Bubble Indicators

The count for TC40 was closer to 1200, the hall took 1000 and folks couldn’t get a seat. Add at least a couple of hundred again for the gate crashers and demo pit. For the record 17 was a quiet day in TC submission land

I think the amount of low-cost, bad-idea startups will actually help ensure that there is no bubble. While half-baked ideas surely are being funded, the fact that an unfunded team of two can accomplish much of the same will surely keep more savvy investors waiting to give any real cash to those who can present an actual business, and/or something with real disruptive value.

In other words, all of you creating dumb startups with silly names on a shoestring budget, keep doing it! You’re helping to show that mediocre ideas do not need big budgets to fail– unlike the last bubble.

Facebook being worth 10 billion bucks is not a bubble. It is a fact. And so what if many startups are inane, redundant, or half-baked?

Only 17 unsolicited submissions? That’s IT? Guys, I’m gonna submit 5 of mine tomorrow, up those miserable numbers a little.

By the way, I disagree with the statement that valuations are not in wacko territory. Millions upon millions for sites that have yet to earn a penny? Come on. We’ve been through this argument before, in the late ’90’s. Everyone knows whom history proved right…. (Until the current bubble came along.)

Erick says: “…[L]ast month’s TechCrunch40 conference, which drew about 900 people (not counting the random booth babes).”

Random…booth…babes.

Ummm…Erick…isn’t this a tad sexist? Surely there were some men “manning” the booths too. What would you call them?

The booth babes I refer to were actual, scantily-clad models at a few of the booths handing out flyers and (I believe) condoms. I didn’t see any bare-chested men in thongs or speedos.

Most of the entrepreneurs at the booths (both men and women) wore business casual. I am not referring to them.

Where can I find TC40 videos ??

http://vidsonly.blogspot.com

OK, I stand corrected. Mea culpa, Erick.

Of course, we also have Michael using photo editors to pump up model’s breasts in a nearby post….so maybe I jumped the gun.

My point is simply that women are into computers and are fans of techcrunch too. Let’s not turn the posts on techcrunch into a fraternity party. Thx.

Facebook being worth 10 billion bucks is not a bubble. It is a fact. And so what if many startups are inane, redundant, or half-baked totaly agree with you there buddy

ty
trading tennis blog

Of course there is a bubble. Tons of companies are getting lots of money for only eyeballs, nothing proprietary about their technology and the potential to make money in advertising. It’s now a “gold rush” and everyone is anxious to invest before they miss this blip in overvaluations and under analysis.

Sure the social media element of the Web is powerful and will be successfully leveraged by many companies, but overwhelming most will fail immediately or fail within a short time.

The basics of sustainable business models are rarely seen in today’s social media startups.

i’m totally bemused by Hide Pink Shirt Guy…

http://www.cbc.ca/money/story/.....ml?ref=rss

“American internet ad revenues for the first six months of the year set a record at nearly $10 billion US, representing a roughly 27 per cent increase over the first half of 2006, say figures released Friday.”

Minus 40% which automatically goes to Google:
valleywag.com/tech/online-advertising/-307760.php

“Google accounted for nearly 40 percent of the $10 billion U.S. online advertising market in the first six months of this year. I, for one, welcome our Google overlords. ”

SOMEBODY’s satire, is staring to look awfully retarded.
blog.pmarca.com/2007/10/ok-youre-right-.html

“Here we sit, with over $7 billion in venture funding this year chasing exactly zero good ideas.”

7 Billion per year in VC chasing SIX, 6 Billion dollars.

Somebody was sleeping in Math class. Pathetic. BeerCo is going after the Google 40%. Unlike the rest of you guys. We don’t share Californians low Math scores.

it’s turtles all the way down.

new websites spring up with revenue coming from ads, that are paid for by other companies, whose revenue comes from ads from other companies, who are also funded via ads from even more companies, “ad” infinitum (pun intended, beyotch!)

The bubble in the late 90s to early oughts (Yes - I’ve officially termed the years 2000-2009 the ‘oughts’) will indeed keep many low-risk investors shell shocked and start-up tentative for at least another decade, as well as incur the at-least yearly article declaring “we’re in another bubble.”

