Facebook is valued at $65b, according to Nyppex – the private market equity solution provider. Ask yourself how many hours of your time on Facebook were included in that valuation. Hold on – Groupon is worth about $25b. Ohhh. Wait, Zynga – the gaming company is worth $8b, according to Nyppex. Do these valuations make sense? Is a bubble near?
We do not know the answer and it may not matter, especially to Nigeria. Simply, a tech bubble brings small good things and many bad things also. Bubble corrects a cycle and before it, penetration is peaked. Nigeria missed the tech bubble of late 1980s that involved the PC companies. We did not participate. Then the dot-com bubble of early 2000 and we also missed that. We had no player in those sectors and we did not feel the busts. Too bad!
We want Nigeria to participate and to feel the impact of the next tech bubble. Yes, we can only feel it if we are into it. And it seems that social media will be the first opportunity for Nigeria to feel a tech bubble. We are not there, but if it can wait for extra five years, we might get there. If there is a bubble right now, we may go unscratched which will be very disappointing.
Why do we want to experience the bubble in Nigeria? After bubbles, technologies evolve. Every bubble leaves debris which are picked up and used to create the next technology and then a bubble repeats. It is a virtuoso (yes, virtuoso) cycle. Without bubble, there will not be new direction. There will not be new approach. There will not be innovation. Without the late 1980 bubbles, we might not have experienced the dot-com. And without the dot-com, there will not be any Facebook or Google.
When the PC market crashed for the stocks of the players like Intel, Compaq, the world saw cheaper microprocessors everywhere. They quickly figured out what to do with those microprocessors – and they created the web-based companies. By the time that one crashed, web was everywhere. And likes of Google then built a behemoth on top of that. Tech bubble brings a new direction and provides new perspectives.
But this time around, we are not just the typical consumers or spectators; we are participating and if the busts happen, we will be affected in Nigeria. If those cloud operators fold, most businesses in Nigeria will disappear. And that is exactly what we think we want. We have to play the game and get burnt along. People, yes – let us rain in Lagos.
The government must invest and help the startups with tools and infrastructure to get better. Only that way will the companies be involved in deep technology and reap the benefits. We must play at the creative sides and not be bystanders of importers and consumers. Lagos is booming with ideas and if we get support, Nigeria will play at the highest level and when the good tides come, we will ride and if the worst comes, let it not spare us because those that will be left behind are spectators.
This tech cycle will surely come to an end. It will happen. The question is this? Is Nigeria going to learn from this social media cycle for the next one. Just note that top tier firms like Facebook and Google will survive a bubble – only the lower tiers will be bubbled out! We want top tiers and let us go do it.