Thursday, October 18, 2007

Bubble Redux: Expect 2009 Burst

It's deja vu all over again in Silicon Valley, as web startups with little to no revenue are easily finding investors or companies willing to pay 7-8 figures for them.

The New York Times outlines some of the over valuations. A bubble is occurring, this one based on the belief that the community of the web will generate huge sums through advertising to people foregoing other media.

The previous bubble was fueled by the belief that online shopping would largely replace retail, but of course that never happened. This bubble is centered on the misplaced belief that advertising dollars can sustain the plethora of personalized content (largely user generated) including video.

In some ways bubble 1.0 was more believable because at least it centered on moving product. Now the future is hinged on advertising and media that will help to move product through advertising, so it's twice the challenge. Community will be absorbed by mainstream publishers who will reap the most benefit.

So if history repeats itself, the next bust will occur in around May of 2009, just after the next President takes a seat in the Oval Office. Get out before you get sucked in.

Posted By John Gartner at 10:02 AM
Permanent Link: Bubble Redux: Expect 2009 Burst | Comments (0)

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