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Here’s the truth: These questions are irrelevant to understanding whether Facebook is valued fairly or not. And if you have sincerely asked yourself these questions, you may want to reconsider purchasing stock.

Disclaimers: I am not a professional financial expert, nor do I have insider knowledge about Facebook or Google. I have never invested a penny in the stock market. This piece is my personal opinion.

I’m writing because of two recent bubbles (the dot-com bubble and the more recent housing bubble) that seemed to be a surefire way to create wealth, but many investors ended up losing a lot of money. Some of this loss could have been prevented if people fully understood their investments and asked critical questions upfront.

How do you make sense of Facebook’s valuation, or any stock valuation for that matter? Here’s a crash course on the stock market. First, the actual price of the stock is irrelevant to any discussion about stock value. A $38 Facebook stock sounds a like a bargain compared to a $600 Apple stock, but it’s not. The number is irrelevant because Facebook and Apple have different numbers of shares outstanding.

At its current enterprise valuation of roughly $100 billion, Facebook is one of the most highly valued companies in the world. You need to compare that number to the company’s revenue, earnings, and growth. Facebook’s current earnings are $1 billion. That means that the company’s price-to-earnings ratio is 100. If I wanted to buy all of Facebook at today’s price, I would have to invest 100 times what it would earn me back this year. Here’s another way to look at it; if Facebook’s earnings stay constant for the next century, it would take me more than 100 years to get my $100 billion back. Google’s price-to-earnings ratio is a fairly standard 15-20, but even this number is high by historical standards. To hold its current stock price, Facebook’s earnings need to grow, rather quickly, from $1 billion to more than $5 billion.

Where will future growth come from? What may happen in the marketplace that could disrupt that growth? Can Facebook monetize its user base to five times its current earnings over the next few years and then add some on top of that? Because, of course, you want your shares to grow. Right now, Facebook has 1 billion users, so the math is pretty easy – Facebook is currently making $1 on each of its users each year. To keep its current value, Facebook needs to make $5 per user. For the stock price to double in a non-bubble economy, Facebook would quickly need to extract $10 per user per year (or significantly grow its user base, of course). Armed with these numbers, you can judge for yourself and think about whether you want to buy Facebook stock. I bet most people don’t think this critically when they invest.

None of this analysis matters, of course, in a bubble, where a stock price may rise, not because the fundamentals change, but because there is high demand. I hope that people are smarter this time around and are not the ones holding the bag when the buying stops. No one wants to be the sucker at the end of the line.

First, context: I think marketing and entertainment savvy have an important place in training and development. All cross-disciplinary approaches to improve the design and production of exceptional online learning experiences are welcome. Enspire’s own media subsidiary, Houndstooth, reflects this philosophy – cross pollinating heavily between the worlds of marketing, learning, and entertainment, and deploying 3D or 2D media as need dictates.

That said, I’ve noticed customers are specifically seeking out vendors to create 3D environments for asynchronous learning experiences.  Note the “asynchronous” modifier.  I’m referring to single user experiences, not multi-user virtual worlds.

Is 3D better for this kind of learning?

In most considerations about the design and production of effective instructional media, the answer is, it is not better. In fact, 3D environments can cause considerable confusion for many learners (such as problems of wayfinding.)

Of course, there are really good uses of 3D media in asynchronous instruction, such as:

• Engaging in a virtual dissection
• Identifying interior parts of a machine or structure
• Practicing instrumentation controls through flight simulation.

But these are high-fidelity exceptions. For most online learning experiences I recommend 2D media – or 2½D.

Along with possible cognitive issues regarding attention, memory, and interferences, I find overly realistic settings can distract from the focused learning objectives. I much prefer a modulated level of abstraction, specifically for visual explanations and generally for online learning experiences.

You see, reality gets messy in the details; but learning needs to be focused. For a simply great explanation of the concept of focus I asked Scott McCloud, author of Understanding Comics if I could use one of his panels.

I like his idea of amplifying specific details. Furthermore, McCloud notes that how simplification away from high-level realism in cartooning opens the imagination and potential for personal projection.  These concepts are true for instruction, too.

While we don’t have much research on efficacy of 3D versus 2D media for instruction, from personal experience I recommend first teaching tasks and behaviors through simple explanations and environments. As knowledge and skills develop, it’s important to add more details and to simulate real-world phenomena – and the resulting distractions and difficulties.

You may have noticed that things have changed a little bit around here. A few weeks ago, we rolled out a new version of our website to bring it in line with our new brand image. For the most part, this update is visual in nature; the structure of the site is much the same. We hope that you enjoy the stylistic improvements as much as we do.

We did have one large functional change to the site, however, and that’s with regard to demonstrations of our work. As you’ll see on our new demos page, you now have the option to schedule demonstrations of our three leadership development simulations: Management Challenge, Business Challenge, and Executive Challenge. We’ve also moved demos of all our custom-developed work to a new site. Just create an account and you’re ready to view our on-demand demos with the click of a button. If you’re looking for more, or if you’re wondering whether we’ve done something close to your needs, feel free to contact us and we’ll give you a more in-depth view of our capabilities.

Enspire’s Houndstooth media arm provides design and high end media production for Enspire Learning products and custom services.  HT also explores creative projects outside the learning space in Austin and beyond. All this creativity finds its way back into Enspire work… a virtuous cycle.

Every year, writer/director Richard Linklater‘s Austin Film Society honors outstanding Texans who’ve made a significant contribution to film and entertainment, and non-Texans who have advanced the Texas entertainment industry.

Houndstooth developed the motion graphics package for the 2012 Texas Film Hall of Fame Awards banquet,  held at Austin City Limit’s new home – The Moody Theater – in the W Hotel in downtown Austin.   Houndstooth also designed and executed custom lighting for the  event, painting the outside of the W with a kaleidoscope of color.  View HT’s Ziris loop and other videos here, and pictures from the banquet on Flickr.

Catch KLRU‘s rebroadcast of the show on May 14th at 10:00 PM CST!

We will be in booth #1404, so feel free to stop by and ask us about our simulations and custom learning!

Click here to watch the recorded webinar!

Southwest Airlines has a highly engaged workforce known for its sense of humor and teamwork. Its culture is fueled by significant investments in leadership development. This session explores how Southwest’s Developing Legendary Leaders program, an intensive boot camp for managers and directors, builds leadership, strategic thinking and business acumen skills. The session takes a close look at a competitive team-based simulation that allows Southwest’s rising leaders to hone their business acumen skills.

Get an inside view into Southwest’s successful leadership development program, and see the results of Southwest’s focus on developing leaders from within the organization.

To learn more about Enspire’s Business Challenge at Southwest, read our case study here.

Also, feel free to stop by our virtual booth and chat with Gordy about Enspire’s simulation-based programs!

Click here to register for the virtual symposium!