Monday, October 31, 2005

Google hiring like it's 1999: "The search giant is stocking up on engineers and more as it races to keep pace with its own ambitions." —
Money, money everywhere -- but no place to park it: "The latest firm to raise money is Cupertino's Bay Partners, which has just announced a $290 million fund. There have been several other funds raised lately, which we haven't mentioned, including Morgenthaler's $458 million fund announced earlier this month. " —SiliconBeat

Let me take this opportunity to say that the first offer of $20M at a $20M pre for Bubble 2.0 takes it.

Friday, October 28, 2005

The rebirth of tech: "Startups are hot—again. Valuations are nuts—again. Fortunes are being made—again." —CNN Money

Feel the waves of pleasure cascading through your body.
Overstock Pride Goes Before Fall: "'Q3 was rough,' [Overstock CEO Patrick Byrne] said in the press release.  'My bad.'" —Henry Blodgett

Sad to see one of the original Bubble 2.0 Index components (charts at right) fallen on hard times. Actually, that's not true. Hasta luego, Señor Wacko!

Wednesday, October 26, 2005

Innovation is bursting out again: "The last 4 years have been brutal, but innovation is happening again. Lots of new companies are emerging and you can feel the excitement again. VCs are investing again. Life is good." —Don Dodge

While it may sound strange coming from someone who writes a blog titled "Bubble 2.0", I honestly believe that the widespread bubble angst is not much more than shell-shock from Bust 1.0. Yes, it was bad. Yes, it hurt. But if you really remember it, you know that we're nowhere remotely close to Bubble 1.0. This is an exciting time. And as Don says, life is good.

Tuesday, October 25, 2005

VCs Talking Bubbles: Trying To Hold Down Valuations?: "Reading an article of VCs talking about how some areas are starting to overheat sounds an awful lot like VCs trying to keep valuations down so they can still invest cheaply, rather than any real attempt to invest smarter." —Techdirt
Get Your Head Out of the F**ing Tag Cloud: "The title aside, it’s actually a cheerful and upbeat bit of musing. Really. I mean it." —Paul Kedrosky (UCSD)

I was on the phone with Paul the other day and he mentioned the title of his talk: "Pull Your Head Out of Your F**king Tag Cloud". I laughed so hard it almost made coffee shoot out of my nose. It looks like he's changed "pull" to "get" and "your" to "the", which makes it less offensive, but also less funny.

Monday, October 24, 2005

Yes, Google is a One-Product Company: "Suffice it to say that anyone who wants a reminder about what happens to the revenue and profitability (and stock prices) of one-revenue stream companies when the revenue stream falters should check out Yahoo! from 1999 through 2002." —Henry Blodgett

Henry Blodgett as the voice of reason, dogs and cats living together... mass hysteria!

Even if you're not buying the hype, you should at least buy the shirt:

From the Bubble 2.0 Store.

Built To Be Bought: "If companies are indeed again being built for acquisition rather than independence, venture investors are in for a rude re-awakening (that will be precipitated by a very loud popping sound). While a few companies being built for acquisition will be acquired, the vast majority will ultimately run out of money and be shut down (particularly as each new Web 2.0 idea doesn't just spawn one company but three or four). So when I hear large numbers of companies pitching themselves as excellent acquisition candidates before they've even gotten out of the gate I can't help but think to myself that we are in the heart of Bubble 2.0. Sadly, only one thing follows Bubble 2.0 and that is Bust 2.0. On the good side, there's always Web 3.0. " —David Hornik (August)

It's not a bubble until all these junky little "companies" go public. Until then it's just a time of cretaceous diversity.

Friday, October 21, 2005

Where's the love for web 2.0?: "I'm happy to see silicon valley getting back to its core mission, that of creating and testing lots of new ideas. I'm happy for google's success and the amount of investment that that will bring back to this very necessary American endeavor." —Mark Pincus
They Get Paid For This, Part II: "What I do know is that Google’s growth last quarter was almost triple eBay’s and more than double Yahoo’s, and that margins are higher and free cash flow is higher and, oh, yes: the earnings revisions by Wall Street’s Finest this morning are far higher for Google than they were for either Yahoo or eBay." —Jeff Matthews

This is what Web 2.0 is all about: building an automated money-making machine that runs 24/7, throwing off cash and growing like crazy. Go, go GOOG!
Will mainstream people flock to Flock?: "Web 2.0 has to reach out to mainstream people, before the blogosphere implodes from all the 2.0 hype and anti-hype (the latter is worse than the former IMHO, because it has the added fuel of cynicism)." —Richard MacManus

Given the schizophrenic nature of this blog, which swings wildly between abject cynicism and irrational exuberance, we agree with Richard. No we don't. Yes we do. Kill the nasty hobbitses...
Seeing Is Believing: "My point here is that we're entering another period of Internet exuberance. Yes, a lot has changed since 1999, but it's amazing how many of the ideas being pushed are the SAME ideas, just empowered now by dark fiber, cheap broadband, and six years of Moore's Law." —Robert X. Cringely

Cringely runs the numbers and declares that Internet 2.0 is going to require a lot of hard drive space. Thanks, Bob.
Web 2.0: It's... like your brain on LSD!: "There's much fretting about what Web 2.0 really is. It's twice as cosmic, but what it is it?" —The Register

There's no cynic like a British cynic.

