I was at an investor event within a week of Youtube being acquired by Google for a billion dollars. Before the presentations began I spoke with an entrepreneur who was pitching his online video sharing company, and he brought up the Youtube acquisition.
If I had the chance, I would have offered my condolences. But before I could I realized he was actually excited about the news. And later on when he pitched his company to the group, *they *were excited about it.
You have a company that has arguably already achieved a critical mass of defensibility, where it was basically synonymous with the market (online video sharing). And it gets acquired by one of the largest tech companies. To silly old me, that’s fucking horrible news for every other tiny video startup that’s basically doing what Youtube does.
Apparently most people in the room heard that a comparable company sold for a billion dollars and just got excited…
For what it’s worth, there were other investors who felt the same way I did… but not the majority.
I can think of literally hundreds of technological applications that would be gold at the consumer level, if and only if we start understanding DNA coding like we presently understand computer coding to the point where we can safely tailor organisms to specific tasks.
Start with truly hypoallergenic cats, or for that matter, poinsettas that don’t poison the hell out of your hypoallergenic cat when it eats a leaf.
Then maybe, I dunno, a bacterium that only eats black mold? Or termite eggs?
I made good money working for .com start-ups, while at the same time trying to beg friends to not invest in them. It can be challenging to do so without running afoul of the insider trading regulations.
A pro tip that will help notice bubbles is this, if they are inviting the public to invest, most likely the ship has already sailed and now investment is mostly being driven by the bigger sucker rule.
The .com bust was obvious, the housing bubble was obvious and now the aggregated marketing data bubble is getting fat.
Just one high profile data leak or a HIPAA style privacy law would kill most of the value of social networking.
Generally speaking Internet/computer companies are started/recreated by a person with vision and a plan for the future. After awhile these are sold off to become a corporation which by thier very nature never look forward, they just study trends from last year.
Myspace v Facebook illustrates this difference perfectly (and why corporations fail).
I’m amazed at how wealthy first world a lot of the optimism is, a lot of the wealth that is supposedly there is on the order of say selling concert tickets to someone because you’ve been tracking them for months. How much of the world will even be able to buy this crap?
This is part of it, as well as the “Oh, look - shiny!” aspect of tech. Bubbles are psychological events and when you combine youth, enthusiasm, certainty (after all, who is more certain than a 20-something for whom things have gone mostly right in their life?), “Oh, look - shiny!”, and the potential (no matter how slight) of changing the world/making a billion… you get bubbles. Lots of them, all frothing up.
Investors see $$$ in the Internet. It has affected every industry, massive amounts of business has become entwined with the Internet in some manner.
But the Internet is a frontier, nobody knows where it is going. There are hits and misses but a lot more misses than hits. People are fickle and are always looking for the next big thing. As services age they tend to get more and more bloated. When companies become public the focus often shifts to the balance sheet and dividends rather than customer satisfaction.
I think Facebook could easily be replaced tomorrow by a service that respected privacy, let you own your data, and had a nice clean layout once again.
This comment really illustrates the tech industry mentality that people in all other industries are idiots and have no idea what they are doing. That they are somehow immune from economic forces or beurocracy.
Many top corporations have been around for decades or longer. You don’t stay in business that long without having a vision and a plan for the future.
Facebook is just as much of a “corporation” as Myspace. The difference is that Facebook struck a chord with students and alumni of institutes of higher learning looking to connect with each other while Myspace couldn’t move beyond it’s core customer base of indie rock bands and booty calls.
The internet is a relatively ‘new world’ yet to be explored, and while a few have managed to turn a profit here and there, and some have struck it very big, people feel that the potential is much greater then has been realized so far. I like it to compare it to a second habitable planet, many internet companies are still dependent on earth resources to keep their new planet colony afloat, but some have been able to tap into enough resources in this new planet that their colony is not only self sufficient but can send supplies (money) back to earth.
The ‘bubbles’ that the OP refers to are not industry wide bubbles, but individual companies that seem to be getting a good foothold in this new world and perhaps have a chance of really striking it rich beyond what they already achieved.
But it is the potential of what I see is really a whole new planet that people are betting on, instead of ‘non-internet’ sectors which are seen more as cross competition with each other. A new fronteer of great resource potential that people want to cash in on.
Isn’t the main reason because there’s an entire apparatus in place that hypes these companies, attracts lots of investment, and puts a small number of insiders in a position to cash out when a company is at its peak valuation?
You get a couple of guys out of Harvard Business School, Stamford or MIT. After a few years working at Goldman Sachs or Mckinsey or some other firm, they decide to form their own startup. Some sort of “data agregator” or “social networking portal” or whatever. They get some “angel investor” or VC funding from their business school buddies working at Sequoia Capital. Their new hot app gets written up in Wired or Fast Company. Hopefully they generate enough buzz to get bought out by Google or some other company or maybe even have their own IPO. Usually not though. But their “exit strategy” may afford them enough cash to maybe set up their own “startup incubator” for the next wave of kids building iPhone apps in their dorm room.
Facebook’s commenting widget is run by 100s of sites all across the net. It’s free, it’s easy to setup, and by requiring a Facebook account to post, it keeps out a lot of spammers and shitheads.
If Facebook dropped a single ad on top of every commenting widget tomorrow, they’d make some serious coin and very few sites would drop the widget in protest.
And if the people who post don’t know how to keep that stuff from cluttering up their pages and their friends’ feeds (and they don’t), it’s free advertising for the site.