Around the year 2000 there was the dot-com bubble. Companies got a lot of money just for adding “.com” to their names, and even companies like Kozmo.com, whose delivery costs exceeded their total revenue, grew bigger and bigger for no reason.
I remember back then that a website or a service with a user base had its worth calculated according to the number of registered users. That’s why ICQ got a lot of money from AOL (the technology of instant messaging developed by ICQ was relatively simple). I even remember that there were numbers saying “one user is worth so-and-so cents”.
Then, after everyone realized they were not actually making any profit, there was the hi-tech downturn and investors were very careful with their money. Now, following the whole Web 2.0 craze, investors are again investing in small web startups. However, lately some startup companies closed their doors. True, most of them are small and simply have rough competition. Take, for example, the online calendar market. It is now filled with competitors, Google Calendar among them. Kiko.com is a startup that had an online calendar as a product and sold itself on eBay later. Here are some notes from a Kiko.com GUI developer..
But this is not what worries me most. I’m mostly worried about websites that are given money according to popularity. It reminds me of the cents-per-user times and how much it didn’t matter later on when no one was making money. Now, in an interview with Paul Graham, Mr. Graham says we’re not in a bubble. He also says things like “founders shouldn’t worry about a business model when they start a company. They should have something that people want and worry about the business model later.” Although I would like to believe that’s true and go start my own company, such remarks frigthen me most.
So are we in a new bubble or not?