However, just like the crash of the stock market in the early 20th century (Wow - when you define the date like that it feels hecka long ago!) I’m not sure it’s entirely accurate or fair to assume it’ll keep on keepin on. One bubble doesn’t necessarily beget more bubbles.

In almost every aspect of life I’m a cynic — there’s no such thing as love; wars will never end; people are dumb etc. — yet, one thing I count on is that money rules the world. I think entrepreneurs and VCs have learned from the past bubble and the new found knowledge will keep the Internet creeping into everyone’s everyday world.

The days of bubbles bursting are over. The New Order will be more smaller ones that attach themselves to each other…

rofl@ pink shirt guy
OT FTW

Just use MS Bubble Generator, it’s a Feature in Vista!

http://fakesteveballmer.blogspot.com

:bowrofl: @ pinkshirtguy.

Amazing how far along mr PSG has come along.

The next big ideas are going to come out of biotech and nanotech - not the internet. Maybe Mike should start covering these other fields as the headlines on TC are starting to sound totally monotinous.

It’s definitely time to party like it’s 1999! FB @ $15BB is recockulous people. We’re just one 9/11 away from FEB 2000.

Sites like Techcrunch only add fuel to the fire. There is definitely a bubble and you guys covering sites that don’t even have a chance to survive doesn’t help.

“Maybe Paul Graham has it right. It’s so cheap to create Web startups these days”

But those startups are all 100% worthless.
You may as well aggregate random wikipedia and other public license content pages on a million subdomains. It will make you a lot more money.
The people that are able to create startup sites cheaply are also the same ones that don’t have the talent to work on a successful website portal.

You’ll get a lot more bang for your buck by mirroring php.net and wikipedia if you’re looking to actually make money on your investment. Otherwise kiss the money goodbye. I’ve been here since before 2000. I was using Java 1.1 for god’s sakes.

Bubble 2.0 is just something we have to deal with around here, it’s like death and taxes. Is there too much funding laced hubris floating around in technology? Yea, probably. Is it as financially ridiculous as the last bubble…not at all. Lets just hope these VCs have mixed some viable companies into their Web 2.0 starter deck this time around.

psg on techcrunch…holy shit.

OT deserves the credit

I asked the following question to a number of Junior VC partners:

“Why is your fund throwing dough at these startups with precisely duplicate models to other valley 2 and 3 man shops that make these stupid applications? ”

The generalized answer: “I have to screen and bring in deals, if I don’t, Im not doing my job.”

Me: “why not more research on better grounded B2B, on demand, real-world business model startups?”

Junior: “Not enough buzz - those commercial Web 20 service businesses are so hard to listen to in the format of a presentation, and the numbers are so growth incremental”.

Me: Huh….so you are saying that you would rather throw money at hype engines with no business model, or very speculative models, than B2B models that actually have longer, more realistic harvest curves?”

Partner: “in a word, yes”.

We are in big trouble.

One attribute of the last bubble that’s been missed in this discussion is the torrent of IPOs. Thus far it doesn’t seem like we’ve seen these non-profit-to-low profit early-stage companies doing public offerings. Of course, they’d have a hard time to find any firms to take them public after the last time around.

So maybe the trend to watch this time around is private funding and acquisition for early-stage companies. I’d like to see the hard numbers comparing early-stage funding and acquisition now vs. circa 1999, though the anecdotes (thanks, Alan W) are interesting.

Finally, I think criticism of TechCrunch for “adding fuel to the fire” is just off base. TechCrunch reports information, offers some editorial commentary, and encourages people to post opinions. That’s no different than journalism down through the ages.

Jon:

It seems that the current model favors the early buyout of insubstantial companies over IPO, in the current trend. This has manifested to the point where the well moneyed Goliaths can acquire and sometimes allow the new asset to lie fallow, which I believe has been covered in a recent TC story.

Alan, I talk with a lot of people out seeking funding right now. i know several web2.0 types who’ve been turned down by VCs who are focusing on b2b’s. Sure, there are a lot of lemmings and bandwagoners, and many jr associates may simply not be experienced enough to have lived thru cycles with downturns.

but the people I talk to who are talking to VCs aren’t turning down VC money left & right funding ridiculous ideas. They are getting thoughtful, cautious responses from VC firms - and these are web2.0 companies with real business models and bringing in income.

