A new Internet bubble?
Twitter $3.7bn; Groupon $6bn; Facebook $50bn. What are they really worth.
These kinds of valuations, fuelled by second markets, give us flashbacks to the first Internet bubble ten years ago and are producing a mix of reactions from euphoria to cynicism over the return these fast growth Internet businesses can provide. But is this bubble different?
Steve Blank recently commented on factors behind the bubble and reasons why things might be different this time around.
Startups can now access billions of potential customers through multiple devices that provide unprecedented speed to market and scalability. While big IPOs might be on the horizon, the exit strategy for many startups is acquisition by large scale, fast growth companies such as Google, Facebook or Zynga.
These startups (which are attractive for angel investors) are growing wide user bases before determining revenue models to ensure they can deliver on investment – a key difference in this bubble. Attracting users involves creating buzz around the company and fast branding, particularly through social media.
by Christopher Kennett.
Image: Salvatore Vuono / FreeDigitalPhotos.net