Mark Evans

It’s Bubble Time, Baby!

Yup, it’s now official; we’re in the midst of another dot-com bubble. It was something I was desperately trying to avoid suggesting given the last one was so painful to watch but it’s now probably upon us.

The final straw? On the heels of the Facebook-Microsoft deal last week, Read/WriteWeb has a post in which PlentyofFish’s Markus Frind suggests his AdSense-drive dating site could be worth $1-billion. Maybe it is worth that much money but when one of the leading tech blogs goes along with the claim with hardly any push back, then something is not quite right.

The $1-billion premise hinges on Frind’s contention that POF makes $10,000 a day from AdSense, and will generate about $10-million in revenue this year. Combine that with POF getting 1.2 billion pageviews a month, 500,000 unique log-ins a day and significantly better click-through rates than Facebook - and lets encourages Frind to start talking about an ultra-high valuation.

For its part Read/WriteWeb does little to question Frind’s contention, which may be accurate but we have no way of knowing given it’s a privately-owned company. All Read/WriteWeb does is lamely conclude that:

“Markus didn’t put a figure on what PlentyOfFish is probably worth, it’s clear he is thinking in Billions and not Millions. It’s very hard to quantify this, but at the very least POF would be worth in the 9 figures due to its annual revenues of $10M. Not bad for a one-man company (plus a new Customer Service Rep!).”

I don’t mean to take a shot at Read/WriteWeb, which consistently writes thorough posts, but this is the kind of of breathless writing that was alive and well during the dot-com boom. (Note: I wrote more than my fair share of these kind of stories during the last boom)

Just to dig a little deeper into POF, I did some quick research. Here’s a Compete.com chart, which suggests POF gets about 1.8 million unique visitors a month.

Quantcast suggests POF gets about 1.4 million unique visitors in the U.S. while Alexa estimates 43% of POF’s traffic comes from the U.S., 27% from Canada and 15% from the U.K. - so if you’re being generous POF probably gets about three million unique visitors a month in total.

For all anyone knows, POF may be a two-person cash-making machine that is worth a whack o’ dough, particularly in this frothy environment. The problem is that until Frind opens the company’s books, no one will really knows what’s what.

The other more troubling issue is Facebook’s $15-billion valuation has completely warped the economic landscape. Facebook has now become the benchmark by everyone else is valuing themselves: if Facebook has this much traffic and this much growth, then we must be worth [insert rich valuation here] because we have this much traffic and growth. This is just dot-com deja vu all over again.

So, welcome to the official start of Bubble 2.0. Let’s hope it’s not as painful and dramatic as the last one!

Update: A terrific read on whether there’s a bubble happening is the New York Magazine’s John Heilmen’s story. His take is we are in a bubble but it’s okay given some terrific companies will emerge from it - just like companies such as eBay, Yahoo and Amazon came out of Bubble 1.0. Meanwhile, Steve Rubel has a nice rant on how he’s tired of the hype, the deals and the parties. He want to go back to 2004 when the online landscape was a lot more calm.