What the Heck is a Bubble Anyway?
Mike Arrington put together a video on Web 2.0 which he released the other day. The video attempted to answer the question “What is Web 2.0?” by posing it to a lot of top Web 2.0 folks. The basic answer is that the users are more involved than ever and things are now more open. However, I am more interested in the talk of whether or not Web 2.0 is in a bubble. It is apparent that, to answer that question, the term bubble needs to be defined.
In other pieces I have written on the subject (once of which was written back in October of ‘05) I have referred people to the public markets. The numbers clearly show that the public markets have virtually no interest in web company IPOs right now. In fact, GoDaddy just pulled their IPO citing adverse market conditions. So, are we in a bubble? I don’t believe we are in the classic sense of the word considering that there is no public market interest. However, I think it is obvious that we are in somewhat of a funding bubble.
VCs are raising more money than ever and have to deploy it. Companies are taking more money than they need because they can. Paths to profitability are becoming a bit shaky. Verticals are becoming more and more crowded causing company descriptions to be prefaced with the words “yet another.” However, in the midst of this there are some solid companies out there that are changing the world. Probably even more than were present in Web 1.0. So there is a lot to look forward to and I am excited to see the story play out while this time getting to play a role in it.
