I also don’t disagree that the investing is in more sound business ideas this time around, however I still feel that the amount of money is too much. While I’m sure that a company like SimplyHired uses quite a bit of bandwidth and server time, somehow, I just don’t see where a 13.5 million investment is warranted. Maybe as a purchase price, but all they did was invest and get a percentage of the company.

Mostly, I just think that the valuations are getting more and more bloated.

This time around I’m just not seeing the crazy business ideas I did before. Like I remember about 20,000 attempts at social networking sites and business planning and online calendar applications, not to mention loads of free web email services popping up with their own gimmicks. What I’m seeing this time is people investing in ideas and business’ that are already established and have a community but just haven’t yet been monetized to any degree. Look at flickr for instance, its a great service with a wide following and ease of use but it has pretty much no ads and has yet to make a countable dime on selling hard prints of pictures people submit. Yahoo bought them to add to their portfolio of user services in what I think was an intellgent move. It adds to their overall value and encourages people to use their other web properties (or it will once you link them all together). I disagree with Dvorak when he says flickr is a losing proposition. Perhaps on its own it might be but as a service part of Yahoo its real value is not so much in the incoming stream directly from it but the residual users and base that it brings with it. Yahoo is buying users essentially.

I guess what I’m trying to say is that the main difference I see this time vs the dotcom bubble is that investors are throwing money at real established ideas that have been proven to work. This might be a bubble but it certainly has a lot less fluff than the last one if it is. God only knows during the last one we could have thrown these comments in a business plan and said we wanted to start a site that involved us commenting back and forth and we would have gotten at least 2mill for writing a business plan that had punctuation and correct grammar.

I believe that given the recent deal, thats about the 2nd richest horse’s mouth to grace my comments, next to dave sifry that is. I’m glad to see it really, as it means that some of us little people get noticed once in a while.

As for your question, I am definetely seeing some trends that would indicate that there is a bubble forming and it may indeed be ready to pop again. It is in no way similar to the previous bubble at the beginning of the century however. The dynamics of the Web 2.0 sites that we are seeing are making it much easier to create a valuable service site. For instance, we are seeing quite a few new sites that “mimic” other sites. How many digg clones have you seen? And isn’t Digg really just an improved(depending on your POV) version of slashdot? I believe the investors were more cautious at the beginning, but the increased investing and funding recenly are what gives me reason to pause here. As with any group of business, people, etc… the cream of the crop rises to the top and even if we do see another bubble pop, several of those sites will survive. Blogging for instance will survive, as will sites like digg, delicious, and maybe even simplyhired.

Obviously, I agree that diversification is an excellent reason for some of these purchases as the more diverse your portfolio, the less risk is actually felt. Of course, ask some of the original dotcom bust investors how their diversification efforts worked.