Google+ has grown to 25 million+ members in no time. Facebook has over 750 million members and continues to grow at a scorching pace. Groupon and LinkedIn have redefined the IPO paradigm for good. Facebook is expected to go public next year with a market valuation worth – hold your breath – $100 billion. Is technology growing too fast to our liking? Or do these market moves signify another tech bubble in the making? A recent report from Avvo indicates that the Silicon Valley has witnessed more than 3,000 percent increase in startup related page views over the past six months. The report doesn’t term this meteoric rise as a tech bubble but it calls it a staggering jump and the most activity seen out of the valley since 2007.
At the beginning of this year, I wrote a post about my opinion on the so-called social media bubble burst. To be honest, social media has grown strength to strength in the last six months and if the initial response to Google+ is anything to go by, I expect 2011 to be another golden year for social media and technology companies.
With all due respect to social media and tech critics, I can’t resist but ask the question ‘What Tech Bubble’ are we talking about?
Startups are good
To be honest, I’ve never understood why flourishing startups aren’t considered a positive sign for the tech market. I’m fond of startups – a number of major social networks, be it Facebook or Twitter were early stage startups that scaled with time.
Of course, not all startups are meant to succeed. If you don’t have a sound business plan, the willingness to grind it out and the required legal expertise to pull it off, you are riding a sinking boat.
Social Media Factor
Critics often cite the example of MySpace as a case in point to prove that we are in the midst of a tech bubble. To be honest, I’ve never been a Myspace fan. Though it ruled the roost in social media world for a long time, it was never a fascinating value proposition for business users. I strongly believe that any social network needs to mass adoption in the business world in order to sustain and grow like Facebook and Twitter. Myspace failed miserably on that front.
Google+ has proved that if you play it right, you can make the most of the ongoing social media revolution.
IPOs
Exorbitant market valuations for companies such as Zynga and Groupon fueled speculations that these resemble figures from the bubble era. However, critics often miss the point that Zynga and Groupon have been game changers in their respective domains. They have a solid user base and impressive revenues to support their case.
Valuations
Facebook’s market valuation tops $100 billion while Twitter is reported to be hovering around the $8 billion mark. In January, Facebook was believed to be worth $50 billion and back then I argued that Facebook is worth every cent of its valuation.
Do you think we are going through a tech bubble which will burst sooner than later? Or do you believe that it is possible for the tech world to retain this momentum and continue to grow at a scorching pace? Can social media help ease concerns over the so-called looming tech bubble? Please share your opinion by leaving a comment.
I don’t think there’s a burst coming.
They happened when companies with no sales, no visible revenue strategy and little more than a flash(y) website were the norm.
Today’s social IPO candidate has real revenues and a real, working business … not an idea and a team.
It’s tough to say. I agree that the companies with crazy valuations are also bringing in crazy returns, so not really sure that’s an ‘over valuation.’
The best thing about social media is it’s ever changing – and it’s the perfect playground for startups to innovate and succeed.
~Tammy, CEO @MarketMeSuite:twitter
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There is still tech stuff we have yet to discover…it wide open territory!
shesh in radio and broadcasting we are still discovering Social Media…gonna be about 2-4 years before we even figure it out…might BURST them LOL
I think a bubble will burst sooner or later because investors are paying more attention to the hype surrounding the currently popular technology /social networking companies instead of to fundamentals such as P/E ratios. Will these technology/social networking stocks actually achieve the valuations and provide with a return for the capital?
I think the valuations are overvalued.
Nick Bilton, writer for the New York Times, observed that age played a determining factor in the response to the question of a looming bubble at a recent TechCrunch Disrupt conference.
“At TechCrunch Conference, Talk of a Bubble”
http://bits.blogs.nytimes.com/2011/09/13/at-techcrunch-conference-gossip-and-talk-of-a-bubble/
Anyone young or old interested in bubbles would enjoy reading “The Tulipomania” in
Memoirs of Extraordinary Popular Delusions and the Madness of Crowds by Charles Mackay available free via Project Gutenberg
http://www.gutenberg.org/ebooks/24518
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