Wednesday, April 20, 2011
Tuesday, February 22, 2011
Is this the start of the second dotcom bubble? | Business | The Observer
Alan Patrick, co-founder of technology consultancy Broadsight, says we are at the beginning of another bubble and that the first breaths have been blown: "A bubble is defined by too much money chasing assets, greater production of those assets, then the need to find a greater fool to buy them."
So far, money is chasing a small group of companies – Facebook, Groupon et al – that could prove to be good investments, says Patrick, who also writes the Broadstuff blog. That was true of other bubbles too: at the start of the US property boom, for example, it was the best houses in the best locations that took off first. Only later did people start speculating on grotty flats in Florida.
According to Patrick, there are 10 tell-tale signs that a bubble is being blown:
■ 1. The arrival of a "New Thing" that cannot be valued in the old way. Dumb-money companies start paying over the odds for New Thing acquisitions.
■ 2. Smart people identify the start of a bubble; New Thing apostles make ever more glowing claims.
■ 3. Startups with founders deemed to have "pedigree" (for example, former employees of New Thing companies) get funded at eye-watering valuations for next to no reason.
■ 4. There is a flurry of new investment funds catering for startups.
■ 5. Companies start getting funded "off the slide deck" (that is, purely on the basis of their PowerPoint presentations) without actually having a product.
■ 6. MBAs leave banks to start up firms.
■ 7. The "big flotation" happens.
■ 8. Banks make a market in the New Thing, investing pension money.
■ 9. Taxi drivers start giving you advice on what stock to buy.
■ 10. A New Thing darling buys an old-world company for stupid money. The end is nigh.
This time social media is the New Thing. Its most earnest acolytes claim that the likes of Twitter and Facebook are a revolution in human communications unseen since Gutenberg started printing the Bible. They aren't making money, but they are worth a fortune. Two smart cookies – Arianna Huffington, founder of the Huffington Post, and Michael Arrington, creator of the influential technology blog TechCrunch – have sold their publications to AOL, a company not noted for the astuteness of its recent decisions. Tick off stage 1.
The second stage looks tickable, too. Fred Wilson, investor at Union Square Ventures and a veteran of the 1999/2000 dotcom bubble, has been sounding the alarm for some time. In a recent interview with TechCrunch, Wilson said he was worried that a two- or three-person startup could get a $50m-$100m valuation. "To me that's not in the realm of reasonable," Wilson said.
He even went as far as to name names – in particular Quora, a questions-and-answers site set up by Facebook alumni Adam D'Angelo and Charlie Cheever that raised $11m in funding last year at a price that valued the company at $86m. Now it is reportedly fending off offers for $330m. See stage 3 above.
Mark Cuban, the investor who made a fortune in the first dotcom boom, has compared the current funding frenzy to a pyramid scheme. In another recent interview, David Cohen, managing director of the well-known Silicon Valley start-up fund TechStars, says there is a bubble in the number of companies financing startups. Cross off stage 4.
The last dotcom boom really took off after the flotation of the internet software company Netscape in 1995. Patrick says this time it's likely to be Facebook that lights the fuse. So far, private investors have been locked out of the New Thing. But JP Morgan is setting up a fund, and Goldman Sachs recently tried to get its clients' money into Facebook. That would take us all the way to stage 8, in which case we're just waiting for stages 9 and 10 – where cabbies get in on the act and the game goes into reverse.
Thursday, November 11, 2010
1.0 Is the Loneliest Number — Matt Mullenweg
Usage is like oxygen for ideas. You can never fully anticipate how an audience is going to react to something you’ve created until it’s out there. That means every moment you’re working on something without it being in the public it’s actually dying, deprived of the oxygen of the real world. It’s even worse because development doesn’t happen in a vacuum — if you have a halfway decent idea, you can be sure that there are two or three teams somewhere in the world that independently came up with it and are working on the same thing, or something you haven’t even imagined that disrupts the market you’re working in. (Think of all the podcasting companies — including Ev Williams’ Odeo — before iTunes built podcasting functionality in.)
By shipping early and often you have the unique competitive advantage of hearing from real people what they think of your work, which in best case helps you anticipate market direction, and in worst case gives you a few people rooting for you that you can email when your team pivots to a new idea. Nothing can recreate the crucible of real usage.
Wednesday, November 3, 2010
How a foosball table can kill your startup – part two
- If we tracked the usage of Guitar Hero setups, foosball tables, pinball machines, etc., we would see that utilization of them is not really worth their cost and the rent we pay for the space they take up.
- Often the toy/activity choice we make is driven by what we personally like. I highly doubt anyone actually thinks about how employees from other demographic groups perceive them. Therefore, we unconsciously create an environment of discrimination.
- Innovation happens outside of the walls of our offices. Encourage your employees to get outside and network with their customers and spend more time with their families.
- Employees are not stupid! We may be able to attract them with these “benefits”, but the novelty wears off quickly. The deeper we can tap into satisfying the needs of our employees, the more likely they will stay with us. Maslow’s hierarchy of needs is often ignored at our own peril.
Tuesday, October 5, 2010
7 Trends to Watch, In An Age of Info Overload | Co.Design
Ones and zeroes gush like Grade A Crude not just from our electronics, but out of our ears and pores and split ends. Yet the more information there is, the less informed we seem to feel.We race to keep up with the news, the news about the news, the feeds, the tweets, the posts, the inbox. But instead of feeling masterful, all-knowing, there's a dream-like fear that however fast we run, we're going to miss that surely-you-knew bullet train, only to be left babbling incoherently on a suddenly-deserted platform.
Information is now the most abundant commodity on earth. These are strange times -- not just for us citizens, but for all the corporate citizens that employ us, feed us, and work the engine that makes the world go round. So here are seven home truths to help keep things in perspective.
- People Crave Certainty
- Branded Content Is a Dangerous Road - Drive Responsibly
- Bet on Humans over Technology
- If You Have Nothing to Say, Don't. No, Really
- Privacy Is Becoming Pivotal - Take a Stand
- Information Works for You, Not the Other Way Round
- Empower Your Intrapreneurs
Monday, October 4, 2010
Thursday, September 23, 2010
Online Banking Startup Think Finance Secures $90 Million Line of Credit
Think Finance is announcing that they’ve secured a $90 million credit facility from Victory Park Capital Advisors. This massive line of credit will be used to develop, expand and underwrite, Elastic, Think Finance’s web-based bank account replacement product.
Elastic is currently operational as a pilot program, providing its online bankers with an Elastic debit card, line of credit, and access to bank account statements and account history. Think Finance will enhance Elastic’s services with a savings feature, financial literacy tools and budgeting tools. The company plans to release these features and aggressively push Elastic in the first quarter of 2011.