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Ask HN: Bubble 2.0 - what lessons were learnt the first time around?
I'm increasingly reading reports that we're about to enter another period of gross over-valuation and increased speculative investing.
This article [1], describes a possible bid of $6-$8 million, for a web-service that hasn't even reached beta.
Assuming this kind of story is a warning sign, and we are approaching another period of lunacy; is it possible to glean anything from the last bubble? Were any lessons learnt? Do any of you have any advice for getting through this kind of scenario with the least amount of trauma?
[1] http://techcrunch.com/2011/02/02/hipster-groupon/
- sursani 16y agoThis is absurd. I am working on my internet startup as we speak and reading news like this really disappoints me. Why is our country all about a quick buck or fast cash rather. We move from Internet bubble in late 90s to Housing bubble in the '00s back to the Internet bubble... is housing bubble next?
- keiferski 16y agoMy bet is on an educational bubble (although it isn't strictly comparable.)
- keiferski 16y agoI wasn't around during the first bubble, and I don't actually run a company presently. (So take this with a grain of salt.) But from my perspective, most of the failed sites in bubble 1.0 didn't actually have good products - they didn't actually sell a basic 'X product' to 'Y customer'. I think the same thing is happening now. Just look at Path, Hipster, etc. being valued at super high numbers. These sites don't actually have a real, solid business model. They're just social networks. (In my opinion) the startup community needs to stop making social networks and pseudo-businesses and focus on real products and real problems, like the rest of the business world has for centuries.
- sagacity 16y ago>>most of the failed sites in bubble 1.0 didn't actually have good products - they didn't actually sell a basic X to Y customer.<< Some counterpoints to ponder: 1. Y (i.e. Internet user base) then was much smaller, as compared to what it is today 2. wombs of the WWW were barely pregnant with eCommerce (if it was known by that name) then >>I think the same thing is happening now.<< IMHO, there are major differences involved: in addition to 1. and 2. above, 3. means to monetise eyeballs (traffic) were scarce then (random, untargeted, ROS banner ads - $15/20/25 CPM, anybody?). Heck, (m)AdSense wasn't even around! I could go on, but let me conclude by saying that (even) non-monetised or barely monetised eyeballs/userbase/traffic has much more commercial/valuation potential today as compared to bubble 1.0 days. What do you think?
- keiferski 16y ago1. Very true. 2. Also true, but I think there's somewhat of a distinction between eCommerce and all web businesses (at least what I've been led to believe.) ECommerce is selling offline things online, or rather, selling products through an online channel. Zappos, Amazon, 37 Signals etc. are examples of this. On the other hand, many of today's startups don't actually sell anything. They have a feature, not a business. Is Path really an eCommerce site? Hipster? 3. True, but again, ads aren't exactly a "product". They're an extra level above your service, and are notoriously much more difficult to pull off successfully. Also, I think that most people (customers) have a strong disdain for advertisements, on a whole. I wouldn't rely on ads to power a product indefinitely into the future; personally, I tune out almost all all advertisements, and I know many people who do the same. Building a business on a fluctuating ad market doesn't seem like a great business model to me. Selling products, however, is much more concrete.
- gyardley 16y agoTrauma? Bubbles are great for founders - while they last. Look at it as an opportunity - there's a reason why "Please God, just one more bubble" was a popular bumper sticker for a while. The primary takeaway from the first bubble is that there's never a bad time to realize a profit. Don't let it ride - put the money in your pocket whenever you can.