporary-with-car-lift/?slide=1

I got a glimpse into the workings of the virtual world when I visited the office of a social media cum marketing company the other day, atop a rough commercial building in the suburbs that we cannot imagine, again, in the company of crates and lorries and forklifts. I entered a nice pantry, artificial turf lined ceilings, brainstorm rooms filled with toys, baubles and junk food, and lots of …. kids, or barely-adult-kids, none more than 5ft 6″, looking like they should belong to a classroom instead of lounging around in the standard uniform of a casual suit, cut off drain-pipe pants and the must have accessory of a Trilby hat or vest or thick framed glasses.

I was informed that these are very important people, for that bench of dozen or so of them control about half a million eyeballs (I could be exaggerating) online at any point in time. They specialise in generating hype and interest in any topic that they are paid for, they make topics go viral online and influence social sentiments in a massive way.

I would hazard to guess that most of us were part of last year’s possibly biggest viral craze of the Ice Bucket Challenge. Thank you, Facebook.

How much do you think that entire set up is worth ?

I’d say, much more than the purported market rate of thousand bucks per person the MLM (Multi Level Marketing) networks are selling their chains/channels for.

The amount of analytics they possess is mind boggling to me, who has just discovered the concept of social media velocity stock alerts that are available out there that help in trading decisions even as the market already has $400 bio in funds managed by robots.

As an investor, we realise that these people have just created wealth from their office based on the power of their social media reach and when they get bought out one day, they will be sitting in nice little windfalls.

This brings me to the main gist of what I intend to write about today. The business of valuing all these virtual assets, networks and channels.

 To continue reading……