Steven Kaplan of Chicago University’s Booth School said the latest hyper-cycle of tech wealth reflects the fact that fortunes are highly dependent on the daily swings of stock markets and fickle moods of investors.
“The social media fortunes have been very volatile,” he said. “This reflects the fact that the valuations of social media firms have fluctuated wildly over the last year with fluctuations in investor expectations about future company cash flows and success.
"To some extent, this mirrors the volatility of fortunes in the dotcom era at the turn of the century – 1999 to 2001," continued Kaplan. "Expectations then proved to be wildly optimistic for many companies. The future value of today's social-media fortunes will depend on the cash flows and performance that the social-media companies are able to generate.”
Of course, individual investors have also lost big on these companies. And the losses of the social-media founders shouldn’t generate much sympathy, since many are still worth hundreds of millions or even billions of dollars.
Yet the social-media bust has revealed just how manic today’s tech wealth has become. Here are five of the biggest losers in the social-media and web bust. Of course, these fortunes could always come back as quickly as they fell. But for now, these founders are, well, Zucked.
Mark Zuckerberg – It’s fitting that the poster boy of social-media wealth has become the poster-boy of social-media wealth loss. When Facebook debuted, Zuckerberg’s shares in the company were worth around $20 billion. He was richer than the Google guys and was briefly the 29th richest person on the planet.
What a difference two months makes – not to mention an earnings miss. Zuckerberg’s paper fortune has fallen by more than $9 billion since May. He’s now worth around $10.8 billion. His world ranking has fallen to below 72, according to Forbes. He also fell off Bloomberg’s list of 40 richest people.
Does Zuckerberg care? He'd probably say no. He’s trying to change the world, not get rich. But in Silicon Valley, money is a measure – if not the measure.
Dustin Moskovitz – The 28-year-old who helped Zuckerberg found Facebook owned about 133 million shares at last count. Those shares were worth more than $5 billion at the IPO price. Now they’re worth less than $3 billion. So his paper loss is more than $2 billion. It’s less than Zuck’s loss – but losing 40 percent of your wealth matters more when you’re down to your last $2 billion.