The last time around, towards the end of the 90s, we saw companies build out the DotCom era on such flimsy business plans as shipping dog food for free with no actual profit margin. Investors poured billions of dollars into these companies seeking magical revenues. Of course the whole thing exploded because it was magic, not real.
Now we’re seeing it again. Facebook is about to go public and folks are saying it is worth billions and billions of dollars. That’s fine, though I’m skeptical. But now Facebook is buying a little photo sharing app called Instagram for about a billion dollars. So now the company that is probably over valued is buying another little company for far more than it is probably worth. Seriously, buying a photo sharing application for a billion dollars is ridiculous.
I’m seeing the next DotCom explosion, and this time it looks like it is at least partially self-funding. This seems far more dangerous to me than the last time around.
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