Then:

In March 2000, the very month that the dot-com bubble burst, Merrill Lynch launched its Internet Strategies Fund. Talk about dismal timing. “People thought that somehow the Internet boom was going to go on forever,” says Russel Kinnel, Morningstar’s director of mutual fund research. The fund lasted only a year before closing its doors.

Now:

J.P. Morgan Chase & Co., riding the wave of investor interest in fast-growing, privately held technology firms such as Facebook Inc. and Twitter Inc., plans to start a fund that would invest in Internet and digital-media companies, people familiar with the matter said.

The planned investment fund, run from the New York company’s asset-management unit, is expected to raise between $500 million and $750 million, these people said. Marketing materials were sent to prospective investors starting about two weeks ago.

Has the shark been jumped, as has been alluded to more than once?  When you (again) start hearing about “page views,” “eyeballs,” and the like, run for the hills.

Category: Venture Capital, Web/Tech

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

14 Responses to “Short Memories”

  1. Petey Wheatstraw says:

    Our memory of bubbles, generally, is short to nonexistent. Hard to believe there’s $500 – $750-million worth of stupid left in this country.

  2. macrotrader603 says:

    I disagree with the “stupid money” label entirely…

    The 2000 Internet bubble was littered with companies with sky high valuations, with no earnings, in some cases no revenues, such as with Corvis, and only a business plan and .com in the name. Exoduc Communications, Global Crossing, whatever.com, etc. were buried in debt and had fatal cash-burn rates.

    Companies such as Ebay, Amazon, Yahoo, Priceline, and later Google have turned out to be legitimate companies and good investments. Going forward Facebook, Twitter and other highly trafficed sites should be too.

    As with any industry there will be companies that don’t make it, but to compare Facebook, Twitter, and Google with actual revenues, cash flow and earnings vs the hype of the 2000 dot com bubble, does not stand up due to the disparity in financial metrics.

    How ‘stupid” is the seed money in Facebook, Google or Priceline? Seriously. Let’s think before we speak.
    Let’s ask the multi-billionaires who started these companies how “stupid” they are?

  3. Moss says:

    Zynga valued at 7 billion, a 3 year old gaming site… Granted there is some value but history does have a strange way of repeating.

  4. johnhaskell says:

    Macro Trader is right. What if you had been the third employee at Yahoo! Or Google? the point is to get in early. Or late. Even if the early guys are already billionaires, that doesn’t mean they can’t become trillionaires, now does it?

  5. ToNYC says:

    To paraphrase Gertrude Stein, the ocean of currency (work potential) is always there, but the ports change.
    The waves come and go on more than just lunar cycles, and if you run for the hills, that’s where you’ll be when the ships come in.

  6. Greg0658 says:

    a couple back to back posts on OUR Internet .. I have a fond of picture of a Native American Indian village with the hunter gatherer tents in the background .. our western method of advertising and generating flow into schemes Works by creating a desire that ends up floating all boats .. that desire to keep up with the Jones and Live Better (sounds like a GE commercial) … that pyramid (mentioned in the other thread) of our so called super-stars acquiring due compensation for their superstardome is just that – the producers needing their own method to survive – to latch on a host …
    back to this thread and OUR Internet – I’m hearing a drum beat now that things are built to a sufficiant size and capability that its now time to corral its openness and contain costs to maintain it at present value – I understand that from the pure capitalist standpoint ..
    did I make my point – about it being OUR internet – we bought it working in the trenches

  7. Petey Wheatstraw says:

    macrotrader603:

    Every bubble ever blown made perfectly good sense, until it didn’t (especially if leveraged with a healthy dose of self-delusion/ideological dishonesty). Regardless of how baseless, one could hardly deny the stock valuations of the internet bubble or the price of a hovel or RE developer/home builder stocks during the housing boom. These things were OBVIOUSLY good investments.

    Pop.

    When the bullshitters start believing their own bullshit, it’s time to get nervous.

  8. BennyProfane says:

    A show of hands here…..Be honest

    Has anyone actually used Groupon for more than a few weeks? For that matter, ever?

    Seems to be an internet version of those ValPack coupons I get in my mailbox.

    The one consolation is that, as an official schmuck, I am locked out of “investing” in these companies, so, I can watch from the sidelines as all the very “smart” and savvy clients of Goldman get taken with this game. It will be enjoyable.

  9. econimonium says:

    Oh yes, I remember from business school that we had an entire finance session on “how to value an internet company”. I still have the case study. If doing that exercise didn’t send off red flags as to how everyone thought of things, nothing would. It also was used by my prof to prove a point: revenue matters. Business model matters. Because, in the end, guesstimates on where your revenue is coming from prove to be all bad.

    Exactly what is the revenue model for these companies? Why are they worth so much in someone’s eyes? What is MySpace now worth? Does anyone remember barriers to entry and all the things that make a company worth something? What, exactly, is Twitter worth? How do you charge for anything that will even pay for the technology costs to keep it going? What about Facebook? When was the last time anyone here clicked on an ad in Facebook? If they charged to use the service, would you pay? What about Twitter? When does someone figure this out? I wonder what the prospectus would say if these companies were to go public…

    From some of the comments, no one has learned anything, and they are willing to bid up the value in hopes of getting into something that no one yet understands the sustainability or even revenue model of. If people want to do that sure, go right ahead. Talk about transfer of wealth! Those guys are partying on your money (I know, I did it during the dot com boom…thanks for your bonus money, fabulous lunches, and enormous pay packages!) and people are stupid enough to give it to them. Tell me what Facebook will be worth in 5 years. Tell me what it will be worth NEXT year. Why? Give me numbers NOT blahblahblah. “Get in on the ground floor” ! People never learn.

  10. But..but..but…Facebook saved the Egyptians from Mubarak. And now that Mubarak is gone, they’ve got a nice military dictatorship that is sure to provide them enough liberty with which to hang themselves.

    I mean, really, flash mobs generated by Facebook postings in the streets of Cairo, just like we try to do here in the US? That’s priceless, no? Freedom’s value is so enormous it can’t be quantified, can it?

    Got to go and call my friendly GS rep and see if any room’s left on the ground floor.

  11. lalaland says:

    You’re too cynical Barry – I’m starting to believe there might be something to this whole ‘internets’ thing…

  12. gordo365 says:

    @Petey – “Hard to believe there’s $500 – $750-million worth of stupid left in this country.”

    You are WAY undervaluing ‘stupid’. I think stupid is the next big bubble…

  13. ashpelham2 says:

    I think the comments on “freedom” are very funny.

    If this is freedom, then I’ll take the alternative, thank you. Freedom sounds like a guise for “it’ll cost ya”.

    Perhaps a friendly dictatorship works best?

    Nothing that is free at first and then becomes a charging something, is going to have the same sustained success.

  14. macrotrader603 says:

    @Petey, you may be right… i’m sure all of the good ideas have already been invented, and there isn’t anything new of value coming down the pike…

    The VC firms should shut down now because they won’t make any money on these companies going forward…what value can there be in having access to 600 million consumers, their demographics and interests?

    Closed minds don’t make money…I’m sure some of you will short them all…maybe not