Thursday, October 20, 2005

Speechless: "Google's stock price—shocking though it is—is much less amazing than Google's fundamental performance, which is simply not to be believed.  A 7 year old company with a revenue run-rate of $6 billion, an annual growth rate near-100%, 43% EBITDA margins, 100%-plus return-on-invested-capital, a dominant global franchise, and already about half the cash flow of Time Warner (a 100 year-old company with 85,000 employees).  As folks at net-relic Compuserve might put it: Wow." —Henry Blodgett
Banks Focused On Startups Upset That Others Are Crowding The Loan Business: "Historically, it's been quite difficult for a startup to get a loan, because the basis of most loans is your ability to pay the money back—and startups usually don't have enough of a track record to make lenders feel comfortable. So, for the banks that do offer loans to startups, it's often quite risky, and the rates can reflect that. However, with a new bubble forming, and with 'hedge funds' (which often aren't 'hedge' funds at all) forming left and right—some of those funds are getting into the business of loaning money to startups. So, the competition has the traditional startup lenders ('venture debt firms') pissed off that these hedge funds are driving down the rates." —Techdirt

Liar's Poker meets Accidental Empires.

Wednesday, October 19, 2005

Web 2.0 Bubble: "What we also have today versus yesterday are business models that can scale cheaply, be profitable, and throw off lots of cash.  Let's focus more on these concepts versus being Web 2.0, as I do not want to think about what kind of rebirth will come from another bubble." —Ed Sim (Dawntreader)

A VC who doesn't want another bubble is a VC who doesn't trust his own timing. Come on, Ed. Act like you've got a pair!
Cisco launches $100M VC fund , part of $1.1B India plan: "Cisco Systems Inc. said on Wednesday it plans to invest $1.1 billion in India in the next three years, including $100 million to fund Indian start-up companies." —Silicon Valley Business Journal

$100M is a nice round number and trips lightly off the tongue: "Hunnerd mee-un." Makes me proud to be, as our president says, a "merkin".
Off Topic: "'s pitch for A disturbingly accurate look into the future from October 1996." —Good Morning Silicon Valley

Funny then, fundable now?

Tuesday, October 18, 2005

Web 2.0 to be followed by F*cked Company 2.0?: "At the current pace, the industry will raise more than $27 billion in 2005. Astonishing, really, considering it raised just $3.8 billion in 2002 as it searched for solid footing in the aftermath of The Great Dark Time." —Good Morning Silicon Valley
The Flip 2K5:

Anil Dash
Cafe 2.0: After the Gold Rush: "A hip Mission District cafe has become the unlikely nerve center for a new wave of software innovators, amid signs of a second internet gold rush. Ritual Coffee Roasters opened just this May, but thanks to free Wi-Fi, French-pressed coffees and gourmet espresso, it has already become a favorite temporary home to some of the best-known Web 2.0 startups." —Wired News

Close your eyes and try to imagine this story showing up in 2001.
"The Search" & Bechtolsheim's Balls: "Rather than haggling over price, Bechtolsheim flattered Page and Brin by saying their not-yet-incorporated company was worth even more than they thought, thus further ingratiating himself as a ballsy seed investor. A great trick that more venture investors could deploy selectively now and then." —Paul Kedrosky

Thus began the historic overvaluation of GOOG.

Monday, October 17, 2005

VC Fundraising Up 62%: "U.S. venture firms raised more in the first three quarters of 2005 than all last year." —Red Herring

Into the maw of the beast...
Entrepreneurs Everywhere: "A lot of people, intoxicated by Web 2.0 hype, are rushing to launch new ventures. Unfortunately, many of them are pursuing similar, and usually flimsy, business models. Rip suggests that all would-be entrepreneurs ask themselves two simple questions: 'How will you sustainably differentiate yourself? What will you do when 15 other similar sites appear in the next 12 months?' Don't assume, in other words, that low entry barriers make it easier to succeed. It's exactly the opposite. Where there are low entry barriers, there are also low barriers to competition." —Nick Carr
Run And Hide: Goldman Sachs Says The Internet IPO Market Is Back: "Goldman Sachs has declared from atop the mountain that the time for internet companies to go public is now back. Open up the floodgates and let the hype flow in..." —Techdirt

Oh man, reading this gave me chills. In a good way.
Gartner Heralds Second Internet Revolution: "Advances in broadband penetration, and the increasing trend of using the Web to deliver applications, will help pave the way for a 'second internet revolution,' industry experts predicted today." —NewsFactor

'Nuff said.

