Anne Zelenka posted some interesting thoughts on GigaOM about the current web 2.0 environment in her Web 2.0 Manages to Sober Up post yesterday. While Steve Rubel predicts doom and gloom ala the 2000 dot-com bust, I think Anne does a great job of providing a more balanced perspective on the current environment.
I think that there are two main differences this time around.
- First, we are dealing mostly with VC investments in this round instead of public money going into insane IPOs. This means that the impact on the economy will be more limited if the bubble bursts.
- Second, most companies taking investment money have actual products. The days of funding technology ideas with no tangible output seem to be mostly (but not entirely) behind us.
In the pre-2000 days, you couldn’t build anything as quickly or inexpensively as you can now. Ajax applications come together quickly and hosting is really affordable. People are building things quickly with little money to see what works. A bunch of ideas will fail before you see the next Flickr or Digg emerge. The funding tends to go into those that have shown some success already.
While my general outlook on the industry is still positive, I don’t think that the future is all roses and kittens. Some companies are probably paying way too much while trying to catch the next big thing. Will Microsoft really get $240M worth of benefit from Facebook? Maybe, but I’m a bit skeptical.
Other Fast Wonder posts you may want to read:
In case you missed the press, we (Jive Software) just did a deal with Sequoia Capital at Jive Software for $15M in VC funding. A few points from Dave Hersh, Jive’s CEO:
We’re proud of how we have grown this business over the last six years. We’ve been profitable since inception and have put good money in the bank. We have made our share of mistakes and missteps, but we haven’t sacrificed our values and ultimately those mistakes made us stronger and smarter. This year we struck a mighty vein with Clearspace when we launched in February. Now the growth is in high gear and bringing on a funding partner is a step towards becoming the provider of choice in the market.
and
We are proud of our heritage as a bootstrapped company. It’s helped to shape a culture of discipline and customer focus, and it’s always fun to say that we never raised a dime. Plus, there’s a few folks in this office that are a bit suspicious of VC’s. And for good reason – there’s a lot of bad ones out there who destroy companies in the name of selfish interests or bad management. But this situation is different for several reasons:
- One VC: not a bunch in the room arguing for their own needs.
- Minority stake: they’re along for the ride, not driving the ship.
- Great firm: these guys didn’t get where they are by forcing bad decisions.
(Quotes from Dave Hersh’s Jive Talks blog post)
I think this is a great step for Jive, and I continue to be excited about working at a great company!
Even if you are not drawn to the allure of the venture capital industry, Guy Kawasaki’s aptitude test is worth reading for the amusement value. A few gems from the test:
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Been kicked in the groin by a major, long-lasting economic downturn, so that you know how powerless you are. (add 1 point)
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Worked at a failed startup, so that you understand three things: first, how hard it is to achieve success; second, that the world doesn’t owe you a thing; and third, what it’s like to be fired or laid off. (add 3 points)
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What is your background? Management consulting (subtract 5 points)
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