Bable…whatever….that dumb and simple talking head concept….is just one of many examples of simple, easily repicated and faddish ideas that people consider funding these days. Too much money chasing too few truly good and sustainable business models!

Here is a list of 256 bubbles in the froth. (taken from the Tcrunch RSS feed over the last month or two)
Criteria:
* a non-word or meaningless
* it’s live (.com)
* average joe has never heard of it

23andme
37signals
adaptiveblue
adicate
adpinion
akiaki
alibaba
anboom
ask3D
attensa
babelgum
bazaarvoice
bebo
bitgravity
bitpass
blogmusic
blogstorm
blubet
bluepulse
boobox
boxbe
break
bubbleply
buddystumbler
buddytv
callburner
callwave
casttv
cellfish
cellswapper
chimetv
chipin
chitika
chumby
clipmarks
collectivex
congoo
corank
crackle
crowdstorm
crowdvine
cuill
dailymotion
dapper
dekoh
demofuse
designmyroom
diettv
docstock
doostang
doppler
down2night
downfly
dreamcrowd
dukudu
ebuddy
edgio
eswarm
eventbee
fbexchange
feedburner
feedlounge
feedster
fichey
flikzor
fliqz
flixter
flock
fonpods
fotoflexer
fotolai
fring
gamefly
gbox
geni
goodstorm
gootube
grokit
heycosmo
hi5
hipihi
hulu
imeem
incuby
inviteshare
itaggit
itema
iwon
jaiku
jajah
jaxtr
jimdo
jing
jobvent
jooce
jotspot
keibi
kickapps
kiptronic
kongregate
kontera
kushcash
kyte
lala
licketyship
lifelock
lingoz
lookery
loopt
lypp
maestro
meebo
meevee
mesmo.tv
minekey
mint
mixaloo
mobilerunch
mocospace
mog
mosoto
mosso
mozes
mozy
myheritage
mypunchbowl
mystrands
netvibes
nexthink
ning
nowpublic
odeo
ooma
orkut
pageflakes
peak6
peekyou
pheedo
photobucket
pickspop
piclens
piczo
plaxo
playoo
plazes
pligg
podtech
postini
powerset
pownce
pubsub
quintura
reddit
retrevo
revver
riya
rockyou
sampa
sclipo
scoble
scribd
seesmic
sendori
seriosity
shellfari
shycast
sifd
sightspeed
skitch
slapvid
slide
smugmug
socialpicks
socialtext
songbird
soundpedia
sparter
spiceworks
spinvox
spiralfrog
spock
sportsvite
spotplex
sproose
stixy
strayfrom
streamburst
streamload
streetadvisor
stubhub
stumbleupon
sudeo
swamble
swaptree
swicki
tailrank
templatemonster
texty
thinkfree
thoof
thumbalizer
thumbplay
timebridge
tinbag
tokbox
topix
truemors
truveo
tvtrip
twitku
ubroadcast
ujogo
upscoop
usphere
ustream
validas
veoh
videoegg
videohybrid
videosift
vizu
vlingo
vuze
vyew
weebly
weewar
wefi
wetpaint
whosoff
wiffiti
wikia
wikiyou
wis.dm
wize
wurkpal
wyzo
xcavator
xift
xing
yappd
yelp
yourminis
zannel
zattoo
zazzle
zentation
zenter
ziitrend
zimbra
zipidee
zipingo
zivity
zlango
zoho
zoomer
zyb

Greed may cause bubbles, but I suspect in the comments above that ENVY causes bubble-calling!

Everyone thought Murdoch was crazy paying $650M for myspace, now everyone marvels at how cheap it was.
The reality is: there’s real money being made on the net now, the traffic numbers are huge and will only grow further. Now I see that John Doer was not insane when he said “the internet is *under*-hyped”.

The late 90s were about speculation, the mid 2000s are about extrapolation, it’s a very different bet.

@21 “The people that are able to create startup sites cheaply are also the same ones that don’t have the talent to work on a successful website portal.”