Sunday, October 16, 2005

Web 2.01 Release Notes: "Web 2.0 isn't about the latest trend in technology—it's about 'harnessing collective intelligence,' involving customers in product development and taking advantage of the web's distributed nature." —Nick Bradbury (FeedDemon)

When I was at Vignette, we'd mercilessly ridicule statements like this by pinching our fingers together, bringing them to our lips, and saying, "Dude, man. It's like... the web is an organic outgrowth of our collective consciousness." Then again, we weren't smart enough to get while the getting was good.
The Web 2.0 Entrepreneur Bubble: "Reduced barriers to entry always look attractive to the entrants. But once you enter, you are an incumbent." —EarlyStageVC

Friday, October 14, 2005

Why the Sudden Interest in AOL?: "Thought to be nearly dead a year ago, America Online is attracting several powerful suitors who see the big bucks in tying up with the company's web portal." —Wired News

In Bubble 1.0, AOL was able to finagle $89M deals out of year-old startups. I can't wait to see the encore.
Net start-ups face odd problem: more VC cash than they need: "Many Internet entrepreneurs don't need the cash, because they're building products cheaply—using open Web technologies, often with two or three developers. So in return, they're demanding that VCs have a lot more to offer than just cash." —

But, says the cynic, a product does not a company make.
Another Sign Bubble 2.0: VCs Begging To Invest In Startups That Don't Need It: "In the first internet bubble, a big problem was that many entrepreneurs started viewing venture capital money as revenue—and therefore, it was all about raising more, rather than building a real business. The money was distracting and often took good ideas off course. If today's entrepreneurs can resist that temptation, put the money in the bank and stay focused on building good businesses, then perhaps that's a good thing. However, having lots of money around can often do funny things to startups." —Techdirt
Bubble 2.0 – The Long Tail of Supply: "Bubble 2.0 aka Web 2.0 is upon is.  Like every bubble, there will be opportunities to create great fortunes, opportunities to lose such fortunes before spending them, plain old opportunities to lose money, chances to get funding to do cool things, and some important changes to the way we live our daily lives." —Tom Evslin

Well said, and by the guy behind not only Microsoft Exchange but also AT&T WorldNet.
Tech people appear hyped about their industry again: "Everyone half-expected the sock puppet to wander through, checking e-mail on its BlackBerry." —USA Today
Quote of the week: "Funny. I definately [sic] felt some of the late 90’s creep into last week. New startups abound, people building features instead of businesses, lots of hand waving and back-slapping. I feel very optimistic this time around, but Web 2.0 was enough to make me worry a bit that folks just can’t wait to go overboard." —Scott Gatz (Yahoo)

Wednesday, October 12, 2005

Web 2.0: Land of Opportunity, or Land of Absurdity?: "OK so there's a lot of hype. So the VCs are throwing money around. So get to work. Build something Web-based that mainstream people will need and want. Now's the time to do it." —Richard MacManus

Tuesday, October 11, 2005

Bubble 2.0 Meme Map:

Bubble 2.0 Meme Map

Inspired by O'Reilly.

Monday, October 10, 2005

I'd like to note that this blog just had its first birthday. The inaugural post was made on October 5, 2004.

I got the idea for the blog while driving to a meeting with a VC firm in Austin. My partner and I were stopped at the light at 5th and Lamar and noticed the new Vespa store. We talked about Paul Graham's What the Bubble Got Right essay and decided that the hangover was starting to fade.

Exactly one year to the day after that initial post, I found myself in San Francisco at a $2,800 conference on "Web 2.0" where the hotel ballrooms were literally standing room only. Mary Meeker was there. So was Henry Blodgett. And so were at least two dozen venture capitalists, including, I might add, one from the firm that we had pitched—unsuccessfully—a year earlier.
VCitis: "This Web 2.0 stuff is all well and good but I can tell you what my next investment will be in—a mental health facility on Sand Hill Road." —David Hornik

Funny, I thought there was already such a facility at 2480 Sand Hill Road, Suite 101. My mistake. "VeriSign is about to announce it acquired Moreover Technologies, the San Francisco based news aggregator. The acquisition price is around $25m according to SVW sources." —SiliconValleyWatcher

I remember Moreover from when they subleased office space from my wife's architecture firm... in 1999. Still, $4m and change a year isn't too bad.
A Healthy Skepticism about Web 2.0: "I hope that during this next boom we remember to critically test all ideas and notions with a healthy skepticism. I didn’t sense much of it over the past few days in San Fran, but I suspect that it will follow after the lessons we’ve learned." —David Beisel (Masthead)

My favorite thing about this quote is that it takes "this next boom" for granted. Yes!
Another Bubble?: "We're clearly experiencing now another upsurge of both rational and irrational exuberance. Is it another bubble?" —Kevin Werbach

Sure seems like a popular notion.

