Photo: Jef Poskanzer on Flickr. Some rights reserved.
The $15bn valuation of Facebook after the Microsoft deal has prompted more than a few Valley watchers to observe the bubbleness of Web 2.0.
The same conversation happened in London after the (admittedly less dramatic) Last.fm acquisition, but most people in the industry still maintained that there is no bubble and will be no burst because, basically, everyone is far more experienced this time round.
Steve Rubel on Micro Persuasion isn't buying it. From the somber offices of Edelman PR, he says that despite his optimism about new technology and business, he's become disillusioned with the constant flow of shiny shiny new new sites, the dot com parties and the countless trade shows.
Web 2.0 is skunk drunk on Kool Aid
"Let's face it, we're skunk drunk and it's because of money. It's almost like we all need to enter Betty Ford Clinic 2.0 together. This time, it's not stock market money but private equity, M&A, VCs and to some degree the reckless abandonment of logic by some advertisers who are perpetuating what is sure to end badly when the economy turns. Hubris is back my friends.
"The bubble really began in earnest on October 9, 2006 when Google bought YouTube. That's when every person with an entrepreneurial itch woke up and smelled the hype and money. Prior to then, startups were more focused on the entrance, not the exit. But the Google YouTube deal and many others that followed (including big time investments) really opened up the floodgates to money and it changed the attitude of the web."
Rubel's point is that much of today's start-ups are really just after the cash, rather than, say, knocking up something for fun like Dave Winer did with NYTimes River.
"There will be carnage"
Most of Steve Rubel's commenters seem to agree, and New York magazine says that even Michael Moritz - the Welsh journalist turned mega-financier who bankrolled Google et al - has hinted that he expects a crash. At the recent Web 2.0 conference in San Francisco he said "the great news for me about these times of enthusiasm is that inevitably there's a lot of bedlam, undoubtedly there'll be carnage, there'll be all sorts of carcasses strewn across the road.
"But there will also be a handful of companies that will emerge to become very significant. And that's what working and living and investing in Silicon Valley has always been about."
So do the $3.4bn in venture funding, the eye-opping valuations and the flood of "dum-dum starts ups" like MyCatSpace.com all point to an unsustainable peak of doom?
The biggest difference between now and the last dot com crash has to be the advertising, now a vast industry that can more than pay for the excesses of The New Internet: Google's UK advertising revenues even overtook those of ITV1 this year, which is a sign of changing times if ever there was one. And then there are the 1.3bn web users around the world.
Even if the industry did crash, just how far could it fall?
Source: Micro Persuasion
Technorati Tags: bubble, Edelman, Facebook, Google, MichaelMoritz, Microsoft, SteveRubel, YouTube
