Yes, It’s a Bubble… Now, STFUM8!
People seem to think that “we” (the tech industry / Silicon Valley) are in another bubble. And, while I tend to agree (think about how places like Gaia or Mint have been funded with immense amounts of money), I also disagree at the same time.
Hello, Mr. Bubble.
What?
Much like Prince, people are partying like it’s 1999. But in this case, the party involves alot of coding and being nerds, while also getting alot of money from Venture Capitalists and private Angel Investors. Some good things are being produced, there’s no doubt about that (consider all the big names you’ve heard in the print media recently). There also happens to be a crapton of crap.
The Problem
The problem is that there is way too much of a “me too” attitude, and not enough originality. I’m not sure I can even name all of the Twitter/Jaiku/Pownce competitors… there has to be at least 10 of them. And then there’s a social network launched by everyone and their grandma about every 8.5 minutes…. that’s a great idea, I know I want to be part of 1500 different social networks, especially the ones that have no meaning or value! In addition to that, there’s all the YouTube, Google (search), etc. competitors.
Why does everyone insist on copying everyone else? I’m not exactly sure, but it probably has something to do with the fact that VC’s are willing to throw money at anyone with a business plan written on a napkin that involves the phrases “social network”, “the next [name current big site] of [name industry]“, and “Web 2.0″.
IR Ur Sowshul Netwerkz Vizyouleyzayshunz!
The Crap
Ok, so people aren’t being original. Not a real big deal, because if they are copying a “big” idea, then at least it’s worth something, an is potentially useful. But what about the people who build utter, total, encapsulating crap? Yeah, there’s alot of it (read more about my feelings on “mainstream Web 2.0″). Let’s review some of the worst ideas, and their problems, shall we?
- Ning
- Concept: A social network of social networks. Create a social network from their product for your own specific needs/interests.
- Funded: Yes.
- Problem: Really? Do I have to explain this? There’s something called MySpace. And Facebook. And a handful of others that captivate people’s interests (Goodreads, for example). Is there a market for another social network? No, because there is no-one left to use it. So why build a social network around a white label distribution of a social network? I have no idea.
- SecondLife
- Concept: Virtual reality as conceived in all SciFi movies and books.
- Funded: Not sure, but they do have an actual income.
- Problem: This is actually one of my less hated. It’s actually a really good concept. I tried it once, and it was very slow and annoying… maybe it was the connection. Anyways, if the whole world hadn’t degenerated into porn, online sex fantasies, extortion, and other virtual “crimes” it might be useful. But they failed to police it in the beginning, and now it’s too late.
- Mint
- Concept: Online banking, investment, and money management / tracking
- Funded: Yes.
- Problem: Hmm… where to start. How about the fact that you give them your bank data. Is that not a problem? What’s the thought process? “Oh yeah, some random internet startup is definitely secure enough and trustworthy for my personal bank data” … way to go, Sherlock. On top of that, things like this already exist. It’s called “Quicken” or “QuickBooks”… and if you want an internet version, surprise! They have internet versions of that software! And it’s secure! And widely used!
- [all the Digg Clones]
- Concept: Social news, exactly like Digg does it.
- Funded: Sometimes.
- Problem: Digg works because of the user base. There’s only so many people who are fanatic enough about news to obsess over it, and they only spread so thin. Congratulations on creating a failing business model, which happens to be based on someone else’s idea.
- Kindersay
- Concept: Teaching your young children.
- Funded: Yes.
- Problem: …yeah, this is easy. It’s called “Kindergarten”. The Internet is good for older people (like, maybe, 3rd grade) to do research and learn on… but when you barely know what a computer is, why should you be learning from some generic white woman about generic topics? Can’t your parents teach you? Oh that’s right, they’re too busy playing SecondLife to care about you.
And that’s just off the top of my head, from what’s been talked about recently. There’s about 1.3 x 10^24e other terrible terrible ideas out there that are funded, and being lauded as “revolutionary” and “ground breaking” by people like TechCrunch (while it is helpful for the current startup / industry news, Arrington is a pompous self-involved ass).
Anyways
I got a little sidetracked. Sorry. Anyways, to pick up the thread of discussion here, we are in a bubble. Everyone (in the industry) knows it. The difference is that this time people actually have monetization models. Companies aren’t spending millions of dollars on sock puppet TV ads… in fact, very little money is being spent on advertising other than word-of-mouth. And, despite all the clones and terrible ideas that will fail, there are many web applications that are (and will be) crossing over to “mainstream” [again, see here].
RAWR!
The fact that the bubble is recognized is indicative of the difference from last time. Yes, money is being thrown all over the place. But there will not be a huge economic crash (at least related to the “Web 2.0 revolution, baby”). Why? There’s one major, all-encompassing reason:
99.9% of these companies do not have publicly traded stock. They don’t have intentions of IPO’s.
You’d think that people would have realized this by now. I have, and I’m not even old enough to drink at a bar.