Sunday, October 09, 2005

Internet Outsider: Ruh Roh. Web 2.0 Rocking Like It's 1999: "Here's to praying that the exuberance is not a herald of rough times ahead. And here's a toast to all the inspiring, fascinating, and massive opportunities to come." —Henry Blodgett

OK, that's it for the Web 2.0 Conference-related posts. But I don't know what's weirder: the fact that Henry Blodgett is the one calling for calm, or that he's doing it on hisblog.
Froth Central at Web 2.0?: "Both entrepreneurs and VCs tell me things are getting crazy again, especially in consumer Internet ventures. Things have been heating up for some time, but it appears they're reaching a boiling point." —BusinessWeek
Mary's Back - The Internet, China and Bubbles: "Mary [Meeker]’s reappearance and the general atmosphere at the Web 2.0 conference (not to mention some of the recent acquisition prices of early stage Internet companies) have prompted a lot of people to worry about whether we are entering another bubble (of course, they’re not really worried about the bubble, what they’re concerned about is a Bubble 2.0 - there's actually a blog by this name, with slogan 'Please, God, just one more bubble!' - to be followed by a Bust 2.0)" —John Hagel

I'm a huge fan of John Hagel's work, which includes Net Gain, Net Worth, and The Only Sustainable Edge, which I'm reading now. Thanks for the mention and the link, John!
VCs Want Bloggers; But The Feeling Is Not Necessarily Mutual: "We have also heard from a number of blogging networks about the calls that they are getting from venture capitalists. The VCs, it would seem, are hearing over and again from the ad networks that content is king again." —alarm:clock

Saturday, October 08, 2005

Henry Blodget is back for Web 2.0: "Henry Blodget, the famous internet analyst for Merrill Lynch, is back on the scene just in time for Web 2.0." —Don Dodge

Let it be known that I'm setting a 12-month target for my Web 2.0 bar bill at $400.
YouTube Gets Sequoia’s Cash?: "The Web 2.0 funding frenzy is in full effect. YouTube, a self described ‘Flickr of Video’ was one day being told to go raise less than a million dollars and grow the business. A few weeks later the word is that they have raised $5 million from Sequoia Capital at pre-money valuation of $15 million. Well that’s the story these days with Web 2.0 companies." —Om Malik on Broadband
Media whoring: "I don't know what's up, but I've been getting scads of press calls this week -- NY Times, Newsweek, The Economist, NPR, Congressional Quarterly, and Wired, just since Wednesday. All on different topics. Perhaps just a coincidence, or maybe it's another data point that the tech hype cycle is a-boilin' once again." —Kevin Werbach

Or perhaps it's yet more evidence of Bubble2.0™.

Friday, October 07, 2005


Domain Name: BUBBLE20.COM
Whois Server:
Referral URL:
Status: ACTIVE
Updated Date: 15-aug-2005
Creation Date: 15-aug-2005
Expiration Date: 15-aug-2006

How long until Verisign buys it for $2.3M?
Bubble 2.0: "Ed Bott and others like Rex Hammock are calling the AOL-Weblogs Inc. deal Bubble 2.0. Word is also starting to leak out about new contracts the bloggers will be required to sign." —Steve Rubel

Looks like I should I should have trademarked "Bubble 2.0™".
Bubble or Bubble-let?: "Mary Meeker called where we're at now a 'boom-let'. We've gone from boom to bust to boom-let (presumably a precursor to the next boom). She thinks the first 10 years of Web were just the warm-up act for what will happen next." —Richard MacManus

Yesterday I saw Mary Meeker, Henry Blodgett, and Esther Dyson in the same room. It kind of freaked me out.
Zen koan:

First, there is a bubble
Then there is no bubble
Then there is

If Everyone Thinks It's a Bubble, It's Not a Bubble: "Our Web 2.0 conference is prompting allsortsofpeople to declare that the Bubble-with-a-capital-B is back, Web 2.0 is over, and here we go again. The only problem with this is, if everyone agrees it's a bubble, then it isn't a bubble." —Marc Hedlund, O'Reilly Radar

Monday, October 03, 2005

Sun Shares Rise on Google Talk: "Sun Microsystems shares get a lift after it talks about closer ties with Google." —Red Herring

In Bubble 2.0, just being associated with Google makes you more valuable. Amazing.