Is It Smarter To Invest In Silicon Valley Or Hollywood?

Is It Smarter To Invest In Silicon Valley Or Hollywood?

If there’s one thing I know about Gizmodo readers and staff, it’s that we all have a bunch of excess money that’s stressing us out. What should we do with it? Where should we invest it? Tough questions. But even if the whole tech startup vs. blockbuster investing question doesn’t quite apply to you it’s still kind of fascinating. The bottom line is, unsurprisingly, that they’re both super risky, but for different reasons.

Over at the Bits Blog, Nick Bilton describes the strengths and pitfalls of each industry from an investment perspective. He points out that in 2012 “The Dark Knight Rises” made $US1 billion in box-office sales while Facebook bought Instagram for the same amount. But both are glittering exceptions, not the dreary norm.

Hollywood has some advantage because it can predict certain hits by hyping movie versions of beloved franchises, like Harry Potter. In Silicon Valley it is much harder to predict which startups will hit the right trend at the right moment. On the other hand, movies that have big returns on their investments still tend to only deliver profits in the millions of dollars, while hit startups sell for billions. It gets even more nuanced. Movies must pay box offices, but make money back on residuals. Startups can launch with very little overhead, but most tech investors are richer than movie investors.

Bilton does draw the ridiculous conclusion that there is more fame in Silicon Valley than the place defined by famous people aka Hollywood (based on the clearly skewed fact that Mark Zuckerberg has more Facebook followers than Leonardo DiCaprio). But in general it’s just satisfying to think about which perilous and potentially dynamite investment you would make. Or, you know, will make. [The New York Times]

Image credit: Shutterstock/Leszek Maziarz