A gentle comparison with the greatest?

Everyone knows about Facebook, it is an extremely visible company for obvious reasons. When they do stuff like buy Whatsapp for $19bn it becomes the latest talking point around the dinner table. If GE were doing such a large acquisition it would draw half the interest. When these acquisitions are discussed the biggest talking point is why Facebook would buy such a company and how would they integrate it with their current business model. People um and ah, trying to justify the acquisition.


The very well known Reuters journalist Felix Salmon came up with a very smart expatiation in this piece titled Mark Zuckerberg, the Warren Buffett of Technology? And you know what, I think he's nailed it. Basically the article says that the Zuck is not necessarily planning on integrating these businesses into Facebook. He is using the Facebook lofty share price to buy amazingly innovative businesses and hold them as an investment holding company would. Facebook have a big cash pile which is going to grow and these small businesses can use that umbrella to grow with almost no limitations. Some may fail but some may change our lives forever.


I find this extremely exciting. Technology is a very tough business and if you slack for just a second you will be left behind. Facebook are hedging themselves against these changes. The Zuck has impressed me since the business has listed and he has had to take a more corporate roll. In fact I think he has thrived. For me he is up there with Elon Musk. This strategy and the realisation from Felix Salmon of what is actually going on here has made me re-evaluate Facebook as an investment. At first I was happy to add the stock for clients looking for a bit more risk. But now I am inclined to consider it as a staple addition for every portfolio. I will keep a close eye on the progress.


Having said that, Google are also positioning themselves well as a diversified technological conglomerate. The business is so big it is not required to announce most of its acquisitions. But trust me they are hard at work both acquiring and innovating organically. It is a very exciting space.