Relax, it's not an Internet bubble - Battelle


John Batelle writing in the NY Times lets us know that this not another bubble. He sets out his credentials,details his arguement, and even declares his interest as "co-producer of the Web 2.0 conference"

I should know. It cost me millions to build my Web 1.0 business's Web site. My current business is based on blogging, where the average cost to start a site is about $100.

The reasons for it not being a bubble this time round are given:-

1."The first version of the Internet - call it Web 1.0 - was long on vision but short on execution and audience. The technology was rudimentary". And it took money to get started.

2."Most new Web businesses nowadays are started with less than half a million dollars, and it's rare to find one that wants to use money from an initial public offering to get to profitability."

3. "vastly improved search technologies" make the old untargeted banner ad expenditure unnecessary.

4. "Most companies this time around are taking the path of acquisition, finding homes at large, stable and profitable companies like Yahoo, Google, News Corporation or Barry Diller's InterActiveCorp. The era of the hot Net I.P.O. is over, and good riddance."

I am not altogether convinced that it is an arguement why we might not be in the expansion phase of a bubble. If one major player failed to deliver the required quarterly results, the resulting slide in that one companies share price could burst the whole bubble.


Yah there's a STOCK bubble

Yah there's a STOCK bubble -- but even if their share prices were to plummet, it doesn't mean their business fundamentals or margins would change.

The thing about the

The thing about the "bubble", even the first time around is that people didn't stop using the Internet. There may be overvaluation of companies and inflated hopes for what certain businesses can achieve, but there's no inherent flaw in the logic -

1. People need tools and services to use the Internet better.
2. Companies deliver.
3. Some fail while others succeed.
4. Putting money into it is a risky gamble - you could win big or lost big.

Call it whatever you want, it's just how industries grow.

stock bubbles

google's PE ratio is 45. yahoo's is 50.

stock price is, by definition, one of the fundamentals for any publicly traded company. their valuation dictates how much money they have to devote to various areas of the business, acquisitions, etc. if the stock price starts looking shaky, all kinds of crazy stuff can start happening.

google especially is a bellwether stock. watch analysts talk about how their reported earnings "set the bar" for the health of the entire technology sector. stock bubbles do matter, in a very material way.

The problem with Web 2.0 that most of the people I talk to say Web 2.0 -is the venture capitalists new .com boom

What the VCs don't realise is that the vast majority of the big players have already made their name it is harder now to start a successful web biz than it was years ago. If they'd made the right investment decisions in '98 they would be living in the lap of luxury right now and wouldn't even be thinking about Web 2.0

Nor ...

... nor making up terms like "Web 2.0".

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