"The only thing even remotely close to the bubble of old would be Twitter, and they have 200 million users. Name one service during the dot-com era with anything approaching that number."

The raw numbers may have changed (there are more people on the internet now) but the strategy is the same. In the late 90's it was all about eyeballs, actual profit be damned. Nowadays it's all about "social". Twitter, Facebook et al are going down the same road: many ephemeral eyeballs with no discernible path to the kind of profitability tech sector investors expect. They are at best media plays, and over the past 10 years we've seen how unkind the market has been to the likes of AOL and Yahoo.

Groupon may be the standout company of this era (who knows?) but people who boast of Groupon's numbers don't seem to understand that most of the revenue goes into the retailer's pocket. It's an as yet unproven proposition that there's substantial money to be made in dipping into the razor-thin profit margins of struggling local businesses.

We won't know who wasted $100 million+ until it's all over -- that's the thing about bubbles. The oversized VC funds and oversized valuations are relatively recent phenomena and it will likely be at least 18-24 months until the well goes dry. But when you see billion-plus dollar VC funds and a dozen me-too venture backed companies in the mobile photo-sharing space alone, well, it doesn't take an expert to see the froth in the water. Personally, I wasn't alarmed until about six months ago.

Why should any of us care? Because after the party's over the tech sector is in for a rather bad hangover. The jobs and the capital will disappear seemingly overnight. As entertaining as it can be to watch things go boom, I'd much prefer sustainable growth.

"most of the revenue goes into the retailer's pocket"

I thought the standard model at Groupon was 50% to Groupon (who carries no inventory, or service costs) and 50% to the retailer (who carries all the costs of the product sold to the customer).

Outside of advertising and sales, Groupon is close to 100% margin (they carry a bit of the per-coupon merchandising and servicing cost)- the retailer carries all the cost of the product that the customer actually buys.

"we won't know who wasted 100mm until its over"

word

> Name a company in this "bubble" that has wasted $100 Million dollars like Boo.com or pets.com or $50 Million like flooz without producing even 1% of that in revenue.

Color got $41 million, which is almost at your limit.

Not a fair statement. They haven't wasted it yet. The only just got it. You can't expect them to be making money straight out of the gate, especially when their product's only just became version 1.0.

At least so far it's just VC money that will be wasted in this bubble. Money from people whose job it is to invest properly, so if they lose it all it's quite literally their own fault.

It's not a giant wealth transfer scheme from Main Street to Wall Street like the last bubble. Not yet, anyway.

No, we have more efficient mechanisms for that now.

Didn't Facebook escape SEC regulations with Goldman Sachs to avoid mandatory publishing finance details? Where did the $2 billion a year come from?

> Name one service during the dot-com era with anything approaching that number.

200M site users in 1999? Are you serious? Was there even a total of 200M online in US for all the sites combined at that time? I doubt it. If you judge by that you'd have to scale it accordingly somehow.

You don't need to scale it some how. 200 million users isn't worth less today than 200 million users yesterday or tomorrow.

EDIT: actually if anything, 200 million users today are worth much more as people are much more likely to spend money online etc. A business's relative position in the online space doesn't affect how viable that business is.

it does matter. if the rate of growth of US internet users was greater back then, then it could be assumed that internet based companies would grow faster.

The only valuation that got me close to thinking 'wow, crazy' was hearing that foursquare is raising a big round at a $500M valuation.

The rest of them, Facebook, Zynga, GroupOn etc. make some sense

Foursquare probably gets funded on the same concept color did. It's more about the data it can generate and sell, not the product itself. I'm still not convinced that it's a viable way to cover that kind of value.

It's still to early to tell but Color (www.color.com) which gathered $41 milion may be the first to fit the bubble profile.

In all fairness, there's nothing wrong with raising $41 million dollars if you're not burning through it. Color Labs could be stashing all that money in a mattress somewhere. Also, the founders of Color Labs have a history of extremely profitable exits (LaLa, Onebox, Photobucket, etc).

As I said, its too early to tell, especially with all the talent at Color Labs. Most of us might be wrong about their product.

Regarding those 41 million dollars, VCs invest to make a profit.

Isn't that basically what the article said? Did you read it?

Is it possible he was simply reiterating/corroborating the point?

You'd have to read his comment out of context to believe that. No. This was a response to a misread headline.

Yes. No. I imagine most people here (judging by the comments) misread the headline and the URL it was on and then commented without going further than that. This results in a bunch of posts which parrot the original article and add nothing of value. They simple add useless noise.

A few of us can safely sit here and comment, and vote down the comments that do not offer any insight or contribute to the content of HN, but I fear we are in the minority.

Instagram, Color, Path, Foursquare, Gowalla, Twitter, Quora to start.

Suppose there are no companies such as Boo.com today. It doesn't mean there's no bubble. To say that there is no bubble, you'd have to make a convincing argument that the valuations companies are in line with the (future) demand for their services.

I'd really love to read a fair analysis of whether there is a bubble, but I fear the completely understandable bias of TechCrunch and HN is preventing it. Still, I like to think of us as a curious bunch and I hope we will talk about this honestly at some point.

it got fundamentally cheaper and easier to scale: so X million users now is not X million users then! Also people learn to find new ways to make unsustainable deals and bubbles come and go. So saying there is NO bubble at all, is probably wrong most of the time. But i agree, todays tech companies produce value. But in my opinion they do not solve significant real-world problems (optimizing communication is not enough). we tend to forget that there is a world outside the internet.