Notes from web 2.0 conf

With some pressure to publish or perish…

biggest takeaway for me was that there is a continued bubble at the front of the pipe and that’s great for entrepreneurs and everyone other than LPs in vc funds.

There seems to continue to be huge capital available to fund any decent idea even though there are obvious signs these are risky bets – ie. There is no exit other than sale to big player and still few companies reporting big revs and profits.

During the boom I ran an enterprise software company. The big difference was most of us *were* showing big rev numbers. My company did 10 million in first year sales. Because of this there was a frothy public market that was ready to buy IPOs in pre profits companies.

What’s interesting is that we’re not hearing about many ventures where the vc’s pull the plug. Mayfield did choose to stop funding tribe which is why I took it over along with the lender.

Are there others we’re not hearing about? There must be a ton of companies coming up on second and third rounds. I’d love to understand the vc rationale in funding them. Many may be taking similar approaches to those that survived the bust in stockpiling money and waiting for a business to evolve.

I’d love to hear any stories you’ve heard about companies reaching profits or how they’re faring without. Sent wirelessly via BlackBerry from T-Mobile.

2 thoughts on “Notes from web 2.0 conf

  1. Mark,
    Whatever Bubble is coming will not be nearly as detrimental as Bubble 1.0.
    The damage will not affect hedge funds, retirement accounts, small investors, etc. to a great degree since only a small number of the current crop of Startups will go public.
    Presently, most Startups aren’t whole companies. They’re basically brands with viral products waiting for the next M&A auction.
    Also,
    Have you blogged about your experience taking over and, perhaps, restructuring tribe. It would be good to discuss the strategic implications of tribe’s experiences with VCs and the obvious underperformance of their business model or revenue model (if they had one). Tribe has plenty potential and open-ended strategic options, but it just never really took off.

  2. Mark —
    Awesome seeing you last week.
    I disagree slightly with your post — I think the big difference between this bubble and last one is that in the late 90s, the bubble was driven I think by the insatiable demand for internet equity – Support.com was the exception not the rule in terms of real results and that is why you guys were actually able to get out in September of 2000 (if my memory serves). There wasn’t a lot of sustainable business models for most of the rest of the businesses and hence they got killed when the entire ecosystem went down.
    Today, at least we know there is in fact a way to monetize traffic through advertising. It works — if you can get explosive growth in eyeballs you can do a great job of making cash.
    My problem today is that it is so inexpensive to start these businesesses — which means people are raising too much money – which means they are spending too much — at the same time that there very hard to get decent CPMs at low traffic. So unless you can be YouTube and get to 100MM views or whatever– it will be hard to succeed with all that capital.
    Instead of figuring out how to cash flow as soon as possible they are betting it all on the come — and it is unclear that the extra money is what is actually going to drive the traffic. Some traffic can be bought but maniacal focus on serving your customers with an incredible customer experrience is going to be what gets you there and I am not sure that is solved by more people for these companies.
    So I agree with your conclusion — I would also hate to be an LP in a VC fund right now.

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