Web 2.0 Bubble
Posted by Matt on October 17th, 2007
Bubble, ahem ‘That which must not be named’ is on the mind again. The webosphere is buzzing with “bubble” talk lately. However, while most poke fun at the idea of another dot-com bubble, it is not something to take too lightly. In an article this morning, the New York Times pointed out the now record setting influx of money into web startups. They put it plainly:
“Internet start-ups are drawing investment based on their ability to build an audience, not bring in revenue — the very alchemy that many say led to the inflation and bursting of the dot-com bubble.”
Can it last?
When social networks for fishermen start popping up, I start asking questions, but are we really in a “bubble”? Is all things web 2.0 going to crash, leaving thousands of geeks and web nerd jobless around the world?
I do not believe so and here’s why. Value. With DRM free music, on-demand IPTV, enterprise level web applications, user generated ad-driven communities, video blogging, and the widespread growth of broadband - this new web, this web 2.0, is hitting on all cylinders. We can all agree that there is a ton a hype in the webosphere right now, but, really, it’s there for a damn good reason.
Richard Huang
October 19, 2007
“Bubble bubble, toil and trouble…”
I think most funds are very cautious about putting money into web startups, it’s not as irrational as the 90s where you’d get money as long as you had a website.
The amount of money being poured into emerging markets is even more ridiculous. The expectations for extremely high growth in income/revenue from emerging market companies is also somewhat unreasonable, irrational, and speculative.
If anything, I think emerging markets are more of a bubble than web startups atm. However, with the constant devaluation of the USD as necessitated by the current account deficit, emerging markets may correct their bubble-ness in a less painful way. So probably….no real significant bubble. Even the housing bubble wasn’t/isn’t that severe…
Matt
October 22, 2007
Thanks for the comment Richard. I definitely agree with you, and think that most of this bubble talk is simply speculation. But with the growing number of startups, is there really enough ad revenue to go around?
Emerging markets are definitely gaining a whole bunch of money lately and it seems anyone involved in finance at all is predicting an inevitable crash. But might as well ride the wave while it’s here, right?