Two years ago, when the craze for social media startups was in full swing, a former Facebook engineer summed up the situation with a memorable lament: “The best minds of my generation are thinking about how to make people click ads,” the engineer, Jeff Hammerbacher, told Bloomberg Businessweek at the time. “That sucks,” he added.
It might be over.
Here’s how Bloomberg Businessweek’s Ashlee Vance explained it at the height of the social media money boom:
Once again, 11 years after the dot-com-era peak of the Nasdaq, Silicon Valley is reaching the saturation point with business plans that hinge on crossed fingers as much as anything else. “We are certainly in another bubble,” says Matthew Cowan, co-founder of the tech investment firm Bridgescale Partners. “And it’s being driven by social media and consumer-oriented applications.”
If Cowan was right, the air seems to have been released fairly gently—at least in comparison to the Internet bubble of the late 1990s, which shook the U.S. economy. Sure, Zynga crashed and Groupon burned, but overall tech investment continues at a reliable pace. The total amount of venture investment in Internet companies last quarter was $3.625 billion, close to what it was in the third quarter of 2011—and much higher than it was before then.
New buzzwords have arrived: Big data and cloud companies are grabbing the imaginations of venture capitalists, says Anand Sanwal, founder of CB Insights. Boring companies that make tech products to sell to businesses seem to be in ascendance. But it’s just not the same.
“Social was so unique in that it had taken up a lot of mind-share,” Sanwal says. “Folks were singularly focused on social, and that was unlike anything we’ve seen to date. It was probably most analogous to e-commerce in the last dot-com boom.”