"The only thing even remotely close to the bubble of old would be Twitter, and they have 200 million users. Name one service during the dot-com era with anything approaching that number."
The raw numbers may have changed (there are more people on the internet now) but the strategy is the same. In the late 90's it was all about eyeballs, actual profit be damned. Nowadays it's all about "social". Twitter, Facebook et al are going down the same road: many ephemeral eyeballs with no discernible path to the kind of profitability tech sector investors expect. They are at best media plays, and over the past 10 years we've seen how unkind the market has been to the likes of AOL and Yahoo.
Groupon may be the standout company of this era (who knows?) but people who boast of Groupon's numbers don't seem to understand that most of the revenue goes into the retailer's pocket. It's an as yet unproven proposition that there's substantial money to be made in dipping into the razor-thin profit margins of struggling local businesses.
We won't know who wasted $100 million+ until it's all over -- that's the thing about bubbles. The oversized VC funds and oversized valuations are relatively recent phenomena and it will likely be at least 18-24 months until the well goes dry. But when you see billion-plus dollar VC funds and a dozen me-too venture backed companies in the mobile photo-sharing space alone, well, it doesn't take an expert to see the froth in the water. Personally, I wasn't alarmed until about six months ago.
Why should any of us care? Because after the party's over the tech sector is in for a rather bad hangover. The jobs and the capital will disappear seemingly overnight. As entertaining as it can be to watch things go boom, I'd much prefer sustainable growth.
"most of the revenue goes into the retailer's pocket"
I thought the standard model at Groupon was 50% to Groupon (who carries no inventory, or service costs) and 50% to the retailer (who carries all the costs of the product sold to the customer).
Outside of advertising and sales, Groupon is close to 100% margin (they carry a bit of the per-coupon merchandising and servicing cost)- the retailer carries all the cost of the product that the customer actually buys.
The raw numbers may have changed (there are more people on the internet now) but the strategy is the same. In the late 90's it was all about eyeballs, actual profit be damned. Nowadays it's all about "social". Twitter, Facebook et al are going down the same road: many ephemeral eyeballs with no discernible path to the kind of profitability tech sector investors expect. They are at best media plays, and over the past 10 years we've seen how unkind the market has been to the likes of AOL and Yahoo.
Groupon may be the standout company of this era (who knows?) but people who boast of Groupon's numbers don't seem to understand that most of the revenue goes into the retailer's pocket. It's an as yet unproven proposition that there's substantial money to be made in dipping into the razor-thin profit margins of struggling local businesses.
We won't know who wasted $100 million+ until it's all over -- that's the thing about bubbles. The oversized VC funds and oversized valuations are relatively recent phenomena and it will likely be at least 18-24 months until the well goes dry. But when you see billion-plus dollar VC funds and a dozen me-too venture backed companies in the mobile photo-sharing space alone, well, it doesn't take an expert to see the froth in the water. Personally, I wasn't alarmed until about six months ago.
Why should any of us care? Because after the party's over the tech sector is in for a rather bad hangover. The jobs and the capital will disappear seemingly overnight. As entertaining as it can be to watch things go boom, I'd much prefer sustainable growth.