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21st February 2011

Is this the start of the second dotcom bubble?

1. The arrival of a “New Thing” that cannot be valued in the old way. Dumb-money companies start paying over the odds for New Thing acquisitions.
2. Smart people identify the start of a bubble; New Thing apostles make ever more glowing claims.
3. Startups with founders deemed to have “pedigree” (for example, former employees of New Thing companies) get funded at eye-watering valuations for next to no reason.
4. There is a flurry of new investment funds catering for startups.
5. Companies start getting funded “off the slide deck” (that is, purely on the basis of their PowerPoint presentations) without actually having a product.
6. MBAs leave banks to start up firms.
7. The “big flotation” happens.
8. Banks make a market in the New Thing, investing pension money.
9. Taxi drivers start giving you advice on what stock to buy.
10. A New Thing darling buys an old-world company for stupid money. The end is nigh.

(Source: twitter.com)