Beware the Web 2.0 Bubble
Bubble 2.0
http://avc.blogs.com/a_vc/2005/03/bubble_20.html
I was going to write about the current internet bubble we're going through today, fortunately for everyone though, veteran VC Fred Wilson beat me to it. As he's infinately more qualified to speak on such matters i'll just add a little what what he had to say...
Fred gives a nice analogy in his post: If you go to a really great party, and wake up with a dreadful hangover, but your friends decide to throw another great party, what do you do? Go of course...
Money is being made all over the Internet these days. Some of it by good old fashioned revenues and cash flow. That's the foundation for the recovery in Internet investing we've been enjoying for the past couple years.
But increasingly money is being made the way we made it from 1998 to early 2000; mometum investing, speculation, fast money chasing deals, caution being thrown to the wind, and amateurs jumping in on the action.
He ends by cautioning party goers to drink responsibly this time :)
There's no doubt in my mind we're in a bubble right now, though during the last one i was far to busy selling expensive ads to 20-something CEO's with far more money than sense to take much notice of the first from this perspective, all i hope from this one, is that we get some great innovations out of it. If it has to burst, like all bubbles eventually do, let's hope it's not quite as messy and that we're left with something valuable at the end.
Doesn't feel like last time
At least in the north of UK the bubble is not really anywhere near last time. Feels more like a semi-recovery than anywhere near a bubble for us. People are actually interested on business revenue models as well as exit plans, budgets are not quite as fat ..
Mebbe if you are a silicon valley photo-sharing-tagging-blog-related startup, but not for us in grim northern towns ;O)
Don't jump on the bubble
Honey, I knew the last bubble, the last bubble was a friend of mine. This aint no bubble.
Well, so far we have a few M&A deals, a few VC investments, no IPOs, no real action. I don't see how this can be dismissed as a bubble. Let's not jump on everything too fast - let's see what comes out first. One of the results of excitement is innovation. It's a bit like a war - it may not be a good thing, but you get a lot of technical innovation.
I believe we are now consolidating what we learned in the first round.
Must agree
Bubble is not the right term. Are some stocks overpriced? Yes, but that's always the case. Are some investors a little too free with their money? Yes, but there's always a few of those guys. The Internet revenue stream from paid search ads and actual e-commerce transactions is a very solid and sound model. It's like selling ads and content through other mediums, this one is just new and more open. When Proctor & Gamble first started spending money on TV ads (along with a few other companies), nobody called it a bubble - that's basically where we are now, except P&G can track their revenues this time, so they know if they're spending too much or too little.
And ..
Companies with the buying power of P&G dont often pay too much ..