"Based on that, the entirety of Web 2.0 should be an automatic bubble." Pets.com was based on selling physical products. Most Web 2.0 companies aren't, but a l

"Based on that, the entirety of Web 2.0 should be an automatic bubble." Pets.com was based on selling physical products. Most Web 2.0 companies aren't, but a lot of them are profitable or break-even. "The "demand" wasn't there because the majority of people didn't have internet" Maybe. But if your value proposition is "we sell pet food online" you have a larger problem. "vulture funds gave them plenty of cash to burn, what were they going to do? Invest it in a CD?" Perhaps spend it working on expanding their market base beyond pet products. Amazon did that, as an example. Alternately, don't take the money. "Amazon back then had a value add? What was that? Selling books for a loss?" Things like reader reviews and instantly available critical reviews, suggestions of other books, wish lists -- not to mention the ability to browse titles without having to leave my house. You can't (easily) do any of that in a physical bookstore. And it's why a lot of people started going there. "And an economic bubble is defined as when assumed value is more so than intrinsic value. Read techcrunch for more than a month and you'll find plenty of investments or exits for extraordinarily pricing." Defined by you, perhaps. I prefer the way Goladus described it: "Large, risky investments based primarily on the logic that values are surging and will keep surging fueled the inflated valuations." Regardless of exact definition, a bubble that involves relatively small amounts of private money is not the same as a bubble made of large amounts of public money.