
Are we at the start of the web 2.0 bubble? - maheshrs

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uuilly
A financial bubble means that people are buying something less for its
inherent value and more b/c they think that other people will buy it for more.
Look at real estate prices. They should always be determined by people's
salaries. The amount a person can pay for a mortgage is directly proportional
to their salary. Salaries haven't been increasing much lately, but in the last
few years real estate prices have gone through the roof. So home owners accept
that they will be over-stretched in the short term in the hopes that they can
"flip it" for more. Since people have become falsely convinced that "you can't
loose in real estate" they are happy buying overvalued houses b/c they "know"
that the price will only go up. The problem is you eventually run out of
suckers. Eventually people say, this one bedroom condo is not worth a million
dollars. After the notion that real estate prices "only go up" is disproved,
the bubble quickly pops.

This is all to say that financial bubbles require lots of "transactions" for
the positive feedback loop to take hold. People have to see the price going up
up up up up up up enough to get hypnotized. Since there are very few public
web 2.0 companies I don't see how this can happen. The transactions in Web 2.0
come from angels, VC's and big companies making acquisitions. Since there are
very few transactions in the cycle there is little opportunity to pump the
price up and pass it on to suckers. Also the suckers in question are
professional investors and big software companies. While they may make
amazingly stupid decisions from time to time, they are not nearly as stupid as
the hordes of unwashed E-traders.

I think the real question is, "is Web 2.0 oversaturated?" That's a very
different dynamic than a bubble.

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mikesabat
No we are not at the start of a Web 2.0 BUBBLE. We are at the beginning of the
Web 2.0 investment CYCLE.

We are starting up the curve where investment, attention and innovation are
rising. A BUBBLE is later up the curve.

A BUBBLE has a negative connotation and implies that negative things can or
are happening. The question you would be asking in a bubble is "Everyone has
made a ton of money, can this get any bigger or should I get out now before
the floor crashes through?"

I don't see anyone in that mindframe yet.

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rrival
How much weight should we assign to the decrease in cost to entry between '99
and '06 in calculating the point at which we're saturated with startups? How
many local event (and share your plans with your friends!) evite competitors
do I need to have access to? It's getting a little out of hand.

When Web 2.0's cycle increases to the point of a bubble and explodes in a
rainbow-reflective-gradient shower of glossy logos, it won't be the VCs that
get burned, it'll be the little guys hunting VC (or profitability) who rolled
their own and failed or didn't succeed in a stellar way. It'll be much, much
quieter than the dot-com bomb.

I'm actually pleased to see projects starting to end up in the TechCrunch
deadpool, and I'm waiting to see if traffic to FuckedCompany.com starts
increasing.

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maheshrs
Huh! When I first submit this question, I didn't get the text box! Anyway, my
main question is as follows:

-> Are we at the start of a web 2.0 bubble? I say this because I see (way) too many startups doing the same thing over and over again (e.g.: social networking, web based im, wiki/blog backed news feeds, web based video, etc). Some of the newer ones are trying to add some money making (biz model as the vc-s like to call it) tactics to the whole game, but, mostly, most of these startups have no real monetary benefits.

-> If we are at the start of a bubble, when will it burst?

-> When the bubble bursts, how bad will it be this time: global economic meltdown? 

~~~
jsjenkins168
A big difference between the .com bubble of the late 90's and the situation
right now is in the number of companies applying for an IPO. That number is
still currently a fraction of .com bubble levels.

VC investments are on the rise but still lower than at the peak of the bubble.

When looking at these statistics it doesn't yet resemble what we saw in the
late 90's. Maybe people learned their lesson. Or it could be just the
resulting chilling effect from the Sarbanes-Oxley Act... Its a lot more
difficult to go public nowadays.

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blored
I think that investors are jumping on facebook apps like they did on regular
websites in the first bubble.

