*1) the original investment has yet to turn a profit – which if it did could expand then expand the investment pool- great- but as far as I know it hasn’t*

Facebook is now generating profits: http://www.imediaconnection.com/content/24463.asp, LinkedIn has been profitable for over 2 years: http://blog.linkedin.com/2007/05/21/linkedin_is_in_/

*2) at face value the social significance of social media is – imo – less than the social significance of clean tech (”spammy quiz” vs solar powered hot tubs).*

social media is a way of communicating and collaborating, is television/email/text-messaging less significant then clean-tech? hard to say…

*if the product does not keep my belly full, get me drunk, keep me healthy, expands my human capital, does something good for the world, get me off, or help me make more money (via advertising) – I am not interested in forgoing any future consumption for current dollars.*

im pretty sure social media can do all the things you mentioned above, in the same way that television/email/text-messaging/mobile phones/etc… can. It’s a vehicle for communication…

*Moreover, the internet has led to a good deal of creative destruction in some industries– bye bye local video rental store, bye bye newspaper/magazines, bye bye cd player (records were the coolest anyway). And are we better off because of it?*

I mean, goodbye horse and buggies, bow and arrow, caravels, and magic eye posters. Are we better off, I dunno I’d rather have 10k songs on my iPod then 12 on my discman.

*Jobs in Silicon Valley have decreased 17% and wages increased 36%.*

We’re in a recession, these jobs will come back, look at these stats in relationship to financial services.

*Basically, I ask really, really, really, don’t we have bigger mountains to clime?*

We’re just at the beginning of this whole web thing, but I believe social tools can be used for greater good. In essence we are talking about removing barriers and empowering people. The social web will create drastic changes in education (no longer will living in rural areas prevent quality education), government (check out the Iranian elections / twitter story or Barry Obama’s use of social media), and all aspects of life/business. I’m a big believer of this stuff…

Waste meaning, 1) the original investment has yet to turn a profit – which if it did could expand then expand the investment pool- great- but as far as I know it hasn’t 2) at face value the social significance of social media is – imo – less than the social significance of clean tech (“spammy quiz” vs solar powered hot tubs).

I think you get the point- but I’ll elaborate on the zero sum game idea anyway- mostly because I don’t feel like doing my job right now (at a software company nonetheless). Say MSFT spends a billion on FB and FB never turns a profit. That is a billion dollars MSFT could have spent on something else but now can’t. MSFT has a finite amount of billion dollars it can throw around, and in turn can only make a finite amount of unprofitable investments.

On the other hand, the Billion dollar investment didn’t exactly go into a hole in the ground. But simply put, the money just changed hands:
Pre purchase: MSFT and FB Creator
Post purchase: MSFT-1 and FB creator+1.
Rearranging the terms you see that we have MSFT-1 + FB+1 = MSFT + FB = pre purchase condition.

Now lets extrapolate this to society at large. The whole dot com bubble thing represents, I think an example of how the monitization of social media may never materialize.

I am no expert, but, imo, at the heart Google, the golden child of the dot com craze, is an advertising company (or marketing if you prefer)- which is a tried and ‘true’ business model. Really what it is a company that puts a billboard in everyone’s home… which is real estate… they allow any company to buy a piece of real estate in every computer owners home/office. Obviously they branched out since then but I think you catch my drift. But I’ll be explicit, if the product does not keep my belly full, get me drunk, keep me healthy, expands my human capital, does something good for the world, get me off, or help me make more money (via advertising) – I am not interested in forgoing any future consumption for current dollars.

Moreover, the internet has led to a good deal of creative destruction in some industries– bye bye local video rental store, bye bye newspaper/magazines, bye bye cd player (records were the coolest anyway). And are we better off because of it? Jobs in Silicon Valley have decreased 17% and wages increased 36%.** Automate, outsource, and pray helicopter ben doesn’t let inflation eat the middle class wage. Adam Smith said, make every man a merchant. Technology seems to fly in the face of that notion- but I, and other more prominent economists, believe technology has lead to some of the greatest improvements in the quality of life for all of humanity – The social advantage of automation has been demonstrated via the, printing press, the assembly line, clothing manufacturing, etc- which has decreased the cost of the goods produced allowing more people to have access to them. Win! – But I don’t think that is the case with Fatbook et al.
Basically, I ask really, really, really, don’t we have bigger mountains to clime?

http://fora.tv/2009/08/05/Entrepreneurism_Begin_With_The_End_In_Mind_Jon_Fisher#_Did_Facebook_and_Twitter_Miss_Their_Window_For_Profit

**http://curiouscapitalist.blogs.time.com/2009/08/13/silicon-valley-fewer-jobs-at-higher-pay/