Bubble V. Boom?

Isn't the natural cycle of bubbles and booms a bust?
Heather Green

There is a lot of talk about how we should redefine what's going on right now with the Internet not as a bubble, but at a boom. But I can't help but think that the third B word we should keep in the back of our minds is bust.

We're all very close to the last bubble and so it might be natural to think that, because all the factors aren't the same (it's harder to go public now, so inexperienced investors won't get hurt, or it's cheaper to do a startup now, so even if companies fail, it's only a small failure), the notion of a bust can't be applied to both.

We have yet to see how this will play out. What we are seeing, it seems to me, is a rush to do the same thing, and plenty of these companies will go under. All I have to do is look in my email box to think that whether this is called boom or bubble, it's a little frothalicious out there. Since publishing on Monday a story about online video—the moment's hot trend—I have gotten 25 or 30 emails pitching young startups.You know all those film sharing companies can't make it, right?

Speaking on this a while ago, Joe Kraus said that seed funders, who are taking the funding place of VCs this time around, will get burned. And maybe like last time, as a whole group of startups go under, it will take time before people take some of these areas seriously again. Already people are beginning to wonder, after Dan Gillmor's apparent bowing out of his Bayosphere citizen media startup, whether citizen's journalism makes sense.

What seems true is that there are a lot of me-too companies that aren't quite sure what their business model is, beyond being funded by Google Adwords. That kind of seems like the definition of a bubble. I don't know, maybe I am just being a curmudgeon.

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