Dave Winer's in thoughtful mood:
In the late 90s, the period of irrational exuberance, we knew the end would come, and we knew what the end would look like — a stock market crash of the dotcom sector. So, if Web 2.0 is a bubble, and if like all bubbles it bursts, how will we know when it happens?
...Google stock will crash. That's how we'll know. When I realized this, I should have known, because I've been saying for almost a year that Web 2.0 is nothing more than an aftermarket for Google. Startups slicing little bits of Google's P/E ratio, acting as sales reps for Google ads, and getting great multiples for the revenue they generate by fostering the creation of new UGC to place ads on. When Google crashes, that's the end of that, no more wave to ride, no more aftermarket, Bubble Burst 2.0. And the flip of this is also true — as long as Google's stock stays up, no bubble burst.
This is of course predicated on the idea that a stock price means something of itself. It doesn't - the stock price is simply (remember this) the market's evaluation of the future dividends that you'll earn on that share in the company's lifetime. Often it's wrong, in which case the price corrects itself. But a fall in the stock price doesn't affect how much cash the company has in the bank (remember this too: cash is king, cashflow is, um, prince).
Even so, there's a ring of truth to this. If Google's stock craters, venture capitalists will see the sector as one which doesn't have such great promise, and Google as being unable to jump at acquisitions (for if Google's interested in a startup, then Microsoft and Yahoo are almost obliged to be).
Google's P/E ratio (in English, how many years it takes to earn in dividends what each share costs you) is already bonkers, at somewhere around 50. It's strictly a share for speculation, which could make it the canary in the Web 2.0 coalmine. Dave said it first.
