Quick, Duck! It’s another Web 2.0 Bubble!

Posted by: Rea Maor In: Internet and SEO - Thursday, August 2nd, 2007

It’s about time we paid some attention to one of the A-List bloggers, and today Dvorak interests me. His latest post for PCMag declares that a new Bubble-bust of the Web market is coming.

Now, say what you will; Dvorak really goes out of his way to be controversial and groups like the crew of Slashdot have a low opinion of him. Yes I know, you could stand back and throw a dart at IT tech and be right just as often as Dvorak. But really, I think he may be right this time, OR he may be wrong this time, but the real truth will be somewhere in the middle.

Will some players in the online commerce world go broke? Well, of course! That happens in every industry. What I always thought of the first Web bubble-bust (circa 1999, 2000) was that what really happened was that a bunch of people went bankrupt because they had no idea how to be in business in the first place.

You see this stuff discussed online like there was some kind of magic at work. There isn’t; the online businesses which failed seven years ago mostly were making a lot of stupid mistakes; the ones who played it smart moved right through and said, “What bubble? We’re all doing fine!” You had:

  1. The smart. Amazon, eBay, Yahoo and Google blazed right through. They were big, but they stayed afloat.
  2. The lucky. AOL, Wired, Netscape, and CNET are still alive mostly because, like a chicken with its head cut off, they were too stupid to know they were dead.
  3. The wounded. About, Angelfire, and Altavista today survive as ghettos of the Internet, still clinging to their domains and being places you wouldn’t want to go anyway.
  4. The protected. Lycos got bought by Terra, Hotmail by Microsoft, GeoCities by Yahoo. You can’t go bankrupt if a solvent company buys you. You become a Cinderella instead.
  5. The dead. Tripod: Kablam! WorldCom: Kerplunk! Riot-E: Poof! Disney’s Go.com portal,realizing it was on fire, ran screaming over a cliff.

In other words, the first Web Bubble-blowout didn’t really affect the world market that much. The United States’ NASDAQ dove, and over in California’s Silicon Valley investors were trying to kill themselves by jumping out of their windows only to realize that they were in the basement server room already. Lots of investors in America and Europe lost money, but these are the kind of people who order their cash printed on toilet paper rolls, anyway.

The rest of the Internet market felt a downturn. For some it has since picked up. Nevertheless, you have seen a bunch of new start-ups as the Web 2.0 thing picked up. And a lot of new investor funding is getting passed around. A lot more IPOs have been announced. Here’s a hint: when you see a company with absolutely NO revenue running on borrowed money for a year and then getting a million cold cash in investor money? And the reporter asks them if their company’s going to be profitable soon and they say something like, “We’ll play it by ear and see what happens!” That’s a company that’s going down. Most probably as a flaming comet over a cliff.

Remember, it isn’t a market bust, it’s the economic version of Darwin thinning the herd.

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One Response to “Quick, Duck! It’s another Web 2.0 Bubble!”

  1. Coop search Says:

    yes you are right some web 2.0 companies like raw sugar (a social tagging site) went out of business, but it was mostly because they did not get enough advertisers to sustain them.

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