Let's Party Like it's 1999
The bubble is back, right? You've got a whack of venture capital flowing into Web 2.0 start-ups - many of them lacking viable business models - while money-losing Vonage is scrambling to cram an IPO down the throats of investors. And then you got Paul Kedrosky tellling everyone (at the folks at the mesh conference) that's alright because “it takes a lot of dead bodies to fill a swamp; you gotta do this stuff. We gotta screw it up and waste money.” Not sure this is the kind of statement many LPs would want to hear from a VC but success involves varying degrees of risk, which is something most U.S. VCs understand than their Canadian peers. One thing separating Bubble 2.0 from Bubble 1.0 is the lack of IPOs that warped the investment mentality of entrepreneurs, VCs and retail investors. If anything, this has kept some of the frothiness (but not of all of it!) from happening.
May 17th, 2006 at 1:57 pm
Good post Mark - I thought during the web 1.0 boom that the big winners would be the guys who bought the infrastructure and hardware that the pioneers had to sell when the went under.
Amazon sort of proved me wrong (has it broken even yet though?) but similar thinking surrounds this bubble - the real winners will be the established corporations who pay the money to hire the brains behind the failed 2.0 companies.
May 17th, 2006 at 2:09 pm
Rick's comment at MESH - I wish that in '99 we saw one of these companies that “gives away everything for free” fail miserably… We wouldn't be having this silly problem today. - Interesting.
May 17th, 2006 at 5:12 pm
That's just lame. I'm so tired of building software (toilet bowls, as I call them) for an executive who thinks he's god because he raised $20 million from an idiot VC, then pisses away the $20 million telling everybody he's god and forgetting to build a business.
May 18th, 2006 at 12:11 am
I was too young to remember the first dot-com bubble from an investor perspective (I'm 20 now) but I feel like the number of IPOs going on then dwarfs the number that have shown up today. Vonage hasn't happened yet, and aside from Google (clearly not a bubble company) have there been all that many Web 2.0 IPOs? I thought the whole point of Web 2.0 was to either get acquired by, get copied by, or get a job at one of the majors? You do note in your post that there is a “lack of IPOs”, but usually the term bubble is used to describe an asset class (tech stocks, commodities, housing prices, etc.) whose VALUATION is out of control, so I'm not really sure how you can have a bubble in… well actually I'm not sure what you're suggesting there is a bubble in. Certainly not tech and telco stocks, because any company getting VC is obviously not a public company.
I could be totally off the mark, and I'd actually appreciate being corrected (not flamed) if I am.
Thanks
-Mike