Views on the Bubble
Recently, Michael Arrington posted Silicon Valley Could Use A Downturn Right About Now causing some interesting and probably healthy conversation. This includes the Valleywag criticism within their coverage The Genie is Out of the Bottle and The Bubble isn’t all bad. Goes with the territory when you are a member of the Technology/Media Triumvirate (TechCrunch, GigaOm, PaidContent). A couple of views jump out at me on the topic overall.
Arrington’s Comments
First, I find it interesting that Arrington, someone who stands to profit most from a healthy technology economy, is the one calling for a downturn. Downturns and bubble bursts have typically not been kind to those whose readership depends heavily on the industry remaining in full throttle mode. Looking back at the first bubble, publications like Red Herring, Industry Standard, Business 2.0 and Wired were the rage and when 2000 hit, the burst hit them as hard as it hit the start-ups they wrote about. As much as I love reading new media outlets covering today’s upswing, I am not confident that there is enough business for them if the bubble bursts and we see a similar downturn.
A Bubble?
Secondly, the bubble itself. I don’t live in the valley so I can’t reflect on Arrington’s view on how “hostile” or different the valley has gotten, how far we are from the purity of entrepreneurism during quieter times. I can reflect, however, on the first bubble from my time at About.com and living through the hype and the burst. The parties were thriving, start-ups were coming out of no where and features were launching as full-fledged companies that had no shot of surviving on their own. In that, I do see some similarities to the late 90’s. But for some reason, I don’t see it as a bubble like before.
My View
I may be wrong, but aside from the incredible acquisitions taking place, I don’t see the same behavior in the venture capital community where unsound ideas are being funded. Yes, there is the set of companies that are simply being built for exit, and they are numerous. But do we see 12 different online bookstores trying to be the next Amazon.com? I don’t believe we do.
The thing that concerns me most is the fact we live in a new web, much of which is based on platform capabilities and web services. So it isn’t as easy to see the duplicity of effort as we should have seen in the late 90’s when it was so obvious. I do not see as many copycats and large number of companies trying to do the same thing (except for perhaps the social networking space). What I see more is each company has their own lense on problem(s) they are trying to solve. The issue is that no economy is going to support so many players in the platform, web services, mash-up space and there will be losers as the environment shakes out. That is healthy.
But is it a bubble? Not if healthy economics and survival of the fittest kicks in. And not if there are winners in each of the key verticals of the new web. In the last 90’s there were a lot of start-ups simply launching with no real problem to solve or customer base to address. That I see as a fundamental difference to today.
