A year ago, we were amazed at how Skype's founders and investors more or less manipulated the press into claiming the company (which had made very little money) was worth $1 billion, then $3 billion just a short while later, only to end up at $4.1 billion only a couple months later. The numbers are hard to justify no matter how you look at it, but press hype (fed eagerly by the investors) worked like a charm until someone coughed up that huge amount. Earlier this year, it looked like Facebook was trying the same strategy -- except they started at $2 billion, despite the fact that their larger competitor, MySpace, was bought only a few months earlier for $580 million. It appears that $2 billion may have been a bit too high to start in this game. $1 billion works much better. So, almost exactly a year after Skype first pulled their $1 billion number out of a hat, here comes the press claiming that YouTube (with barely any revenue and huge bandwidth bills) is now worth $1 billion. How long will it be until we see that number jump higher and higher until someone drastically overpays? Perhaps instead of starting new businesses (that compete with YouTube), Skype's founders should just consult other hot startups on how to maximize the insanity right before selling out.
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