Such a wide sweeping generalization of people can’t possibly true.

How can there be a bubble “AGAIN” so soon? WSJ doesn’t know what they are talking about.

Amit
http://www.chai-yah.com

There are definitely some characteristics of a bubble at play currently:
1) Out of whack valuations (YouTube, FaceBook, MySpace, Skype, etc)
2) Hype, hype, hype (video anyone)

However, I would say that overall we are in a much more sustainable place than we were in the late ’90s. The overall costs for starting companies is quickly approaching $0.00 and with that the case companies and ideas can be started quickly and in great abundance.

The key issues that these startups will face is simply getting access to talent; executives and advisors. That is an issue though has always affected startups. The number of startups that have actual revenue opportunities is quite large. Also, with the minimal funding required, companies do not need to generate a huge amount of revenue to be successful.

The large VC funded companies will suffer from the bubble bursting. Smaller / bootstrapped startups will continue to thrive.

I distinctly remember reading an article in early 2000 in Time Magazine that said in the future, half of all people on earth will be entrepreneurs, and that everyone will be running small startups rather than working regular jobs at companies. And I laughed.

Then the bubble burst.

Then I laughed some more.

37 signals and those of that sober ilk do not belong in the bubble category. They were incrementally grown like hot-house tomatoes and lovingly tended by their owner / gardeners.

There is a model you can bet on; but as they are almost always captained by fiercely independent types that would never share equity with an outside agency that exists solely to exploit a harvesting strategy.

These organic new age Web application business, many born outside of the valley, often sit on the shoulders of previously successful businesses. 37 Signals, Chicago, a potently viable web design outfit, the outgrowth of the owner’s strategy to make a product they could call their own.

The birth of Ruby on Rails was but a sublime progeny that further propels the industry to somehow liberate itself from the most awful subset of ‘fast time to harvest’ valley VC’s.

I wish I was young again.

Most advertising spend is still in tv, radio and print, not digital.

Most consumer time is spent in digital.

All that mass media spend is virtually unaccountable to ROAS.

Most of the digital spend is accountable to ROAS.

Those deltas are just getting wider.

Bubble? I don’t think so.

Not even close…

Eric

Good post — you failed to mention TC as a bubble company. It is

@ Duncan — WTF, you jump in to correct your editor on the attendance on TC40??? who cares if it was 1000 or 1200. WE GET THE POINT. Maybe *hopefully* the bubble will burst and we won’t have to be subjected to your non-journalism anymore

Wait wait wait wait… Somebody at TC is complaining about BUBBLES? The whole POINT of TechCrunch is to hype up the bubble and filter out the best ones! Who are you and why are you writing here???

Not much wading needed to realize the folks behind the Hide Pink Shirt Guy company are most definitely smoking something or or drinking heavily to have come up with this doozy of an idea.

I am so cool.

@37 “Maybe *hopefully* the bubble will burst and we won’t have to be subjected to your non-journalism anymore”

Can you really not avoid clicking on your TechCrunch bookmark, or is there a prize for the most absurd comment today?

hid the pink shirt guy? it’s all about timing. they submitted their idea the day you decided to post on a bubble.

please let me know when the next time you’re going to bemoan the re-rise of stupid ideas so that I may at that time submit my website.

you can never make everyone happy. not enough funding cash and it’s the end of the world. funding picks up and it’s a bubble. my opinion for what it’s worth - probably nothing - is that there isn’t a bubble. just a lot of interest and bets being placed in the social and mobile web. if they all were going to pay off then we wouldn’t call them vcs, we’d call them banks.

Bubbles happen when companies stop acquiring companies and then startups are forced to go public. When an inordinate amount of startups go public, that is when you will see a bubble. I work for a very established private company that still needs to raise money. We don’t need to go public because raising money is extremely easy right now. When my company goes public, I know it will be a bubble or close to one.

Bob Metcalfe said recently that bubbles are a good thing for technology, since they indicate intense investment in an area. When the bubble bursts, the survivors pick up the pieces for cheap and reassemble them for a whole that is greater than the sum of its parts…

@ 41

And your point is? I enjoy TC. However I find that Duncan could use some common sense. His comment was absurd and added nothing to the thread. You may not agree with me, but my comment was not absurd.

