The next big thing...

In light of the Blake Lively's hacked pictures and iOS5 hacked the day after the release, I anticipate the next big thing to appear in our zeitgeist is internet security. People definitely don't take it seriously enough. Most people don't realize that sitting at a cafe with public wifi access, anyone on the same wifi network can access your files / what you are doing through a simple app that anyone can download. Don't believe me? Read this NYTimes article. I know absolutely nothing about hacking, but I am an ardent believer that anything and everything can be hacked. The consequences of this can be huge and potentially cripple people's lives, large corporations, and even economies. More and more hacking incidents will happen in the years to come.

The implications of this relates to valuations of internet companies. I understand that the dotcom boom 2.0 is not as irresponsible as dotcom bubble 1.0, but the valuations for some of these companies is a bit ridiculous. I am a product of the 21st century and cannot live without the internet, my iphone, and google, but I also realize how relying too much on technology can be potentially crippling.

Groupon is now valued at $20 - 30Bn. Just to put that into context, Starbucks has an enterprise value of $25Bn. Starbucks has 137,000 employees. They have 17,000 physical locations. Groupon has a server somewhere and a few people working for them. All of Groupon's value may potentially be wiped out with a click of a button by a hacker (i.e. customer data erased, domain hijacked, credit card information stolen). As for Starbucks, that will never happen. The $25Bn would take months to liquidate. The only button that can wipe Starbucks' value is a button to detonate an atomic bomb.

I understand that they are very different companies and I'm comparing apples to oranges. But my point is this. Because of the implications of hacking, the internet is so fragile and one easy catastrophe away from it all coming crashing down. Doomsayers mentality? Maybe.