Will Facebook go the way of Yahoo? Snapchat CEO Evan Spiegel thinks so.

During the dot-com boom, Yahoo reached a $128 billion market cap on massive, fast-growing advertising revenues. Then, when the bubble burst, Yahoo's market cap shrank to less than $10 billion.


The reason: The companies buying Yahoo's ads weren't traditional brand advertisers — the kinds of companies that bought TV and magazine ads. They were dot-coms themselves. They were paying inordinate sums to become Yahoo's official partners in various sectors, from greeting cards to pet stores to travel.

The money they were spending on ads wasn't coming from their own revenues, but from investments made by venture capitalists.

When the bubble burst and venture-capital funding dried up for startups, Yahoo's source of revenues went away too.

In an email leaked in the recent Sony hack, Spiegel says he thinks a similar fate awaits Facebook.

He believes Facebook's ad revenues are also overdependent on venture-backed startups buying traffic and users. Only instead of buying links on the Yahoo homepage, they're buying app install ads.

Spiegel thinks that if venture-capital funding for startups dries up — and he believes it might, when the Fed stops printing money and inflating public tech stocks — Facebook will suddenly, and violently, shrink.

"Facebook has continued to perform in the market despite declining user engagement and pullback of brand advertising dollars — largely due to mobile advertising performance, especially app install advertisements," he writes.

"This is a huge red flag because it indicates that sustainable brand dollars have not yet moved to Facebook mobile platform and mobile revenue growth has been driven by technology companies (many of which are VC funded).

"VC dollars are being spent on user acquisition despite unknown [lifetime value] of users — a recipe for disaster.

"This props up Facebook's share price and continues to justify VC investment in technology products based on abnormally large market cap companies (i.e., "If this company attracts just 5% of users that FB has, it will be HUGE" — fuels spend on user acquisition as user growth is tied to values).

"When the market for tech stocks cools, Facebook market cap will plummet, access to capital for unproven businesses will become inaccessible, and ad spend on user acquisition will rapidly decrease — compounding problems for Facebook and driving stock even lower."

Spiegel's views on Facebook are unusually bearish. He doesn't seem to appreciate how many traditional advertisers are switching their spending from TV, magazines, and billboards to Facebook. They are spending more than a billion dollars marketing on Facebook every quarter.

At Business Insider's annual conference earlier this month, we asked a Target executive which she'd cut first: TV ad spending or Facebook spending. In an upset for Facebook, she said it would be a really hard choice. Ultimately, she said that TV is more important for establishing Target's brand, but that Facebook is a crucial and big part of the company's marketing mix. She said she'd cut spending everywhere else (except TV) before cutting Facebook.

It's also important to understand the context around Spiegel's email. He was sending a note to an investor in his company not long after he rejected a $3 billion acquisition offer from Facebook. It was in his interest at the time to assure this investor that Snapchat had a better future as an independent company than it did inside Facebook.

All that said, it is true that Facebook is at least somewhat dependent on venture-capital-backed startups spending money to buy users who may not prove to become valuable customers in the long term. The Wall Street Journal's Mike Shields reports that, generally, Facebook's app-install ad customers are startups that make mobile games.

The problem for Facebook investors is that the company will not say how dependent it is on those types of ad buyers.

During Facebook's last conference call with investors and analysts, COO Sheryl Sandberg was asked how dependent the company is on mobile app ads sold to "developers" — code for venture-backed app makers.

She said, "Our growth in mobile ads is very broad based. It's across all market or segments, and it's across all of our different ad formats, and we talk about our mobile ad business growing. Mobile app ads are a small part of that, that's growing in line with our total business.

"The other thing that I think people get a little confused about is who is using mobile app ads," she said. "I think commonly when you think about mobile app ads, people often think about developers, and developers are moving them, and we're pleased we're able to help them grow. But they're also being used by some of the largest branders and marketers in the world."

That's a somewhat informative answer from Sandberg. She's saying Facebook investors shouldn't feel over-exposed to the venture-capital market. But it's an incomplete answer. She should tell investors exactly how exposed they are. Facebook should, as soon as possible, begin to break out how much of its revenues are generated by app install ads.

Nicholas Carlson is the author of "Marissa Mayer and the Fight to Save Yahoo!"

The Samsung Gear S is the Korean company’s latest smartwatch that, unlike its new Sony and Asus rivals, shuns Google’s Android Wear in favour of its own operating system: Tizen.

It’s a bold move from Samsung given that it also has a contender in the Android Wear marketplace in the shape of the Gear Live and, as such, it’s a clear indication that the smartwatch genre is still very much in its infancy and manufacturer’s are covering the bases as they find their feet.

But is it a move that should excite early wearable tech adopters? We think so, read on to find out why.

http://www.wareable.com/samsung/samsung-gear-s-review

The city of Miami broke ground on a new film studio today. The Florida Film & Television Center will offer 70,000 square feet of studio space including two sound stages, an onsite editing suite and accessory storage room. The studio will be operated by EUE Screen Gems, a national production company that operates similar sites in New York, Georgia and North Carolina. The massive complex is meant to lure national and international production companies to the city's sunny shores.

Miami's Omni Community Redevelopment Agency gave final approval on the plan in March. The Agency has promised up to $11.5 million for construction of the studio which City of Miami Commissioner, Marc Sarnoff, hopes "will go a long way in securing Miami's status as a top destination for film and television production." The city also hopes the studio will bring more jobs to the area, something the Mayor and City Commissioners reiterated in today's groundbreaking.

See also: The Top Ten Movies Shot in Miami

The studio is the centerpiece of a planned revitalization of the newly named "Media and Entertainment District" along 14th Street, west of the Adrienne Arscht Center. In addition to the $11.5 million for construction, Miami is planning on spending another $6 million to improve the neighborhood's infrastructure--fixing roads, widening sidewalks and rerouting water mains.

This isn't Miami's first attempt to steal some of Los Angeles' thunder, there are currently two large-scale film studios in the city. Greenwich Studios in North Miami is the oldest; formerly the Ivan Tors Studio, the iconic Miami movie Flipper was filmed there in 1962. And The Hollywood Reporter notes that M3Studios has been active in city since 2003. Despite their presence - and the major tax breaks offered by the state of Florida - Miami has never really established itself as a major film site.

The project hasn't come without some vocal detractors. Miami filmmaker Billy Corben told Cultist in March that, "the space is complete unfeasible and unusable. The demand in the market doesn't exist. It's right in the flight path of planes taking off and landing at Miami International Airport." Other local filmmakers also wondered about the likelihood that the promise of jobs would pay off.

It's certainly a bold gamble for the city with a high price tag. The Florida Film and Television Center is scheduled to open at the end of summer 2015.