What is absurd are the folks that spam these comments continually and say nothing.

No bubble.

Crap companies fall by the way-side and the one’s that get $5-$50 million and go nowhere don’t get on-funded.

All businesses need sustainable revenue/earnings streams and the movement to digital by the entire population means that these companies do have enormous socpe for some high margin business. Who cares if it’s advertising; go ask Proctor & Gamble and Kraft if they advertise much, while I don’t know the exact %, a high proportion of their costs go to the cost head. In and off itself it can sustain thousands of $100mm+ businesses. Medium shift means that there is room for lots of winners and plenty of losers.

No bubble.

Crap companies fall by the way-side and the one’s that gat $5-$50 million and go nowhere don’t get on-funded.

All businesses need sustainable revenue/earnings streams and the movement to digital by the entire population means that these companies do have enormous socpe for some high margin business. Who cares if it’s advertising; go ask Proctor & Gamble and Kraft if they advertise much, while I don’t know the exact %, a high proportion of their costs go to the cost head. In and off itself it can sustain thousands of $100mm+ businesses. Medium shift means that there is room for lots of winners and plenty of losers.

Pink Shirt Guy is based on an image posted on popular message board OffTopic.com last year.

Ban Chris Jacobson for breaking rule #1.

Absolute bubble. What material value do any of these “new” sites add? The answer: none. The ad money is driven by a very small population portion that has poor conversion rates. Basing ad revenue on impressions won’t hold water in the long run. Facebook looks like the best contender for the newly emerging market, but they are in the 99.99th percentile and they could make big mistakes that generate big backlash maybe bursting their own bubble. The rest are fodder. Too many, too much, and too little value. Social web is simply a small step toward greater integration, it’s not the answer, it’s a bubble.

Of Course “Hide Pink Shirt Guy” is a business, they obviously had no development cost, they will get some traffic from digg/reddit/techcrunch and the probably don’t do this as a full time job.

And the have some ads, so I think they will make some money on the side with this site, they won’t become rich but they probably never planned to become rich with it in the first place.

So why exactly is somebody making a site about a funny cutout in his freetime a sign of a business bubble ?

I HOPE there is a bubble! BLUB!!

@bob cobb: What’s rule #1?

I read your article “As Tech Heats Up,Sages Dust Off Bubble Indicators”. I could not agree more.

I myself was a founder of $12M founded bubble company, Hotvoice.com, during year 1999. After 3 years of high rides, I came back to work as an ordinary programmer in Wall Street financial company.

Now, I started another web2.0 company http://www.MyGrowUp.com. During this faddish web2.0 period, I constantly ask myself is this another bubble company? After I spend my own money to do limited advertise campaigns on Google, I am confident that MyGrowUp.com is not a bubble.

The purpose of MyGrowUp.com is for everyone to naturally organize his personal photos/videos in timeline, and safely share among family and friends.

To my surprise, during beta run, the real users are parents who love to use MyGrowUp.com to build digital profile for their kids. We believe these kids will inherit their MyGrowUp profile when grow up.

I wish people will not category MyGrowUp.com to be one of bubble web2.0 company. After more beta try, I will search for fundings.

Unfortunately, the VC’s are only interested in sexy new flangled plays, while solid growth companies who have a good track record get passed by for funding. It was sad back in 1998-2000 and its sad once more. Wake up you blue starchy oxford dressshirt clad lemmings!

Bubble? There is NO bubble.
The start-ups today are more informed. Moreover, they have the one big factor needed to sustain in today’s markets - a business model.
The concept of “Online Marketplace” is truly coming to life with the way things are going right now. Remember that when you step out, there are a 100 places you can look for clothing, gadgets, books, food, even speed-dating. Nobody complains about any bubble here. Why feel nervous when the web expands its offerings?

As long as people have a way of keeping the cash flowing in, the sugar daddies will always be there to support them and share a percent of the profits.

Please. Inexperienced entrepreneurs?

Notable first timers include: everyone really important.

Notable first timers exclude: youtube and skype