Are we in another internet bubble?
December 9th, 2007 by Robert
There is wide speculation that we are in another internet bubble. With companies like Facebook having valuations of 15 billion, Digg not selling for a reported $100 million last year because they allegedly wanted $150+ million, it certainly looks like it.
However I believe the primary difference between today’s big internet companies and the 1999-2001 era was today these companies have revenue coming in. In the past vast number of venture capitalists jumped on any and every internet idea whether it could make money or not. So many of these companies bombed and the bubble burst. The majority of the newer companies started out without big money backing and showed real revenue before getting funding.
These days it is much simpler for a couple of people to bring a web startup to fruition with very little cash, grow it out before needing any funding. Digg is a classic example, having been started with $1000 or so. Today’s entrepreneurs also have far more options for developing sites more rapidly and the infrastructure is also a lot less expensive. Combined with more widely available scaling techniques for when they hit it big, it isn’t quite as hard anymore.
Of course that doesn’t mean every startup succeeds. A quick look through Techcrunch’s Deadpool will show that. It seems that the companies that do fail either spend too much too fast, or like the old days don’t have a sound business strategy. Some venture capital companies are also more cautious than they were before. Techcrunch has a good article about this.
Given all of that, it is funny to see people making fun of it all:
0 Responses to “Are we in another internet bubble?”
Leave a Response