A bunch of people are starting to debate whether the recent string of acquisitions are harbingers of a new bubble in tech. Despite the whole conversation on what is Web 2.0 being little more than a red herring, most of the comments I’m seeing appear to be missing a key difference from the last go round: IPOs. Other than Google, which is an outlier if not a special case, very few tech companies (outside of China) are able to go public and those which do are seeing minimal first day price jumps.
What’s happening lately, which I guess dates to Yahoo acquiring Ludicorp (Flickr), is that enough of the companies formed in the last decade have survived and prospered. They’ve grown large enough to find that to continue growth at sufficient levels, and to overcome a certain level of bureaucratic inertia, products must sometimes be acquired rather than built internally.
Why this would be a surprise to anyone is puzzling to me because it’s happened over and over again in technology and elsewhere. If Yahoo had paid $250 million for Ludicorp or Winer got $25 million for weblogs.com I’d be worried, deals at those bloated valuations would give real evidence that no one learned the lessons from the ridiculous paper deals of 2000.
But the price tags weren’t pie in the sky–okay, Skype, not sure about that one but they do have real revenue and seemingly committed user base plus provided a life-changing event for eBay–and as such are more reminiscent of Microsoft’s deals to buy the companies which created FoxPro and PowerPoint, back in the day. All the deals fit well with the acquirer’s business strategy.
Perhaps the reason some people are looking at the activity as a negative indicator because of the success of our tools, they give a sense of interconnection and immediacy that was never possible before. We all “know” Dave Winer, Jason Calcanis and Stewart Butterfield and with RSS feeds, tech.memeorandum and the like it’s like we’re all in the same neighborhood, trading gossip the way our grandparents did about the family two doors down.
In fact, Web 2.0 reminds me of the old saw about Microsoft’s release pattern: 1.0 just to get in the market, 2.0 to get the feature set and 3.0 to fix the bugs and make it usable for the mass market. So no, it’s not 1999 again. Call me when Zimbra does their IPO and the stock triple on opening day.
BillSaysThis 