Bubble 2.0
Remember the 1990’s? Everyone was so excited about this new boom, the rising of a new age called the Internet age. There was much hype and excitement about the dotcom era. Everyone bought in. People invested. People quit their jobs to create or join startups. Everything’s going to be online, we all thought.
And then what came next? The dotcom boom went bust. The bubble burst. People lost a lot of money from their bad investments. People lost their jobs. And we’re talking billions of dollars just gone kaput. The hype was, well, just that—hype. It was deemed to be unsustainable back then. It wasn’t meant to be.
Are we seeing another dotcom era today? Of course we are. And people are calling it “Web 2.0.” You might not think it’s the same. Yeah, infrastructure today is probably more conducive to commerce and to everything-being-online (with high broadband uptake). Still, what I see is the hype, and that’s what I think is dangerous.
When you hear news about YouTube’s being worth a billion dollars or Web 2.0 posterboy Kevin Rose going from zero to millions from his digg.com, you might think, I’ve seen this before. No, it’s not the money. It’s the hype. Excitement might prompt investors and tech-savvy businessmen to buy, buy, buy into seemingly good investments.
Pretty soon, the excitement will die down and we’ll probably see a lot of money lost on bad investments. Again.
In the end, it’s the companies with solid backings, with solid business models, and with really great products and services that will survive. Think Yahoo!. Think Google. Think NewsCorp. They’re buying into new stuff, but they probably know what they’re doing. And even if they get burned along the way with bad investments, they have solid businesses to lean back on. And they probably got a few things right, like my favorites, AdWords, Flickr, and MySpace (uh, maybe not MySpace).
Remember, when you’re walking on water, be sure you can work miracles.
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Excellent post. We see the downside to internet-related investments commented on too little, with people either having short (or selective) memories or not enough hairs on their chest (or fully grown melons) to even know that a downside exists. Plus one often finds that the self-proclaimed online “marketing gurus” actually start believing their own propaganda and their followers have no plan B. when the s..t hits the fan.
Mosey said this on September 23, 2006 1:57 pm
This has happened for years—gold rushes, silver rushes, diamond rushes, the housing market in America lately—we pirates know, at least, that when you seek out great rewards, you have to put a lot on the line. The real tragedy is that so many of those who invest heavily in things like Web 2.0 don’t realize how much they’re risking. To them, it’s just gold at Sutter’s Mill or the Yukon—and if they don’t jump in fast, Someone Else will beat them to it.
DreadPirateYarr said this on September 24, 2006 6:40 am