In the headlines on Techmeme is a blog post predicting a dot com crash in 2008. I’m not so convinced. The conditions are not the same as in 2000. Back then, ridiculously large sums of money were being bet on crazy ideas with a business model as well covered as a thong-wearing butt (it’s Friday night, the analogies are heading South). This time around, it’s possible to start a good idea with minimal investment. To the extent that start-ups are becoming a commodity. Paul Graham has an excellent essay describing the trend – the future of web start-ups. It comes at a time when more and more people are breaking away from corporate life and becoming freelancers. Enough for McKinsey to highlight the effect as one of their 8 business-technology trends to watch in 2008. People have questioned does Twitter have a business model. For many, creating a product that becomes an acquisition target is more than enough.
What I do think we will see in 2008 is a dot-com miss.
People are getting giddy and excited about Web 2.0 acquisitions (YouTube – started in 2005, acquired in 2006 for $1.65bn; Skype – started in 2003, acquired in 2005 for $2.1bn). Myspace, Flickr and Del.ico.us didn’t hit the billions and could be accused of having dealt to soon. But picking the right time to be acquired (or choosing not to, in the hope you will be the next Microsoft or Google) is a huge gamble. Particularly when you are the celebrity in the headlines. If you are not careful, you will get wrapped up in your success and start to feel invincible. Always a dangerous place to be…
In the UK (probably elsewhere too), there is a game called Deal Or No Deal. The concept is simple: 22 boxes, containing various amounts of money from 1p up to £250K. The player has to open boxes, one at a time. At stages throughout the game, a banker offers money to buy the player’s box and stop the game. The amount offered depends on what boxes remain unopened. The player has to choose deal or no deal. Deal, and they take the money and run. No Deal and they keep on playing, hoping that their box contains one of the big numbers. It’s amazing how many people end up with the 1p box. Is that going to be Facebook’s fate? No dot-com crash, just a spectacular miss.
Related links:
- The coming 2008 dot-com crash (Greg Linden, Jan 08)
- Eight business-technology trends to watch (McKinsey, Dec 07 – free registration required to read full article)
- Living company versus one hit wonder (Related blog post, Dec 07)
- Acqusition dots (Related blog post, Oct 07)
Joining Dots 