Thursday, May 31, 2007

Call It a Niche Bubble

Interesting article from Business Week which talks about the parallels between Web 2.0 and the dotcom stuff that went on in the 90's.

Don’t Call It a Bubble

I see his point. I, too, recall that in the not-too-distant past—before Google (GOOG) shelled out $1.65 billion for YouTube in 2006—people were starting companies because they thought they had cool ideas—not just to flip a startup to Yahoo! (YHOO) or Google. There was less talk of "exit strategy" and more emphasis on fun projects put together with friends on a shoestring budget.

I agree with some of the things the author says in the article. The 90's was really the start of the commercial web for lack of a better term. During that time, the web was basically a blank slate or an operating system where applications still had to be written for it. Hence you had an explosion of applications like web mail, online shopping, and so on. There was definitely more diversity back then than there is today. The Web 2.0 term is really a phenomenon that pertains to a certain niche of web applications such as social networking and blogs.

As for startups opting to flip, I think it may have something to do with the difficulty of making money on the web. The web today is a crowded space with lots of things invented already. It is harder to come up with a new idea today that it was in the 90's. I think an IPO is also more difficult today.


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