Imagine when one person can create a platform 90% of humanity relies on. What is that one person worth? What if that product has no revenue because the owner can extract all value on-demand by extorting/blackmailing The Man at will based on collected personal information?
The fact that it's being trotted out again as justification should worry you.
Those two differences have in fact changed the landscape. I can run a couple person startup that generates millions in ad revenue now, with exceptionally high margins. Plenty of Fish is the most famous example of this. Techmeme essentially worked like that, as another example. Hacker News could be like that, if PG wanted it to be.
Point being, it's now drastically easier to monetize traffic long term, compared to 1999 (when the ad market was tiny, backwards, poorly standardized, difficult to utilize, and not very developed for all industries / segments).
Go back to 1999 and build a website supporting a million concurrent users. How much hardware do you need? What are your fixed costs? What are your engineering costs? How do you even market your thing?
Now do the same today.
What's different?
To attract today's users, you still have to be better than your competitor's website. The fact you can easily build a website for millions doesn't mean it will actually see millions of visitors.
Treating The Beatles like General Motors is where the problem lies. Twitter, Facebook, Snap Chat and their ilk are more like the supergroups of yesteryear than the industrial giants that our investment infrastructure was designed to support.
Vanilla Ice might be a better example.
It may well be true that we could convert our current economic condition into a post-scarcity economy by shifting away from capitalism, but at the moment we're stuck in an overproduction/overaccumulation/debt crisis.
No one is saying it's worth nothing.
They are saying "X is not worth this huge valuation" which implies the person saying that thinks there is something "unfair" about the multi-billion dollar valuation.
But, this naysayer person has a proper "fair" valuation in mind based on their complete outsider knowledge. To them, it's actually worth nothing (no revenue == if someone buys it, they can't make money == it's worth nothing), but they'll concede a little since a lot of people use it.
My post really has nothing to do with Snapchat specifically. Snapchat could just as easily be Instagram -- which also had no revenue when it was acquired by Facebook for $1 billion.
But it's not really relevant IMO... Is there another industry that will pay out $1 billion for a company with no revenue (and no patents)?
I think I give a pretty fair argument about this towards the end in comparison to broadcast.com
In short, yes- Back then the bubble was based on the hype that people were coming. The hype now is that the people are here. Again, compare the 500k (thousand, not million) users of broadcast.com (and 5.7b sale) to snapchat and it becomes less frothy.
Like the stock market, valuations are set on what others are willing to pay. You may not use snapchat (I dont either) but you cannot deny the fact of its massive usage. Yes, Its unmonetized- But people are valuing it where it is because another large company is very likely to pay that much to acquire it.
Valuation = how much something is worth to another buyer. Everything in this world has a fluid cost to it, so everything goes through ups and downs. But there is no static valuation, only a constant ride of ups and downs.
If you really think there's nothing wrong with tech valuations, please show me ONE company in another industry that has no revenue and 16 employees, yet is worth $3-4 billion (Snapchat)