John Dvorak, well known writer for PC magazine says "Bubble 2.0 Coming Soon". John says we saw this before in 1999-2000 and the exact same thing will happen again. I don't think so. There are big differences between 1999 and 2007. Marshall Kirkpatrick does a nice job of dismantling Dvorak's arguments.
First, I agree that most of the new Web 2.0 social networking startups will fail to gain traction. But that is true of all startups at all points in time...most of them fail. That is the nature of startups. They take huge risks, blaze new trails, create new wrinkles and innovations, and most often they fail. That is not a bubble.
The bubble of 2000 was an economic bubble that burst with devastating consequences. Companies with no profits and meager revenues were going public with huge valuations back in 2000. There is no economic bubble today. Individual investors are not hurt when these companies fail. Back in 2000 there were thousands of individual investors that got wiped out. Big difference.
It is much easier and cheaper to start a company today than it was 7 to 10 years ago. There are pre-built web platforms, cheap hosting infrastructure, advanced development tools, and easy ways to market and promote new companies. So yes, there are a lot of companies being started. But most of them are one or two person companies started on a shoe string with no outside funding.
Dvorak cites several areas as bubble hype zones. Social networking, Internet video, User Generated Content, mobile everything, ad leveraged search, and lastly, widgets and toolbars. Yes there are lots of experiments and beta projects in these spaces. Yes, most of them will fail. But, there are already some shining examples of success in each of these areas, and more innovations will come. The good ones will be acquired before they get very big. Others will evolve into different areas, and many will fail. That is normal...not a bubble.
When VCs start throwing tens of millions at "experiments" and the NASDAQ starts launching IPOs of companies with no profits, then I will agree we are in a bubble. For now, we are just in a healthy stage of experimentation and innovation.
