Dot-Com Bubble v2.0?

eldavojohn wonders: "With the recent acquisition of YouTube by Google, there has been a lot of speculation (on both Slashdot & The Toronto Star) that we are nearing the second economic bubble created largely in part by growth in the digital sector. While one may be able to debate that the revenue from advertising and sales can indeed back this growth, are we headed towards the second bubble and, if so, how hard is it going to pop? Keep in mind that popular voodoo economic theory has attributed the first bubble phenomenon to 'a combination of rapidly increasing stock prices, individual speculation in stocks, and widely available venture capital.' I think we're experiencing all those, although it is not as flagrant as it was during the first bubble. What do you think?"

Comments

During the first bubble

[ackthpt]

During the first bubble the hubris was so thick in the Silicon Valley air you could feel it. People around you virtually hummed with it. And like The Emperor's New Clothes, if you actually looked at some of the shiny bits you'd notice some what people where trying to sell was utter shite, a scam, not worth a penny, yet people bought their stock on IPO and it all went nuts. There was 'the big strategy', to develope something Microsoft, Oracle or Cisco didn't have and would want and to trumpet it all over the place and hope one of these big companies would make you an instant millionaire by buying you out. Didn't always work.

Now I think most of what is going on in this bubble actually cuts the mustard in the ledgers. It pretty much has to. Too many (ad)venture capitalists got burned and they're a bit more careful now.

People in the Bay Area say there *was* a bubble

[Infonaut]

There was no dotcom bubble and there won't be a new one.

There was a tremendous bubble. I was there. I did work for companies that were almost entirely virtual. There was no "there" there. It was all hot air. I know plenty of people who suddenly had fantastic jobs and were living a lavish lifestyle, only to be out on the street looking for a job when the boom dropped on the bubble. Bay Area traffic noticeably thinned for at least two or three years. It definitely was a bubble, and when it popped, the effect was very painful to a lot of people.

My guess is that while the average person on the street doesn't know the entire dotcom tale, they do know that there was a tremendous upsurge in the NASDAQ for a period of time, and that it was fueled by rampant speculation. This isn't the same thing as Starbucks overextending itself by opening 54 shops in Dubuque, rather than the 52 it can actually support. There was a huge outlay of capital, there were companies going public every day, and the stock market had lost all rationality. Even non-techies could see this. All they had to do was watch the news.

This time it is different, in the sense that all of the Web 2.0 companies aren't going public. As another poster has already mentioned, this time it's private capital chasing after some good and many bad investments. When the majority of these companies die, John Q Investor won't take it in the shorts this time. In that sense, the Web 2.0 investment phenomenon is a lot closer to the normal course of business events you describe.

Re:What made Youtube take off?

[RKBA]

You can also download YouTube and most other videos with the FireFox plugin at:
http://videodownloader.net/