Off-topic / chit-chat


The whole "quirky little internet startup" scene is a bubble


Quick, name me 3 independently successful internet startups from the last 10 years.

You can't, or at least it is extremely difficult. The only one I can think of that is actually profitable is Facebook.

Zynga? Yelp? Groupon? These are all publicly traded "internet startups" founded within the last 10 years. None of them are actually doing any good. These internet based startups delivering online services are all having trouble actually monetizing their product, and although investors have extremely high hopes for their success, they usually end up underperforming.

Lets look at the numbers for a second:

Venture capital firms that focus on tech startups under perform the S&P 500. Truth is, this whole "startup boom" is a bubble. Of the huge amounts of internet startups out there, only a tiny percent get VC funding. Of the tiny percent that get funded, an even smaller percent actually succeed. Truth is, if you want to invest in one, or work at one "for the stock options", you probably have a better chance of striking it rich at the roulette table.

Nearly none of these internet startups actually ended up being independently profitable. The best bet that most of these guys have is to hopefully sell their company at an hugely inflated price to an established tech company.

Its not because the whole tech industry as a whole is not doing well. Stable tech companies that can actually profit did great in the last 10 years. For example, 10 years ago today, IBM closed at 81$, today it closed at 195$. You can see such spectacular growth in many tech companies. The thing is, they aren't the "little quirky startup", they are the big solid companies.

I just watched The Verge's new show, and I do understand that excitement about the whole startup scene. Just like how, when I watched Discovery's Moonshiners, I understand the excitement about the moonshine scene. But really, if you look past the hype, the current internet startup scene is just one huge bubble, Hell, the moonshiners are probably a better investment.