New .com Bust Coming?

9 replies
From the New York Times/MSNBC: NYT: Silicon bubble shows signs of reinflating - Business - The New York Times - msnbc.com

Basically, they're saying it's the same old story as the late 1990's. Companies like Facebook, Twitter and Groupon are showing worth that may not be entirely reality based, just like Amazon, eBay and others did back then. This caused new, speculative, venture capital financed companies to show up (pets.com, webvan, etc) and then collapse due to lack of a good business plan other than raising investment money. The big difference now is that these companies are mostly privately financed rather having an IPO as the objective.

The bottom line, some investors think these opportunities are way overpriced right now because everyone is wanting to invest in the "next Facebook".

A few questions for you...

The starting investment figure mentioned in the article is $50 to $80 million. What could you do with your online business with that kind of cash?

Would you sell out your business to investors for that kind of money? How about a tenth of that? What about 1% of that figure?

Is your online business worth that much? Do you even see yourself as having a business that's worth $100K or even $1M?
#bust #coming
  • Profile picture of the author KenJ
    There might be a bust coming but it is not going to touch most people here. Many warriors are looking for a simple life with a residual income that pays enough for them live life. Sure there are are some top money makers around but they are not in my league.

    Kenj
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  • Profile picture of the author winds
    Originally Posted by bgmacaw View Post

    Basically, they're saying it's the same old story as the late 1990's. Companies like Facebook, Twitter and Groupon are showing worth that may not be entirely reality based, just like Amazon, eBay and others did back then...

    ...The bottom line, some investors think these opportunities are way overpriced right now because everyone is wanting to invest in the "next Facebook".

    Is your online business worth that much? Do you even see yourself as having a business that's worth $100K or even $1M?
    But there's a huge difference - companies like Amazon and eBay were actually online businesses. There whole existence hinged on getting customers and selling goods...and the reason the bubble got so bad was because everyone else was trying to sell the same things. How many big businesses online are in direct competition with someone else large? Maybe I'm just ignorant to the facts, but there aren't any true competitors to Facebook and Twitter left in their respective genres.

    But the poster above me was correct - any bubble like that is irrelevant to what we're doing. How many investors do you see throwing thousands at people doing CPA offers, autoblogs, or whatever strategies on here? There's a difference between online businesses and companies doing business online.
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  • Profile picture of the author jasonmorgan
    To be honest, if somebody gave me 50 million and asked me to create a website that will recover that investment in 5 years... I have no idea what sort of site I would create. I don't have any fresh high-concept ideas laying around waiting for investment capital.

    Since I can't think of anything original at the moment, I would probably sit down and take a good hard look at all of the consistently popular niches and then develop something for the one that I felt was lacking a strong authority site. I would stick with a proven niche since they have a greater chance of returning a profit. Creating the next bingobongo whatchamacallit site... don't most of those fail?

    Business model would revolve around providing information, membership, selling products and building a list for further promotion. Nothing new for those of us wandering around the WF. Think of something along the lines of what Beachbody (p90x) has done, they have cleared over 420 million.

    Maybe use the same resources and expand to a couple of sites all within the same niche but covering different angles for maximum niche coverage and cross-promotion.

    I'd probably invest most of that money into advertising and SEO. 5 million should be enough to cover staff costs for 5 years. A couple of writers, hot shot web developer and a couple of SEO monkeys.

    You could actually pull off all of the above without the 50 million. Just need a group of people wiling to work towards a common goal. Just fill in the roles of Team Leader, Web Developer, Product Creator, Writer and outsourced SEO monkies. BAM! Instant Success... who's in?

    That was way to much thinking this early in the morning. Time for some Cap'n Crunch.
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  • Profile picture of the author MichaelHiles
    I think there may be a market correction coming, but the big difference between this bust and the first one is that cash revenue seems to still be a pretty big requirement.

    Last time around, nobody cared if there were sales, or if there was even a model to generate sales.
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  • Profile picture of the author Steve Peters Benn
    Michael, I sorely miss your old photo. This one just disturbs me. And VCs.
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  • Profile picture of the author MichaelHiles
    I am consciously trying to turn a new leaf here on Warrior Forum, and be more... shall we say... effusive...

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    • Profile picture of the author paulgl
      I would agree that things are turned upside down down.

      Amazon spent years without making one thin dime. But their
      business model was top notch. Who cared if they kept losing millions?
      Eventually, the future was going to be theirs. And it is.

      Now we have "companies" like twitter and facebook. They had no
      form of revenue. No business model. Nothing. Yet companies gave
      them boat loads of cash. Just because.

      In fairness, youtube costs google cash to run it. Google, ever the optimist,
      kept saying, wait until next year.

      The difference, google can use youtube as a playtoy. It's quite a prize.

      Now they are after groupon.

      I kind get twitter, but have never gotten facebook.

      My man "Tom" dumped myspace, right?

      Google and apple seem to have an eye for the future. And some business savvy.

      Paul
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      • Profile picture of the author jvorstermans
        Having been active in the internet development cycles for over 20 years now it is clear to me that no one can predict what is going to happen next.

        Yip, there will be busts and booms and we keep seeing cycles of ups and downs as new web2 apps appear. They last a few years and then are replaced by something else.

        I agree I still don't see where facebook really sits but it is booming. Twitter makes more sense to me.

        From my perspective I use what is popular and go where the conversation is happening. The fact that "venue" might change occasionally is not a concern.

        On another note, I would not invest in venues; for long term anyway.

        John
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  • Profile picture of the author nelaffiliate
    With $50 to $80 million, I would have to carefully think about what to invest that in. But I really can't see any serious "bust" happening soon.

    I would probably invest the money in first researching heavily on applications for mobile devices. I think mobile devices and what you can do with them is the future.
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