Don’t believe the hype, it’s a sequel

“Used, abused without clues
I refused to blow a fuse
They even had it on the news
Don’t believe the hype…”

Public Enemy, Don’t Believe The Hype

Raise your hand if you really believe that Facebook is really valued at $15 billion! Sorry but I don’t.

Here’s what I believe: Microsoft paid $240 million for the right to expand its pre-existing relationship as exclusive third-party representative for advertising on Facebook and the right to block Google out.

For that privilege, which now includes a global agreement instead of the US only, I think Microsoft got a bargain.

Why do I care and more importantly, why should you care? Because when you got out and raise capital for your Web 2.0 startup, don’t get ahead of yourself when talking valuation. It’ll destroy your company and your share value before you can say BUST.

Just another friendly reminder from your pals at Startup Houston.

Peace out!

P.S. In after hours trading in Microsoft today, after they announced a 23% increase in profits primarily due to Vista sales, Microsoft’s market cap grew by over $30 billion. $240 million doesn’t seem like a lot of money anymore, does it?

UPDATE: Nick Carr has a great diatribe about this on his site…I particularly love the link the the mental anchor piece. Great stuff, Nick.